LeSports won Series B+ financing: Completely changing its operating model is the way out

The lack of profit planning for copyright procurement methods and effective back-end operating models are undoubtedly important reasons why LeSports fell into a financial crisis before.

Original title: LeSports won Series B+ financing: With deep participation of government capital, can we see a turning point in the face of difficulties?

LeSports, which has recently been plagued by negatives, has finally seen a turning point.

Today, LeSports announced the progress of the B+ round of financing. Some new and old shareholders of LeSports and funds affiliated with China-Italy Ningbo Ecological Park (national ecological park) confirmed their participation in the B+ round, with a post-investment valuation of 24 billion yuan. However, LeSports did not directly disclose the specific financing amount and financing completion progress.

Lei Zhenjian, founder and CEO of LeSports, said in a media interview: "LeSports 'pre-investment valuation is 21.5 billion yuan, and the post-investment valuation is 24 billion yuan. After everyone calculates this, we can still figure it out."

Roughly calculated, this financing is about 2.5 billion yuan. This means that LeSports, which is currently in a financial crisis, is expected to receive external funding.

Chen Chen, the shareholder representative of LeSports, said that although LeSports has made many mistakes, shareholders still have to support LeSports, both spiritually and materially.

While announcing the financing progress, LeSports also announced that a nine-member LeSports Strategic Development Committee was established, consisting of eight core shareholders, HNA Capital, Zhongze Culture, Price Investment, Pingyin Energy Mining, Dongfang Huifu, Xinpai Capital, Yunfeng Fund and individual shareholder representatives. As well as management representative Lei Zhenjian.

It is reported that the committee will assist the shareholders 'meeting and the board of directors to provide important support to the company during the critical period of the company's upgrading and transformation. The committee will perform its auxiliary responsibilities such as strategic development decisions, daily work supervision and financial supervision, ensure the company's independent operation, and promptly urge the company to properly handle previous receivables and payables.

This series of actions shows that LeSports is re-planning and getting on track in the storm. Can residual problems such as arrears and layoffs be resolved? Can LeSports get out of the crisis as it wishes?

It

is worth mentioning that in this financing, in addition to new and old shareholders, the biggest highlight is the funds affiliated to the China-Italy Ningbo Ecological Park. According to official disclosures, the high-quality comprehensive construction land used for the LeTV Sports Town project is the main asset of the capital increase.

It is reported that the "town" is located between Shanghai, Hangzhou and Ningbo. According to LeSports, with the collaboration of government funds and LeSports, the newly developed LeSports Town will accommodate LeSports 'partners around the world. The implementation of offline sports service products will eventually become a sports tourist destination.

LeSports 'products, including event operations, outdoor tourism, sports training and other products, will also form a synergy effect with the sports town.

Next, LeSports also plans to shift its business focus to the construction of LeSports Town. LeSports CEO Lei Zhenjian said that LeSports will tilt the team's core capabilities and resources to build a LeSports Town, hoping to explore successful models and replicate them to other regions, expand the sports consumer population, and drive the upgrading of the sports industry.

At the same time, LeSports also announced plans to relocate its headquarters to the China-Italy Ningbo Ecological Park; and the China-Italy Ningbo Ecological Park, as one of the eight national-level ecological parks in China, will formulate special policies to support the implementation of projects to support LeSports.

In terms of specific implementation, LeSports will deploy the town through offline commercial business groups among the three major business groups. LeSports said that the offline commercial business group will expand from single-point event operations, sports training and other product-level services to a systematic service with a small town as a unit and covering a variety of sports scenarios.

It can be seen that around LeSports Town, LeSports, which has received government capital support, is expected to reverse the previous decline.

The funding crisis has been temporarily alleviated, and there are

still many problems facing LeSports. Among them, the most important copyright crisis has been brewing for several rounds. This is also an issue that LeSports needs to solve urgently after receiving a new round of financing.

After entering 2017, LeSports lost its copyrights in the AFC Champions League and the Super League. Relevant people said that due to LeSports 'successive losses of copyrights, more copyright parties began to worry that LeSports' copyright installments will not be cashed, and the "debt collection" will cause a run on accounts is imminent. This also means that after receiving the financing, the first thing LeSports needs to do may be to negotiate the accounts with the debtor.

How to carry out the next round of copyright procurement still seems very important.

As a means for LeSports to make its fortune, large-scale copyright procurement once pushed LeSports to the status of the top brother of an Internet sports company. Now that its advantages are no longer, and how further remedial measures are implemented will determine LeSports's future.

In this regard, Lei Zhenjian said,"We will not give up purchasing copyrights, but we will balance a reasonable input-output ratio."

This statement shows that LeSports will officially abandon its previous operating model of obtaining copyright regardless of high prices.

In fact, the previous operating model has aroused opposition from Sun Hongbin, chairman of the board of directors of Sunac China, the second shareholder of LeTV. At its performance meeting on March 28, it even publicly declared that LeTV Sports was a mistake to do the Super League,"The Super League should not be done in the first place. It invested 1.35 billion yuan and lost 1.3 billion yuan. You can't just do it just because people like to watch it. This is a business, and it's wrong for you to do it."

The lack of profit planning for copyright procurement methods and effective back-end operating models are undoubtedly important reasons why LeSports fell into a financial crisis before.

LeSports, which is aware of the problem, has been working hard to make adjustments for months. Yu Hang, the COO responsible for LeSports 'copyright procurement, also resigned amid this wave of adjustments.

However, the lack of funds has made LeSports only able to focus on extinguishing fires for a long time. The timely injection of external funds is expected to promote a new round of transformation of LeSports from the capital level.

Judging from LeSports 'current public statement, in the next stage, in addition to building LeSports Town, LeSports' development focus will continue to focus on expanding the number of users and members. Including continuing to carry out high-quality copyright procurement and developing UGC business, they are all measures to maintain user stickiness by improving the strength of the media business.

Lei Zhenjian said,"As one of LeEco's seven sub-ecosystems, LeEco Sports provides LeEco's large-screen and small-screen users, as well as all sports enthusiasts with richer products and services, including live broadcasts of events, Short Video, graphic information, self-media, and strives to create a link platform that integrates multiple sports services, striving to create more value for users."

If we want to expand the number of users and members, we must develop products and services. However, the lack of high-quality copyright projects may further affect the paid business represented by LeSports members.

Members were LeSports 'hope for profit before the financial crisis. In this strategy, the Octopus Live Broadcast previously acquired by LeSports is crucial. Currently, Octopus Live Broadcast focuses on "national original interactive sports live broadcasts"; in addition, LeTV Sports content is also incubating some homemade Short Video projects.

This series of measures shows that LeSports is trying to shift the company's direction from copyrighted content that requires a lot of investment to UGC user live streaming, which is relatively low-cost.

This seems to be more like a UGC alternative to copyright events, and it still needs to be proved by LeSports 'further achievements.

On the other hand, Lei Zhenjian also revealed that LeSports e-commerce has also been accumulating strength recently. It is reported that in mid-April, LeTV Sports e-commerce officially launched the domain name sportsmall.com; within June, LeTV Sports flagship store will also be reopened on Tmall. LeEco's sports e-commerce and sports consumer business group will focus on building the entrance of sports consumers and create core competitiveness.

Editor: jessica