ESPORTS DISCUSSION - Aalto Capital
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E S P O RT S D I S C U S S I O N
A discussion paper into the Esports
market & FaZe Clan
August 2019
$1.1b M A R K E T A N A LY S I S
2019 total Esports revenues
+26.7% year on year
$456.7m
+34.3%
$251.3m
+41.8%
$189.2m
+14.8%
$103.7m $95.2m
+22.4% -3.05%
Sponsorship Media Rights Advertising Merchandise & Gamer Publisher
Tickets Fees
Excluding revenues from betting, fantasy league,
and similar cash-payout concepts, as well as
revenues generated within games.
New investment coming in from outside the sport
1. POPULAR VICTORIES is being matched from within. Similar to the
INCREASED INCREASED
“Money-maker” effect that was seen in 2003 in
2. LARGE PRIZEPOOLS POPULARITY REVENUE
the world of poker, where poker saw the first-
place prize more than quadruple over three
years markedly increasing its popularity, Esports
Figure 1: ‘Money-maker’ pathway
(in particular Fortnite) are attempting to do
the same. Figure 2: Fortnite World Cup
RECENT ESPORTS
INVESTMENTS IS BOOMING
Companies and fans investing titles due to strong financial backing, capital investment has gone into
▪ Fortnite managed to raise money into sport, competitions and Manchester City and Paris Saint Esports teams since 2013. Teams
over $100m for its star players is nothing new. With Germain are examples of changing are currently competing to establish
competition prize pool for expanding social media, media the status-quo as a result of strong themselves as the ‘Dallas Cowboys’
three years 2018-2021. rights and global reach, the number financial backing and interestingly or the ‘New York Yankees’ of
of leagues turning over $1b in these two teams are two of the Esports to effectively guarantee
▪ Total prize pool of $113m revenue is ever increasing. Over the most active and successful themselves a sizeable share of the
for all other competitions in last couple of decades, substantial professional sports teams in the market for the foreseeable future.
2018. investments have seen sports teams Esports world. There have been multiple funding
transition from being successful due rounds for most teams competing
to their historic roots to being Another example of financial at the top of their divisions as they
▪ Total prize pool is expected look to capitalise on the money
successful due to their financial support resulting in success in more
to reach over $400m by muscle. Financial clout has led to a flowing into the sport.
2022. recent times is the promotion of
widening of the gap between Wolverhampton Wanderers to the
teams, thereby introducing a phase English Premier League in 2018 Shareholders appear to have a
▪ First place prizes already of dominance which looks unlikely following its backing from Chinese mentality that it is better to own
exceed those at Wimbledon, to wane soon. owners and subsequentially 10% of a company valued at $1b
The Masters and the securing the highest points total by than 100% of a company valued as
Daytona 500. Over time, and periods of success, a newly promoted team since $100m.
financial muscle brings expanding 2001.
▪ $34m is the total prize pool fan bases, notoriety from success
for the Dota 2 International and an increase in the level of Large amounts of investment is
2019. income from sponsorship, media now being seen in the Esports
rights and tournament wins, world.
thereby increasing the value of a
team and making it self-sustaining.
The universal excitement to be part
of an Esports team competing for
This can be seen, most notably, in titles in an exploding sector is
sports without a salary cap, like driving investment, the scale of
soccer, where teams with relatively which is surpassing many other
little history of success have won mainstream sports. Over $3.3b of
.
2
Figure 3: DOTA 2 International
M A R K E T A N A LY S I S
2016 2017 2018 2019
Wimbledon Singles
winner (£m) 2.00 2.20 2.25 2.35
Masters Men’s winner
($m) 1.80 1.98 1.98 2.07
Daytona 500 winner
($m) 1.50 1.50 1.58 1.58
Asia has the largest 79% of viewers are YouTube and Twitch
Dota 2 International online population under 35 years-old audiences are larger than
winner (team of 5) ($m) 9.14 10.86 11.23 13.50 HBO, Netflix and ESPN
combined
Table 1: Comparable tournament prize winnings, Source: Individual tournament websites Figure 4a, b, c: Viewership Statistics
COMPARABLE The growth in media rights is
expected to provide the driving
This number is expected to
increase, reaching over 275m
As the popularity increases
younger viewers will start
BROADCASTING force behind the increased
revenue in Esports. Similar to
by 2022 with a total media
audience of 550m, due to the
watching each year and fans at the
top end of the age range will not
RIGHTS other sports with more and more
networks and online broadcasters
demographic of Esports fans,
increasing popularity of gamers,
stop supporting the sport as they
get older, therefore expanding the
wanting to get into televising (or increasing prize pools and audience.
