Their very lengthy press release began with some context. "Since our founding in 2008, for the past seven years, we have created acts such as Untouchable, SECRET and B.A.P as well as a new rookie artist launching soon. As K-Pop becomes a part of the global culture, our goal has been to strengthen our artists' performances and grow with them as we introduce them into the world.
B.A.P was our first male idol group, and the amount of effort and investment we put into the group was no less than what any other company would have done. Thankfully, due to the efforts of the six B.A.P members who came together as one with their talent and hard work, they were able to show off their skills as K-Pop artists with two world tours under their belts.
In the middle of working together, we received the message this past October through their manager that they wanted to rest. Respecting their wishes, we cancelled their upcoming tours in South America and Japan and gave them a long-term vacation. Visiting home and traveling abroad, the members kept in contact with the company. Recently, they told us their opinion that they wanted to go back to promotions beginning in January of next year. In the middle of planning next year's promotions, we heard through a media outlet on November 27 that they were planning a lawsuit.
Since we were maintaining normal contact up until November 26, the article on the next day came as a huge shock. We tried to contact the members through the managers, but they did not respond. We then tried contacting their parents, and the few who we could reach told us to contact their lawyers. We realized that a situation analysis would only be possible after we received the case, and we waited for it to arrive.
In the middle of this, we became suspicious of the media outlets who only focused on one point of view despite the case being in its infancy. As we entered 2014, we were past the break-even point on our finances and B.A.P were on the verge of turning a profit, so this situation became more serious. Finally, we heard reliable rumors that there was a third party controlling public opinion by putting the relationship between the company and B.A.P in a bad light.
To this, we will determine who the third party is and do everything to bring it to justice for breaking the rules of honest business and tarnishing K-Pop's image.
To be truthful, the company has still not officially received the lawsuit. After checking, the law firm who prepared the lawsuit mistakenly had a clerical error regarding proof of document, and the courts had ordered them to correct the mistake. Although we have not yet received the case, we made a request to the courts to view the contents of the case so we could prepare this statement. We will now make a statement on some of the biggest issues in the media.
- 10 billion won in revenue over 3 years. 17,800,000 won per person
TS -> Break-even point reached in 2 years. Second half of 2014, 285 million won expected. If kept to originally planned promotions, second half of 2014 600 million won expected.
[reference the chart at the bottom of this article.]
Our investment in B.A.P began when they were trainees, and large investments began in the second half of 2011 with Bang Yong Guk's solo single, 'I Remember', and BANG&ZELO's 'Never Give Up'. As you can see in the above chart, until 2013, expenses were greater than income. This is because we put our focus on 'conquering the world through music' and realizing our shared goal. Thanks to these risky investments, B.A.P were able to take their place as a new-age K-Pop artist, and became profitable two years after their debut - an accomplishment to be proud of.
As the chart points out, from the point we passed break-even, the gap between our expenses and income becomes greater, and B.A.P began to create more and more profit. Looking at the second half of 2014, if they carried on their planned schedules with tours in South America, Japan and China, we were expecting income of 600 million won. Unfortunately, due to the cancellation of these schedules, we are expecting income of around 285 million won.
Also, depending on the level of promotions, we were tracking B.A.P's income in 2015 to be around 1.8 billion won.
- Profit split 1 (B.A.P): 9 (TS) ?
TS -> expected split 4 (B.A.P): 6 (TS)
Ahead of explaining the term "profit split", we will explain the process by which we do our accounting. Following the contract, we calculate our finances every six months. This is how it works: out of all the sales that come from B.A.P, we take out the investments we have made to the group. With the remainder of the income, we divide them based on the category of product and again based on the ratio split with the artist. We do this because there are expenses that are hard to categorize, including dorms, transport, food, school, training, free time, exercise, massages, hospital costs, T-money, etc.
The reason why the ratio is so low with albums (1:9) as opposed to performances/commercials (5:5) is because the latter has a lesser upfront cost and the expenses are split between us and a third party; while with the former, all of the expenses come out of specialized staff members working for the company itself (content directors, designers, producers, marketing, etc).
The profit split to B.A.P in the first half of 2014 came out lower since the majority of the profits came from albums and singles. After this, as the group successfully completes their world tours and stakes out their position as a K-Pop artist, the profit ratio is changing. This is the intended result from both the members and the company, and has achieved the intended affect of making the profit splits reflect the importance of the artists to the company's success. In the future, as commercials and events make up a greater portion of profits, the ratio of 4:6 was to be expected.
- slave contracts?
TS -> same content as the Fair Trade Commission's "standard contract" + embodiment
The contents of the "slave contracts" brought up by a media outlet are following the rules set by the Fair Trade Commission, and includes material that embodies their rules.
Regarding the length of the contract, if we look at the FTC's guidelines, the length is states as seven years with an extension available upon agreement on both sides with regards to issues such as "extended foreign promotions with a foreign management company" or "any other legitimate reason which may require a long-term contract".
The company has set the beginning of the contract to the release date of the group's first album (solo, digital album, full album) and seven years henceforth. The members each signed their contracts on 2011 March, June and September, and Bang Yong Guk and Zelo started early with solo promotions so the end dates on their contracts are all different.
- issue of trust
TS -> an issue of misunderstanding
Last July, even after the first-half accounting, the B.A.P members continued their schedules without any problems. However, starting in mid-September, the members began exhibiting emotional outbursts, creating problems with variety schedules and other promised events. Despite this, we have apologized numerous times to broadcast stations and others, and tried to protect the members.
Also, the company had tried to solve the problems through the managers and other staff members via discussion and negotiation, and we respected their wishes of the need to rest. On October 23, we agreed to minimize their activities and cancelled two of their world tours so they would get plenty of time to rest until the end of the year.
Since the B.A.P members showed no outward signs of dissatisfaction and continued to live in their dorm, visit the hospital and share meals together, we believed that they were preparing for their comeback and waited until they were ready. As we stated before, we were planning on a comeback in January when we heard this surprising news.
This is the end of our discussion regarding the above points, and we will bare everything we can to the courts so we can reveal the truth. This much is clear: TS Entertainment did not violate the law and have not treated B.A.P in any way that is immoral or unfair.
Our code is "Honesty. Sincerity. Humility". It is possible that in our quest to create a warm and comfortable home for the members and give them the treatment they deserve, our wishes got misunderstood. If we did not recognize the members' hurt feelings before, this is also our fault for misunderstanding due to our lack of experience.
Finally, we hope that B.A.P will, even now, be truthful to what they want and come back together to join forces and achieve that dream that we discussed during their debut. However, if they continue to break off communication and seek out the court, we will respect their wishes and face them in a court of law, searching for a proper solution.
We deeply apologize for causing worry to so many people and will work hard to make sure this entire incident can end in a positive light.
y-axis: South Korean won
x-axis: year (separated by six months)
blue: expenses
red: income
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