After the Emperor of the Ball loses the "Emperor of the Ball", what is the next step?

Sports Economic Observation

2024-04-29 17:15Posted in Beijing Sports Creators

Author: Moon and a half

Number of words: 4430 words

Suggested reading time: 13 minutes

After the Emperor of the Ball loses the "Emperor of the Ball", what is the next step?

At the beginning of this month, there was a sensational "house theft" incident in the sports industry - Adidas' nearly 80-year sponsorship relationship with the German Football Association was successfully broken by the American brand Nike with its "money ability". The author asserted at the time that this was an important sign that the Adidas football business was lit up in red. (Nike's "money ability to steal" succeeded, and Adidas' football business turned on the red light again)

Recently, a similar "home theft" incident has occurred again in the sports industry, but this time the protagonists are not only closer to domestic fans, but also the two sports information apps most commonly used by domestic fans.

On April 26, Beijing Duoge Technology Co., Ltd., the operating company of the Knowing Ball Emperor APP, more than 40 of its trademarks were auctioned by the Beijing No. 1 Intermediate People's Court, and the successful bidder was Xiamen Aobo Network Technology Co., Ltd., which is the operating company of the live broadcast bar APP.

The importance of trademarks is self-evident, as trademarks can not only allow consumers or users to identify a certain enterprise as the source of a product or service, but also the foundation of a company's brand image and reputation. When an enterprise loses the trademark established by accumulating users and basing itself on the market for many years, it is like the enterprise losing its soul.

Why does Qiudi let its trademark flow into the hands of others, and how does Qiudi need to deal with the company's operation after losing its trademark?

The trademark was forcibly sold, and the emperor was "forced" to transform and upgrade

In a sense, a trademark is part of a company's intangible assets. In other words, when a company's assets enter the process of compulsory auction, it often means that the company's economic situation is not optimistic.

Taking LETV as an example, from June 29 to June 30, 2020, 1354 trademarks under the name of LETV Information Technology (Beijing) Co., Ltd. were auctioned, including multiple international classifications of important trademarks such as "LE", "LETV", "LETV TV", and "LETV Super TV".

However, compared with the final transaction price of the trademark of "Understanding the Emperor of the Ball" at 20.91 million yuan, the final transaction price of LETV's assets is much higher. According to public information, the appraisal price of this batch of 1354 trademarks of LETV was 194,900 yuan, and after 1376 bids, it was finally successfully auctioned at a price of 131 million yuan.

Of course, from the perspective of revenue scale and debt scale, the operation of the Emperor is still much more optimistic than that of LeTV, which is heavily in debt. But this time the trademark was forcibly auctioned, which also lit up a serious signal in the industry - Emperor Xiangqiu was caught in a lawsuit over economic disputes. Although the forced auction only involved trademarks and did not involve shares, it was enough to alert the industry.

It should be pointed out that, according to Article 11 of the Provisions of the Supreme People's Court on Several Issues Concerning the Enforcement of Guarantees, if the person subject to enforcement has cash or bank deposits that are convenient for enforcement, the cash and bank deposits shall be given priority. In other words, the cash flow of the Emperor is stretched.

According to the evaluation report of the Beijing No. 1 Intermediate People's Court, the trademark "Xiangqiudi" will be auctioned at least from August 30, 2023 (the evaluation reference date). But what is intriguing is that on April 26, that is, the day before the "Xiangqiudi" trademark was forcibly photographed, Xiangqiudi released news on the station, stating that it would change its name and upgrade its brand, and solicit suggestions from users. According to the news revealed, Emperor Xiangqiu no longer wants to focus solely on the football field, but hopes to further radiate the entire sports field.

In this way, the brand upgrade of the Emperor is not an initiative, but a helpless move under the loss of the trademark of "Emperor Understand", but it is certain that Emperor is not willing to come to this point. On the other hand, this trademark incident can also reflect that the business situation of Emperor Xiangqiu is not as healthy as that of the live broadcast, and the cash flow is not as sufficient as the other party.

It is foreseeable that the loss of the "Xiangqiudi" trademark will have a serious impact on the operation of Xiangqiudi, and may even face a lot of user loss, in addition to serious damage to brand value and a long road of rebranding. Therefore, how to understand the road of the Emperor of the Ball next is a huge test for the founder Chen Cong and the management.

Understand the Emperor of the Globe and Airstar Capital, from investment partners to courts

According to the (2023) Jing 01 Zhi No. 293 Arbitration Case between Beijing Tianxing Kaiyuan Investment Center (Limited Partnership) and Beijing Duoge Technology Co., Ltd. executed by Beijing No. 1 Intermediate People's Court, it is necessary to determine the market value of the trademark rights held by Duoge Technology, so as to provide a reference basis for the court's auction of trademark rights. The appraisal report shows that after the appraisal of a third-party company, the appraised value of the "Xiangqiudi" trademark is 21,893 yuan, but the final auction price is much higher than the appraisal price.