▪ EPL £3.0b per season online streaming) matches, this is media rights.
expected to occur in Esports as A single Esports fan provided an
well. Amazon Prime will be Over 15% of millennials watch average revenue of $5.50 in 2018
streaming their first premier Esports on a monthly basis. This from merchandise sales and
league games for the 2019 season. will increase over time as fans subscriptions.
expose others in their age
There is currently a monthly range to Esports and it This gives an audience of 550m
▪ NFL $6.5b per season viewership of over 167m in becomes ingrained in popular people a value of over $3b.
Esports [1]. culture.
2017 Revenue ($600m) 2022 Predicted Revenue ($7.5b)
Other
Other
▪ Esports expected to be $3b by 17%
7%
2022
Advertising
14%
Sponsorship Sponsorship
Local 35%
38%
4%
Advertising
21%
Media Rights
Tickets Media Rights 40%
9% 15%
Figure 5a: Esports industry 2017 revenue streams Figure 5b: Esports industry 2022 revenue streams
Source: Goldman Sachs Equity Research
[1] Goldman Sachs Equity Research, 12th October 2018 3
Figure 6: FaZe Clan Fortnite squad
FA Z E C L A N S U M M A RY
Social Media
Fig. 7 compares the 12 teams listed in an article by Forbes
FaZe Clan is an American Esports team with a significant presence on social media as well as an e- (the Forbes article, October 2018) against their social media
commerce arm. Founded in 2010, FaZe Clan has entered over 250 tournaments and its social following per platform. It is very clear that FaZe Clan’s social
media following is greater than any of its competitors. FaZe Clan is primed, with one of the biggest following is significantly greater than all other Esports teams
fan bases in Esports, to establish itself as a global franchise similar to the New York Yankees. with a total following of more than double any other team. A
limitation with this graph is that it doesn’t account for
The current largest revenue stream in Esports is from sponsorship (Fig. 5a). The main reason for potential overlap across different platforms; however, this
sponsoring is the number of people that can be impacted and the audience that will be reached. In doesn’t affect FaZe Clan’s results significantly. This is because
the gaming world, publicity and fame not only come with success but with social media publishing the followers from YouTube (the most valuable following)
and content. The most valued platforms are YouTube and Twitch, both of which are video alone is greater than the total following of all other teams, but
streaming platforms. one.
Spread of followers including FaZe Clan YouTube is the primary platform used by gaming teams and
players to distribute their content and earn revenue from
18000 their social media accounts.
16000
• The revenue from a YouTube channel is strongly based
Number of followers thousands
14000
on the daily views, rather than subscribers.
12000
10000
• Daily views are strongly correlated to the number of
subscribers, but views earn the channel advertising rates.
8000
6000 FaZe Clan is significantly further ahead of the competition in
this category and, therefore has the most valuable channel.
4000
2000 Scale up potential; PewDiePie, the most followed gaming
0
streamer, has been included to show the potential of a FaZe
Gen. G Echo Fox Immortals Counter 100 Envy G2 Esports Team Cloud9 Fnatic OpTic Team FaZe Clan Clan’s channel if audience engagement continues to grow.
Esports Logic Thieves Gaming Liquid Gaming SoloMid
Gaming
Youtube Instagram Twitter Facebook Twitch In a sector dominated by sponsorship, media rights and
Figure 7, Source: Individual Team Social media pages advertising it will be teams like FaZe Clan with the larger
Total followings who, not only shape the sport, but also command
Daily views Monthly Equivalent annual the greatest percentage of revenues, provided they are also
Team subscribers
(k) earnings ($) earnings ($) reasonably successful ‘on the pitch’.
(m)
PewDiePie 98.30 18,000 1,020,000 12,240,000 • In the early days of a sport like this, where social media
plays such a prominent role, it is not just success which
determines popularity, but the quality, relatability and
FaZe Clan 6.90 1,000 55,000 660,000 style of their online profile.
Team • FaZe Clan seem to be mastering this.
2.20 112 6,500 78,000
SoloMid
100 As more money and more fans come into Esports this is a
Thieves
0.46 118 5,900 70,800 factor which will maximise the profitability of FaZe Clan and
its potential to be one of the first household names in the
sport.
Fnatic 0.49 119 5,900 70,800
G2 Esports 0.22 72.5 3,900 46,800
Esports Results
Whilst FaZe Clan’s social media presence cannot be denied
Cloud9 0.37 54.6 3,000 36,000 and certainly not ignored, it has less appealing figures when
looking at their Esports tournament success where it ranks
Team 16th among Esports teams for total prize money earned
0.29 30 1,600 19,200 ($7.54m) over the team’s entire history.
