T1: The Price of Excellence

Competing in League of Legends in the LCK and Valorant Pacific, the legendary Korean organization alone has accumulated 15 major titles in League of Legends, including 3 World Championships.

Valued at 220 million dollars by Forbes a year ago and primarily owned (55%) by SK Square, the asset management division of SK Group, T1 represents a drop in the ocean in the financial vastness of the latter's capitalization: 4.3 billion euros.

The financial starting point of the club was marked by the joint venture between SK Telecom and Comcast in 2019, where everything needed to be rebuilt from a structural and organizational standpoint, beginning with immense premises in Seoul and a massive recruitment plan that has now brought the Korean company to more than 70 employees.

In terms of revenue, the growth has been steady since 2020, from 9 to 16 million euros, a 75% increase. The club manages to secure premium partnerships with major brands like Samsung, Nike, Mercedes, and Redbull.

However, even T1 has not found the recipe for combining esports performance with operational balance.

The auditor highlights cumulative losses nearing 40 million euros, explained by several consecutive years of a deficit.

• 2020: -7.79M€

• 2021: -18.2M€

• 2022: -10.6M€

It is noted that historically, the club spends about twice as much as it generates in revenue, caught up particularly by rising salaries and increasing operating costs.

Among these expenses, the report indicates that the club paid 3.5 million euros to the LCK for league participation fees and announced an outstanding balance of 3.5 million to be settled by 2026.

One notable fact stands out: the company succeeds in its international expansion, with nearly 50% of its revenue coming from outside of Asia.

• 7M€ in Korea

• 5.6M€ in the United States

• 2.60M€ in Asia

• 700K€ in Europe

The company has seen a significant decrease in its revenue generated in Asia, particularly in China, where some commercial partnerships have been revalued downwards or not renewed.

The Korean brand is branching out in the west, however, and it's doing it well. With English communication, Western branding, and intercontinental performances, T1 is a brand that goes well beyond the peninsula's borders.

Future financial statements will also be relieved of the Dota roster's expenses since the club withdrew from the circuit after failing to qualify for The International 11, a prerequisite at the start of the 2022 season.

Led by Joe Marsh, the club continues its strong growth while absorbing the deficit year after year. This is possible thanks to a robust financial structure (equity levels are around 50 million euros with a debt ratio of 97%) and a refinancing capacity that seems limitless, supported by strong shareholders and a powerful brand,

whether through shareholder contributions, fundraising, or sponsorship, it seems certain that T1's ability to find refinancing solutions faces no difficulty.

Source: Consolidated Audit Report 2022 T1 DART - Data in EUR at the conversion rate of 10/2023.