Today, we want to point out why shares of B2Digital Inc (OTC US:BTDG) may be as undervalued as any stock in the market. The big idea here is about a model that appears to be proving itself, and appears to be scalable into a large total addressable market.
The model has two major arms: the MMA live event segment and the fitness training segment. They go hand in hand, and both represent solid, profitable businesses in their own right, on an operating basis. But they also augment each other powerfully, especially as the B2 brand grows.
To say that this model appears to be proving itself is not a stretch given the way the company appears to be performing lately based on its direct reports.
These include continuing growth in its live event revenues – which come from gate ticket sales, ppv ticket sales, concession item sales, and now sponsorship fees as well. We also see a pattern of expansion in the gym segment through acquisitions and membership growth.
The fact that the company is starting to book revenues from sponsorship fees is a key benchmark on the trail – it says the B2 Fighting Series brand has started to gain enough value that other brands attached to the MMA space are willing to pay money to B2 to have their logos or products involved in B2 events.
And the establishment of that level of brand traction is huge because the company has a product of its own that it can advertise at B2 Fighting Series events: its own fitness training facilities.
The Vision
B2Digital Inc (OTC US:BTDG) has been announcing a series of new record performances from its live MMA events – the company is making more and more from each event and doing more and more events per month than ever before.
The company’s recent events in Trussville, Dayton, and Kokomo averaged more than $39k in total revenues per event, which is about 30% above its long-term historical average for total revenues per event. The company sees this as an expression of brand growth and improved marketing and distribution of branded content, as well as increasing public interest in live events following the pandemic.
The company’s CEO, Greg Bell, had some interesting thoughts to capture the larger meaning in this data:
“At this point, we are on pace to do 40+ annual events with our average per-event numbers trending steeply in the right direction. And now we are starting to tap into sponsorship sales as well, which is all margin and unlimited upside, and an enormously validating step. Obviously, the bigger our events get, the more value we will be able to extract from sponsorship opportunities.”
That presents a vision, which Bell describes:
“At some point, we see this maturing into a situation where we will be doing multiple events every weekend across different regional markets, with each driving multiples of what we see now, and all of that doubling again through sponsorship flows. That doesn’t even take into the account the Training segment, which will likely always be the bigger side of the business from a revenue standpoint, especially when we have B2 branded MMA training and fitness facilities in every major metro area across the nation, and give them free advertising at our Live MMA events. That’s where we see this headed. Right now, we are seeing a lot of great signals about the viability of that vision.”
That’s a very compelling vision. It paints a picture.
Imagine a version of this company that has four or five MMA events going on every weekend around the country, and has state-of-the-art gyms in every major metropolitan area, all driving multi-million-dollar toplines.
Sponsorship fees might be rolling in at six figures at every event, and PPV ticket sales might be 10x what they are now. In other words, imagine a version of B2 driving 10-digit sales with a top brand.
Given what we are seeing now, and given the growth trajectory of the MMA industry, that vision is hardly a stretch. The current version of B2 Digital is the miniature version of this vision, but fully formed and scaling up further and further with each passing week.
Proof in the Pudding
As a very tangible example of this dynamic, B2Digital Inc (OTC US:BTDG) just reported a new Company record for single-weekend revenues driven by two strong B2 Fighting Series events this past weekend in Bowling Green, Kentucky.
Brandon ‘Hardrock’ Higdon, B2’s Matchmaker, commented: “An amazing weekend of fights showcased 50 fighters and entertained the crowd for two nights. Cameron VanCamp wins again and has to be the top unsigned pro fighter in the country. We have another Canadian champion in Adam Assenza as he won his 4th in a row. The Ultimate Fighter alumni Prince McLean made his long-awaited return and won by KO in exciting fashion. The fight of the weekend was Zakariya Camara vs Seth Shaffer; these two amateurs proved to be two of the best in the country. We look forward to both of them making their pro debuts.”
According to its release, the Company drew in a total of more than $62k in total revenues from the weekend, with $8k coming from sponsorship fees. In addition, because the Company only had to foot the bill for one round of event setup costs, margins were significantly higher than for a typical B2 Fighting Series event.
Management is particularly pleased to report that both events drove revenues and profits above the Company’s long-term per-event average, which is an important step for a two-event weekend, where the crowd is likely filled with many of the same people on both nights.
“Over $60K in revenues driven by two nights of fights offset by only one setup cost, all in one weekend,” remarked Greg P. Bell, Chairman & CEO of B2Digital. “In other words, we leveraged our invested capital into our assets in gear, people, and equipment. And, on a weekend like this, we double up the returns on that investment. It demonstrates one of the many ways we can drive growth going forward now that our brand is strong enough to attract a large crowd on multiple nights in the same market on the same weekend. It’s also very nice to see revenues from sponsorship fees beginning to make a material contribution.”
The company was making $10k a weekend a year ago. It just made over $60k in a weekend from its live event segment and probably another $75k from its gym segment. That’s where we are a year later. Imagine where BTDG might be in another 3 years.
