Amidst the recent contract controversy between B.A.P and their agency TS Entertainment, Dispatch has revealed an exclusive Q & A session between B.A.P’s side, going more in-depth into the sudden issue. Read more to find out further details underlying their request to terminate their contract, which has been planned since May, according to various media sources.
Overall, Dispatch asked a total of 21 questions that uncover more information regarding the relationship between TS Entertainment and B.A.P, as well as minor details about finances, contracts, and more.
Q1. So for approximately three years of promotions, did they receive 18,000,000 won for their earnings?
D. To be precise it was 1,790,000 won. B.A.P had signed a contract with TS Entertainment in March of 2011. They debuted in January of 2012. However, until June of 2014 they never received a single payment. They received their first payment on July 31, 2014 and that amount was 17,900,000 won per person.
Q2. If you divide that over 40 months, it’s about 500,000 won per month.
D. In B.A.P’s case, housing, eating, transportation, and other living expenses were covered by the company. At least during their promotions they didn’t need their own personal money. However, it is different in personal cases. For example, the members had to borrow money from their families when they had hospital fees. One of B.A.P’s acquaintances had said, “They had no choice but to depend on their families for hospital fees” and “They had no choice but to endure it for their future.”
Q3. What are the terms of the agreement between B.A.P and their company?
D. According to the contract ‘Dispatch’ has received, the division of profits was considerably segmented. Firstly, album earnings were divided 1 (B.A.P):9 (company). They were given 10% from merchandise sales.
Q4. 10% of sales? Or 10% of profits?
D. Whatever was left over from the expenses of merchandise. Basically, 10% of net profit. For example, B.A.P sells the “Matoki” dolls. If we say the net profit for a 20,000 won doll was 6,000 won, B.A.P would get 10% of the net profit so they would receive 600 won. And you would further divide that ⅙. So each member would be getting 100 won.
Q5. Do the 1:9 contracts still exist nowadays?
D. It is possible. B.A.P has agreed on the profit tariff. But, starting from the third album, the division has been raised to be 2:8. B.A.P has released 11 albums so far. But they only have one official album. Basically, B.A.P still receives 10% of album profits.
Q6. B.A.P is more famous overseas. What are the profits for overseas performances?
D. The profit division for concerts, events, and performances are 5:5. It is a higher division than album divisions. Commercial performance fees, magazine sales, etc. are also divided by half. However, we have no way of knowing if these sales have been properly calculated and recorded. B.A.P’s side argued that the profits from overseas performances were a trick.
Q7. What kind of tricks are present in overseas performance calculations?
D. The guarantee for overseas performances are definite profits. However, the company has recorded these profits as expenses. According to the statement that Dispatch received, a 12 hundred million won payment for a Japanese performance was recorded as an expense. 100,004,000 won for magazine contract fees was also recorded as an expense.
Also, the overall payment of 1,790,000 won capital isn’t specified. For example, none of the payments are mentioned whether it’s an album, a commercial, a broadcast appearance, or an event. Basically, they are contracted to have a division of 1:9, 2:8, and 5:5 but nothing in their payment states what category they are receiving payment for; therefore, they are not able to know how much they are getting from the division.
Q8. B.A.P is accusing that there have been false sums.
D: That is true, for example, the “unknown public relations fee.” If you look at the statement from January of this year, an approximate 16 hundred million won has been recorded as being used for a “public relations fee.” However, in the secondary statement from July of this year, the “public relations fee” has shrunken to 2 hundred million won. Instead, the “album promotion fee” has been newly added. B.A.P’s side has requested an explanation to the 15 hundred million won in the album promotion fee category.
Q9. What is the stance of the company on the album promotion expenses?
D. We have asked the head accountant “Where were the album promotion expenses pay used for?” As a reply it was said, “It went into the personal account of the CEO so I don’t know.” The B.A.P side has requested to read the transfer statement but was rejected. B.A.P’s side is hoping that the portion regarding the use will be revealed at the court hearing.
Q10. Why did B.A.P wait three years to bring up the problems?
D. They have requested the account statements from late 2013. The company didn’t reveal anything that year, and January of 2014 was the first time they revealed the account statement. However, to prevent leaking the information outside, they only allowed them to view it briefly. They added that they had no money to pay. They had told them that the expenses were greater than the sales so they were at a loss.
Q11. Did the parents of B.A.P accept those facts?
D. According to the company’s first account statement, the profits from March 2011 to December 2013 were negative 5 hundred million won. B.A.P has requested an account statement one more time with the help of an attorney in March 2014. And then they received the secondary account statement checks in July 2014.
Q12. How were the account statement details for July 2014?
D. In January 2014 (2011 – December 2013), the statement was negative. However, the July statement (2011 – June 2014) the statement had returned to positive. Over the six months, the net profit has increased over six hundred million won. Also the company has paid each member 1,790,000 won.
Q13. How did a group at a loss turn into a profitable group?