The final background of the auction of the trademark "Xiangqiudi" is that Duoge Technology has become the executor of the above-mentioned arbitration case, and the subject matter of the enforcement is "41,307,252.00 yuan". It is worth noting that before the trademark of "Understanding the Ball" was auctioned, there were signs of bad signs of Doge Technology. In January 2024, Chen Cong was restricted from high consumption, and between March 3 and March 28, 2023, more than 83 million yuan of equity in Duoge Technology has been frozen.

According to the equity penetration chart of Qichacha, Tianxing Kaiyuan Investment Center is a company under Tianxing Capital. Airstar Capital is also one of the investors when Knowing Qiudi carried out Series C financing. A series of facts show that Knowing Ball Emperor and Airstar Capital have changed from partners who worked side by side at the beginning to plaintiffs and defendants who are now facing each other in court.

According to public information, at present, the company has carried out the D round of financing in 2017, but the specific amount has not been announced. When Emperor Xiangqiu carried out the C round of financing of 350 million yuan in August 2016, in addition to Airstar Capital, there were also Sequoia China and Suning.

According to the author's analysis, one of the main reasons behind this is the tight capital chain of Airstar Capital. According to the company's investigation data, 56.32% of the legal proceedings involved by Airstar Capital were defendants, with a total value of more than 340 million yuan.

Airstar Capital, known as the "60 billion capital 500 investment project", has been suffering from the previous aggressive investment since 2016. Because of the failure of the listing on the New Third Board in 2016, Airstar Capital needed to repurchase shares from investors at a high price. At that time, in order to alleviate the shortage of funds, Airstar Capital began to reduce its holdings and pledge its invested stocks in the NEEQ market.

Therefore, as one of the shareholders of Xiangqiudi, Tianxing Capital also directly implicated Xiangqiudi when it fell into a financial constraint, which eventually led to the auction of the trademark of Xiangqiudi.

Combined with the current public information, as well as the actions of Emperor Xiangqiu "running all the way" after obtaining financing, it is speculated that the second main reason for the two parties to go to court this time may be related to the VAM agreement entered into when Airstar Capital invested in Emperor Qiudi.

As we all know, many investors or investment institutions often require VAM to join a common business practice when investing in a company. A common VAM agreement states that the investee company needs to complete a certain revenue target or successfully go public in a certain period of time in the future, otherwise it needs to buy back the original investment amount and compensate accordingly.

Of course, the specific amount of each investment and the VAM rules are different, but to put it in layman's terms, it means that if the invested enterprise fails to complete the tasks given by the investor at the time of investment on time, it needs to make corresponding liquidated damages. Taking Wanda Commercial Management after the failure of the most well-known VAM agreement this year as an example, Wanda Commercial Management experienced four IPOs that failed to be listed, and finally Wang Jianlin paid the price of losing actual control and bore the consequences of the failure of the VAM.

So specifically in the case of Understanding Qiudi and Airstar Capital, we should not ignore the investment background of both parties - 2016, this critical point in time. In 2016, China's sports industry began to run wildly, and one of the landmark events was that LeTV Sports completed a Series B financing of 8 billion yuan that year.

After getting the C round of financing, the company continued to expand outward, and even carried out a lot of offline business, including the acquisition of Premier League clubs by joint investment companies, the contact with offline competitions and the development of digital currency business, all in order to expand the scale and source of revenue of the company. This is also a common move that many companies with a single revenue structure need to expand their business scope in order to go public.

The company's single revenue structure means that the ability to resist risks is poor. Similar to the Emperor of Football, Tiger Pounce is also based on sports information and content, and its revenue source is mainly advertising. According to the prospectus submitted by Hupu in 2017, advertising revenue accounted for 61% of Hupu's revenue at its peak. Due to the failure to change the single revenue structure, Hupu failed to hit the market twice.

Therefore, under such a background of the times and the enthusiasm of the industry, there is a high probability that the "Knowing the Ball Emperor Listing" has been added to the VAM agreement between the two parties. According to the Sports Industry Independent Review, "For those who are familiar with these two companies, perhaps there is an inevitability in their rivalry, because the personalities of the two companies are too similar – extremely gambling." ”

It is not surprising that the aggressive and adventurous corporate style, the high sentiment of the sports industry as a whole at that time, the single revenue structure of sports content companies and the difficulty of monetization, led to problems in the cooperation between the two parties. However, as of the time of writing, the two sides have not publicly responded to the details of the court, as well as the key information behind the investment and financing of the two parties.