Liquid
Optic
1.50 12.6 590 7,080
Gaming
Table 2: YouTube Channel summaries across Esports teams, Source: Youtubermoney.com 4
G A M E PA RT I C I PAT I O N
Number of Prize FaZe Clan
No. Game
tournaments money ($m) Participation
1 Dota 2 1172 181.78 No
2 CS: GO 4207 80.40 Yes
3 Fortnite 387 71.51 Yes
League of
4 2327 68.16 No
Legends
5 StarCraft II 5450 30.82 No
Heroes of the
6 451 18.03 No
Storm
7 Hearthstone 838 17.64 No
8 Overwatch 658 15.95 No
9 Counter-Strike 979 13.47 No
10 PUBG 152 12.40 Yes
Figure 8: 2 of the games FaZe Clan has a team for Table 3: Top 10 games ordered by tournament prize money, Source: esportsearnings.com
Of the six games in which FaZe Along with Fortnite, it is games Focusing on The Gamers
Clan competes, only three like FIFA and Call of Duty with
(Counter-Strike: Global Offensive huge followings that have given When looking at the personnel on
FaZe Clan Esports (CS:GO), Fortnite and PUBG) are
in the top 10 games ranked by
FaZe Clan its large social media
fan base; however, these games
the teams there are two distinct
groups of gamers;
Games total prize money awarded.
Notable omissions from its list are
aren’t profitable in terms of
winnings. 1. Those who enter
Dota 2 and League of Legends competitions and make their
▪ Counter Strike: Global which are 1st and 4th on the list money from prize money;
As Esports enters the
Offensive of total prize money awarded at mainstream it can be expected and
$181m and $68m respectively, as the games with large followings
▪ Fortnite seen in Table 3. Of the list of top will gain more sizeable prize 2. Those who may enter the
players by prize money earned, pools, but for now the money occasional competition, but
▪ PUBG before the Fortnite World Cup, lies elsewhere. their social media presence is
the top 38 all play Dota 2. what drives their income.
▪ Call of Duty With FaZe Clan’s large social
FaZe Clan is missing out presence, it will be a prominent This divide is also present within
significantly on success and prize part of Esports for the FaZe Clan, with a significant
▪ FIFA money by not participating in number of gamers in each section.
foreseeable future; however,
certain games. dynasties and great franchises At the current stage of Esports
▪ Tom Clancy’s Rainbow Siege are not solely built on the size there are very few personalities
of a fan base. The wealthiest who cross the gap and make
By not entering the most
teams in sport today, from significant money from both
profitable competitions, it is no
Manchester United and Real tournaments and social media.
surprise that FaZe Clan doesn’t
have a single player who has won Madrid to the Dallas Cowboys
over $1m throughout their career. and the New York Yankees,
11 other teams have a total of 48 have all had their moments in
The current state of Esports
players who have passed the the sun, typically in the
means that unless you are winning
million-dollar mark. With the formative years of their
the top competitions then there is
$100m dollars raised for the prize respective sports, where they
relatively little income to be
pool by Fortnite, of which only have dominated.
earned. This income figure can be
$20m was distributed in 2018, dwarfed by the top earners on
Fortnite can be expected to rise • That is how a loyal, vocal social media platforms.
from its 4th place ranking in prize and sizeable fan base is
money offered. FaZe Clan will be built and that is what FaZe
well placed to take some of this Clan must ensure becomes
prize money with the current 2nd, the case over the next
3rd and 4th most successful decade.
Fortnite players.
