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Wanda Sports Q3 revenues fall 42% YoY as net profit hits €5.5m

Chinese company continues to navigate “extraordinary challenges and uncertainties” from Covid-19.

2 December 2020 Ed Dixon

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  • WSG posts Q3 2020 revenue of €91.2m
  • Mass Participation unit suffers 87% YoY income drop
  • Debt reduced from €685.2m to €409.5m

Wanda Sports Group (WSG) has seen its third quarter revenues decline by 42 per cent year-over-year (YoY), but reported a net profit of €5.5 million (US$6.6 million) for the period to 30th September.

Q3 revenues for the company, the sports unit of Chinese conglomerate Dalian Wanda Group, came to €91.2 million (US$109.9 million). WSG said this was primarily attributable to a decrease in revenue from the Spectator Sports and Digital, Production and Sports Solutions (DPSS) segments of the business, which were caused by the broad effects of Covid-19 mitigation efforts. 

Its revenue was comprised of €67.3 million (US$81.1 million) from the Spectator Sports unit, down 36 per cent YoY, while €20.7 million (US$24.9 million) came from the DPSS unit, down 20 per cent. A further €3.2 million (US$3.8 million) was brought in from the Mass Participation operations, a whopping 87 per cent drop due to the mass cancellation of events.

WSG’s revenues for the same period in 2019 totalled €245.2 million (US$295.7 million).

The new figures mean a third straight quarter of YoY revenue decline for WSG as it continues to feel the financial implications of the pandemic. Total revenue for Q2 2020 plummeted 75 per cent YoY to €51.8 million (US$62.4 million), while Q1 revenues fell 26 per cent to €163.7 million (US$197.4 million).

Despite the latest downturn, WSG’s profit is an improvement on last year, having reported net losses of €31.2 million (US$37.6 million) for the third quarter of 2019.

Q3 gross profit at the Spectator Sports and DPSS units was €30.8 million (US$37.1 million), down five per cent, and €7.6 million (US$9.1 million), down 14 per cent, respectively. The Mass Participation unit was hit by an 89 per cent drop in gross profit, which came to €1.2 million (US$1.4 million).

WSG added that the gross margin, or gross profit as a percentage of revenue, was 43 per cent, compared with 33 per cent in the corresponding quarter of 2019, primarily reflecting a higher weight of commission-model based business in soccer, which tends to have a higher gross margin.

The group has also reduced its debt from €685.2 million (US$826.3 million) to €409.5 million (US$493.8 million), in part thanks to its full repayment of WSG’s 364-day facility from the proceeds of the sale of the Ironman triathlon series to Advance in a deal worth US$730 million.

The company had total cash and cash equivalents of €151.7 million (US$182.9 million) from continuing operations at the end of the third quarter.

As of 30th September 2020, WSG employs over 1,000 people. It had approximately 1,100 on its books at the end of Q3, but chief financial officer Brian Liao had warned at the time that the company planned to “further streamline our operations in order to preserve cash and protect our profitability”.

The figures come after WSG confirmed the receipt of a preliminary non-binding proposal letter from Wanda Sports & Media, a Dalian Wanda subsidiary, to acquire all of the company’s outstanding Class A ordinary shares. 

“Although we continue to experience extraordinary challenges and uncertainties as the pandemic disrupts our way of life across the globe, we are pleased to deliver the safe returns of some of the compelling regional events, including Italy's Serie A, the German Bundesliga and Premier League football matches with and without spectators,” said WSG chief executive Hengming Yang.

“We remain actively committed in supporting our partners to achieve more sustainable sporting events now and in the future. In addition, our consistent achievements of long-term contractual prolongations and new business wins demonstrate our partners’ full trusts in our strategic vision and value creation, especially under the current challenging environment.

“Despite the continued low visibility in the near term, we remain optimistic about the demand for sporting media on a global basis, as we continue to focus on our strategic execution leveraging our global talents, assets and platform.”

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