According to the official reply to "Lazy Bear Sports", "Thank you for your concern, we have been operating normally, but there are commercial disputes, and we are actively dealing with trademark disputes." We expect to continue to serve the fans in the short and long term. ”

Understand the classic opening screen advertisement of the football emperor, "Do you remember your childhood dreams". Now that you understand that the emperor can't just take care of his dreams, he also needs to consider the reality he is facing now.

Homogeneous sports media platforms need to get rid of "advertising dependence"

As mentioned above, the management of Xiangqiudi already knew that the loss of the trademark would be auctioned at least in August 2023, and the official debut of the in-depth content brand "off-site" of Xiangqiudi earlier may also be related to this.

On April 18, 2024, "On the Sidelines" officially appeared on the WeChat public account, and on April 22, the first article "When Dalian Says Goodbye to "Dalian People"" was officially announced, with more than 11,000 views as of the time of writing. The author is also in the circle of friends, and I saw that there are media teachers who have been in the industry for many years and forwarded and liked and supported.

But for the Emperor of Football, or for the sports media format, sports content is not a money-making business. In particular, making in-depth content not only requires a lot of time and labor costs, but also there is no fair standard for how to measure the benefits of the output of the content of the article.

However, it can be seen from the actions "off the field" that the Emperor may hope to get rid of the serious homogenization of the sports information platform and transform into in-depth content creation, as a differentiated advantage of the Emperor of the Football.

Objectively speaking, domestic sports information has entered a stage of extremely serious homogenization. Whether it is a vertical sports information platform, such as Live Bar, Know Football Emperor and Tiger Pounce, or comprehensive information platforms such as Weibo, Toutiao, Baidu and UC, the homogenization of sports information provided is very serious. However, too much homogeneous content forms information redundancy, and users often only choose the platform or APP they are used to.

So this can also explain why the Emperor wants to do in-depth content, and in addition, the live broadcast bar has also cooperated with many tournament parties in the past two years, providing a large number of live broadcasts of the game, including the 2024 China League. Breaking the homogeneous barrier is not only the emperor of the game, but also the direction that all sports information platforms on the market are working towards.

With the increasing development of the Internet and social media, the ability of users to actively receive information has long been different. This is why the uniqueness and irreplaceability of sports information platforms are gradually being weakened. So why do these platforms need to break the homogenization? In the final analysis, it is not profitable to simply make sports content, but can only rely on the traffic brought by the user base of the APP, so as to generate advertising revenue.

The main revenue types of the three major platforms of Live Bar, Know Football Emperor and Tiger Fight still rely on advertisements on the site or APP. If you have an iPhone, you will definitely find the splash screen ads that appear when you open the live broadcast, understand the ball emperor and tiger pounce. If you accidentally shake your phone a little, it will jump to other apps or pages such as JD.com or Taobao. This in turn generates ad revenue for the platform.

Therefore, when the user traffic is large, the more advertising fees the platform earns. However, the sports information audience has already entered the stock era, and how to retain the users on the site is the key to the operation of the sports information platform. Therefore, platforms such as Know Qiudi, Live Bar and Tiger Pounce continue to innovate in operation in order to maintain the basic disk of their users. If you keep the basic market, you will also keep the revenue.

But in a sense, a large number of sports information content can be copied, and the user experience of the APP can also be optimized through continuous updates. Therefore, in the future, it is not impossible to create new sports information aggregation applications on other capitals and platforms to replace the live broadcast bar, understanding the ball emperor and tiger pounce on the market today.

This is not an isolated case in China, as well-known American sports media ESPN, The Athletic and Sports Illustrated have also fallen into such a crisis. The shrinkage of sports media is a global consensus and trend. For example, the Internet giant Apple has launched the Apple Sports APP in the United States, and if Apple Sports is launched in China in the future, the three major sports information platforms in China will face competitors not as simple as their sports media peers, but Internet giants with a market value of 2.6 trillion US dollars.

Therefore, the trademark incident is a serious reminder to the domestic sports media industry. For the Emperor itself, you can take advantage of this "passive upgrade" to plan the company's operation ideas in the future. For the industry, homogeneous sports media platforms need to find new paths and directions for revenue, otherwise "advertising dependence" will spread to every platform, thus affecting their own safety.

Now there are 46 days left before the opening of the European Championship in Germany and 88 days before the opening of the Paris Olympics, when the football emperor encounters the loss of the trademark, it seems to indicate that 2024 is not only a big year for sports, but also a cold winter year for sports media.

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