D. According to the secondary account statement, over the past three years B.A.P has earned (in total profits) 99 hundred million won. Total expenditure was under 93 hundred million won. So, they suddenly changed to a six hundred million won surplus. CJ performance’s twelve hundred million won payment was recorded as a sale. Here, the commercial profits were an additional four hundred million won, at the least. The first account statement for merchandise profits of nine hundred million won had jumped to a 26 hundred million won in the secondary account statement.
Q14. What is B.A.P questioning the most?
D. The 5:5 division of the performance profits. B.A.P is arguing that the Japanese performance and CJ performance profits were not recorded properly. Firstly, a portion of the Japanese performance profits were recorded as an expense. CJ performance fees were different from what they had verified scale.
Even if they do believe in the company’s statement 100%, it is outside of common sense. If they gave up on the Japan performance profits and received the 5:5 division from the CJ performances…each member would have received at least 1 hundred million won. No matter how you look at it, it is not understandable and doesn’t make sense as to how “it’s only 1790 man won.”
Q15. Then it is necessary to look over the contract?
D: The contract was a 7 year contract starting from March of 2011. However, it is technically over 7 years, because the contract started not from the time the group was made, but from the time the first album was released. B.A.P’s debut album was released in January 2012. According to this, the contract would end in January 2019. Basically, B.A.P’s contract length is 7 years and 10 months.
Q16. It is known that the normal contract length is 7 years.
D: There is a particular clause in the contract. According to Article 3 of the contract, “The contract will end almost 7 years from the first album release.” They have stated that it took one year to prepare for a successful entertainment activity. They have used these tactics to extend the contract length.
Q17. What part of the contract is B.A.P arguing that it is a slave contract?
D: According to Article 3 Section 5, if they no longer can participate in entertainment activities due to personal affairs, they will extend the contract terms. Basically, in response to military duties, infant care, or being hospitalized for more than 30 days due to personal issues, they will extend the contract terms for the same amount of time.
Article 6’s statement of “The latter’s rights and responsibilities” also catch our eyes. If you look at Section 6, it states that if they receive public criticism due to use of recreational drugs, indecent relationships with the opposite sex, etc., all responsibility and loss following will be compensated by that person.
Article 16 about ‘compensations’ is amazing. From the moment the contract has been terminated, the monthly mean of sales is multiplied by however many months of the contract they had left. For example, B.A.P has earned a total of 99 hundred million dollars over 3 years. They have about 49 months of the contract left. If they terminate the contract now and compensate, they would have to pay 140 hundred million dollars.
Q18. We know that this is similar to other companies as well.
D: The country’s entertainment companies return to a promoting system. They invest a lot of money into raising singers. Especially in small companies, if the singers don’t succeed, the company has to be responsible for all the losses. That’s why they make the contract terms as long as possible, not counting the years of mandatory military service.
Q19. B.A.P has been aware of all this and still stamped the contract.
D: B.A.P has understood those parts. They said “It wasn’t that we didn’t understand the early risks of the company. That is why we endured the unfair contract and not even getting paid for 3 years.” They want to know if the company has done what they had promised to do in the contract. Basically, it is a problem of trust.
Q20. Problem of trust, where has it gone wrong?
D: It was this past October 19. A member had been taken to the emergency room for exhaustion due to extreme stress and overworking. As he was getting an IV in the hospital room, a company representative had showed up. It was because the member needed to go to Changwon for a performance.
On October 24, there was also a problem when MBC had a performance in China. B.A.P had said they could not go to the China for the performance due to health problems. They even gave the company the doctor’s notes. However, the company representative said, “If the broadcast company sues us, you all will take full responsibility,” and forced them to go to the performance.
Q21. How is the process going after they have submitted the lawsuit?
D: B.A.P had stated that this is not simply a problem with payment. They have taken hold of the money they earned in the past and worried about the future. They asked how they could have a vision for the future with a trust already broken. That is why they decided to sue for the nullification of their contract and unfair gain.
The law will decide on the outcome of TS Entertainment’s unfair contract. However, TS will need an explanation for their payment statements. They will need to explain how B.A.P was paid that much and prove it. If it is shown that the money was used for personal reasons, B.A.P will be suing the company CEO for embezzlement and many more offenses.
Back on November 26th, B.A.P had filed a lawsuit against TS Entertainment to terminate their contract due to unfair treatment, including financial discrepancy. It had also been quickly revealed by B.A.P. that while their company had earned $9 million USD during a three-year time span, the group members alone had earned $16,000 each. TS Entertainment had quickly spoken up through their first statement, which reveals shock in response to the lawsuit, and informs that they will be looking into the matter as soon as possible. Meanwhile, “TS Entertainment” has trended worldwide on Twitter, and netizens have reacted in various ways across all sorts of social media. Meanwhile, B.A.P themselves had changed their SNS profiles in light of the contract lawsuit.
Updates have yet to be revealed regarding B.A.P and TS Entertainment, so stay tuned for more information, and possible trial dates between both sides.