Why B2Digital (BTDG) Could Emerge as a Major Reopening Play

You may have heard of B2Digital Inc (OTCMKTS:BTDG), especially if you’re a mixed martial arts fan. 

The company styles itself as “the premier development league in MMA”, and it seems upon analysis to have earned that description. But it also seems to be heading for much bigger things ahead as its model comes together in a post-pandemic US marketplace.

That last point is enormously important – the company has two primary segments: fighting and training. The company doesn’t use those terms, but the author wants to right now because it makes the analysis more digestible.

The Fighting segment operates as an entertainment model, where MMA content is created and sold for tickets to both live and PPV audiences.

The Training segment operates as a fitness facility model, where memberships are sold to customers looking to get fit and learn MMA skills.

These two models have enormous synergies – the former functions as a branding channel for the latter; the latter functions as a talent recruitment and development channel for the former.

As far as we can tell, both channels are starting to click on all cylinders despite how the BTDG stock looks from day to day. The company is going to bring in millions of dollars in revenues this year and that run rate is moving rapidly in the right direction.

 

The Pandemic was an Opportunity

We would also point out that the pandemic, as bad as it was for companies like B2Digital Inc (OTCMKTS:BTDG), was also a very rare business opportunity. It sounds awful to say it that way. But that doesn’t make it any less true.

For a company that needed to find a cheap way to quintuple its fitness facility network size, it’s hard to imagine a set of circumstances more impactful than a world suddenly and unexpectedly filled with people desperate to sell things like fitness facilities.

In retrospect, the opportunity is obvious. But it’s important to remember that, by August of last year, we really didn’t know if a vaccine would be possible. It’s hard to allow your mind to go there now because it seems so awful to consider. But it’s true. And if you owned a fitness facility at that point, and you weren’t sure you’d ever be able to open it back up… well, let’s just call it a buyers’ market.

And BTDG was all over that opportunity, financing a major expansion in every aspect of its business, including a massive jump in its One More Gym segment – the Training segment discussed above.

 

Reopening is Bliss

Now, here we are, many months later. 47 states have eased mask and social distancing requirements. We have multiple vaccines that work well. More than half of all Americans have already gotten vaccinated. And, most importantly from B2’s perspective as a business, there are no longer crowd size restrictions at live events in most places.

The upshot of that last point is that we are about to see some serious growth in the Company’s average ticket sales on a per-event basis.

That means the brand will grow faster. And the symbiotic relationship between its Fighting and Training segments will likely get going in earnest for the first time in a big way.

To help foster that, the company recently announced the launch of its new B2 Fighting Series MMA website, www.b2fs.com, which features access to information about upcoming fights, tickets, fighter rankings and statistics, and much more.

According to its release, the Company continues to see accelerating revenue gains from its Live Events, in both aggregate and average per-fight take, from both gate and pay-per-view streams. Gate sales from B2FS Live Events have now climbed to an average of $20k per event, with an average of $8k more coming through PPV sales. The Company has eight (8) more Live MMA Events on the schedule this quarter.

We would note it has recently put out word that it plans over 50 events total this year. And, as noted above, its average take per event should start to sharply increase as crowd capacity regulations ease.

Greg P. Bell, CEO of B2Digital Inc (OTCMKTS:BTDG), noted, “Saturday’s metrics continued to indicate rapid brand growth and a real hunger for live combat sports among our fans. With eight more big events to go this quarter, we are on pace to shatter prior Company records in just about every measure. Our new website promises to add an extra tailwind, with user-friendly functionality and a wealth of information that will help our fans, fighters, and followers track the growth of our aspiring future MMA stars.”

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