Big Hit Rivaling FC Barcelona, BTS Eyeing Messi

Big Hit Ahead of IPO... Expected Market Cap Comparable to FC Barcelona Club Value
BTS Per Member Value Also Rises... 'Ttasant' Could Approach Messi's Transfer Fee

[Asia Economy Reporter Minwoo Lee] If Big Hit Entertainment (hereafter Big Hit) goes public, its market capitalization based on the offering price alone is expected to rival the market value of the Spanish professional football club FC Barcelona. The per-member value of its affiliated idol group BTS, simply calculated by revenue proportion, is even expected to surpass the market value of Lionel Messi, considered the world's top football player.

According to the financial investment industry on the 21st, Big Hit will conduct a demand forecast for institutional investors from the 24th to 25th. After finalizing the offering price on the 28th, the general public subscription for the IPO will be held on the 5th to 6th of next month. The expected offering price ranges from 105,000 to 135,000 KRW. Since many companies going public this year have set their offering prices at the top end of the expected range, it is highly likely that Big Hit will do the same. In this case, the market capitalization would be 4.5692 trillion KRW, similar to the market value of FC Barcelona.

The American business magazine Forbes evaluated FC Barcelona's value at 4.02 billion USD (approximately 4.6773 trillion KRW) in its early last month release of the 'World's Most Valuable Sports Teams 2020'. This ranked 8th among all sports teams and 2nd among football clubs. Big Hit's expected market capitalization surpasses that of Manchester United (3.81 billion USD, 10th), the British professional football club where Park Ji-sung played, as well as the LA Dodgers (3.4 billion USD, tied 14th) and Chicago Bulls (3.2 billion USD, tied 17th). Previously, major IPOs such as SK Biopharm and Kakao Games recorded 'double jump' (starting price twice the offering price followed by the upper limit price) on their first day of listing, increasing their market capitalization by about 160% compared to the offering price. If Big Hit also achieves a double jump, its market capitalization is expected to reach 7.3107 trillion KRW. This would even surpass the Dallas Cowboys of the NFL, who have held the top spot in Forbes' global team value rankings for five consecutive years, valued at 5.5 billion USD.

On the 2nd, BTS performed "Dynamite" at MTV's Video Music Awards. [Image source=Yonhap News]

The value of BTS, Big Hit's affiliated idol group, is also expected to soar dramatically. Big Hit disclosed in its securities registration statement that BTS accounted for 87.7% and 97.4% of total consolidated revenue in the first half of this year and last year, respectively. Applying this ratio simply to Big Hit's market capitalization, BTS's market value is expected to exceed 3.65 trillion KRW. The market value per member is 520 billion KRW, and if Big Hit achieves a double jump, it will surge to 832 billion KRW.

In this case, a simple comparison shows that BTS's value approaches that of Lionel Messi (33, FC Barcelona), the world's most expensive football player. When transfer rumors recently surfaced, FC Barcelona set Messi's transfer fee at 700 million euros (approximately 938.2 billion KRW). BTS's value also exceeds that of Kylian Mbapp? (22, Paris Saint-Germain), the rising star in football. According to the player value rankings for the top five European leagues released earlier this year by the International Centre for Sports Studies (CIES), Mbapp? ranked first with 265.2 million euros (approximately 365.3 billion KRW), while Messi was valued at 125.5 million euros. A financial investment industry official said, "Although simple comparisons are difficult since some professional football clubs are publicly listed companies, the numbers indicate the significant value of BTS and Big Hit."

Meanwhile, there is analysis that Big Hit's value could fluctuate due to the military enlistment of BTS members. Since the members were born between 1992 and 1997 and are subject to enlistment, there are concerns that activity suspension could affect profitability. However, if they do not enlist all at once, individual activities could sufficiently generate revenue. A strong revenue model is also an advantage. Ji In-hae, a researcher at Hanwha Investment & Securities, said, "Big Hit secures intellectual property (IP) through storytelling and world-building, diversifies revenue using IP, and operates a platform business that directly distributes content, creating a virtuous cycle. Both scale and profit growth are expected to continue next year."