5
Figure 9a, b: Sommer Ray, JuJu Smith-Schuster
FA Z E C L A N T E A M
Pos. Years Times Instagram Engagement Engaged
in NFL in Pro Followers followers
Bowl (m)
Odell
WR 5 3 13.56 3.26% 442,190
Beckham Jr
Tom Brady QB 19 14 6.39 7.57% 483,976 Youth Pop Gaming
Cam Newton QB 8 3 4.16 1.95% 81,161 Culture Content
Icons Streamers
Russell
QB 7 6 3.89 1.53% 59,514
Wilson
JJ Watt DL 8 5 3.63 2.30% 83,555
Antonio
WR 9 7 3.35 1.13% 37,910
Brown
Rob Esports
TE 9 5 3.31 4.27% 141,213
Gronkowski Tournament
Ezekiel Elliott RB 3 2 2.78 4.66% 129,408 Players
JuJu Smith-
WR 2 1 2.74 5.49% 150,647
Schuster
Dez Bryant WR 9 3 2.32 1.37% 31,724
Figure 10: FaZe Clan team strategy
Richard
DB 8 4 2.04 1.41% 28,777
Sherman
Table 4: Most followed players in the NFL, Source: socialblade.com
Personalities: o For every 100 bits Lifestyle Icons his breakout season, he also placed
Personalities with a viewership eclipsing donated to a FaZe Clan has also branched out 10th in shirt sales in the entire
the majority of their rivals can earn up to broadcaster the channel into the world of lifestyle icons. league. JuJu has quickly shot to
$12m on YouTube receives $1 and 100 bits Whilst this may be considered a fame as can be seen from his
just from running adverts. The income can be purchased for departure from their profile in the Instagram followers: he is 9th in
stream is slightly more complicated on $1.40. A typical FaZe world of Esports it is another the league. This places him in the
Twitch. Channels receive an income Clan channel could huge market which they can have company of some of the greatest
from adverts and there are two other receive over $2,500 a a foothold in. The most notable of and most established players in the
streams purely supplied through Twitch. month in donations; these icons is Sommer Ray, who league currently, whilst also
however, some had 15m followers before joining beating a significant number of
• Firstly; subscriptions, these channels can make Faze Clan in July 2017 and now other top players. One attribute of
have three tiers: more by offering has over 21m followers on significant interest is the level of
exclusive benefits, like Instagram alone. She is an engagement that he has from his
o Tier 1 costs $4.99/month and personnel snapchat American fitness model who fans, with a percentage of 5.49%,
entitles the subscriber to handles, in return for a regularly posts workout videos second to only Tom Brady. JuJu’s
exclusive content, chat donation of a certain with a predominantly male Instagram followers have also
rooms, ad-free viewing, alerts size. Though a lot of follower base. FaZe Clan have more than doubled in the last year
and emoticons; personalities believe this significant potential in the media from 1.2m in June 2018. This is
isn’t in the best interests and influencer market. likely due to a his on field
o Tier 2 costs $9.99/month and of the fanbase and so performances and social media
provides 1 extra exclusive are much less active in Another icon signed up, after an activity likely being helped at every
emoticon; and requesting donations. impressive first season in the stage by FaZe Clan.
NFL, is JuJu Smith-Schuster in
A channel with c.50,000 followers 2018. The Pittsburgh Steelers’
o This branch of FaZe Clan
Tier 3 costs $24.99/month and 500 subscribers can expect an wide receiver is one of the most demonstrates the breadth of their
providing 2 extra exclusive income of $3,000/pm, but this can popular players in the NFL. He talent management and, combined
emoticons. increase to over $0.5m pm for the finished 5th in the league for with their demonstrated success in
top streamers. Whilst this income receiving yards in his second building a brand, shows the power
For a channel with over 1,000 stream is sizeable, the majority of season. This was partially helped they have across content creators,
subscribers Twitch typically splits the income on YouTube and by the Steelers’ starting receiver, influencers and icons. The success
the proceeds 70% for the channel Twitch comes in the form of Antonio Brown, sustaining an FaZe Clan has seen has also lead
(the personality) and keeps 30% as sponsorships. Increasing revenue injury. Antonio, who is widely to being approached by other high
commission. The most popular requires a high level of engagement considered amongst the best wide profile figures from the NFL and
Twitch channel can have around from the audience. Revenue can receivers to have played the game, NBA and even rappers enquiring
50,000 subscribers. eclipse $1m/pm for streamers such left to join the Oakland Raiders, as to how FaZe Clan can help
as Ninja who have 14 million leaving JuJu as the first choice. them.
• Secondly; donations: Twitch followers. Signing with FaZe Clan wasn’t
only followed by a significant
This is an area where FaZe improvement in JuJu’s on field
o This works with fans
dominates, having an estimated performances; following ….
purchasing ‘bits’ (effectively
annual income for their gamers’
Twitch’s currency) and
channels of over $4m solely from
purchasing donations with
Twitch. 6
these bits to give to
personalities and channels; ………
RECENT PRESS
Figure 11: New York pop-up queue
On the 28th July 2019, straight making it the most successful FaZe Clan recently got into a legal
after the Fortnite world cup, FaZe tournament in the team’s history. dispute with one of their most
Clan signed a 13 year-old deaf girl, Winning prize money from the profitable gamers, Turner “Tfue”
Press: the first female to join the team.
She is more of a streaming
solo competition was: Taylor, he is one of the few
gamers who not only has a large
FaZe Mongraal (13th, $150,000); online following (11m YouTube
personality than a tournament
▪ First female; FaZe and subscribers) as well as a significant
gamer, having streamed with some
FaZe Dubs (15th, $150,000). level of tournament success
Ewok, 13 year-old of the biggest names around.
Notably she played with Tyler In the duos competition: ($575,000). Tfue signed a contract
deaf girl with FaZe Clan in 2018 and
“Ninja” Blevins despite him
announcing that he would not be FaZe Mongraal (6th, $225,000) subsequently exploded onto the
▪ $1.5m in winnings at streaming with female players, winning with an outside partner; Esports scene becoming one of
the recent Fornite demonstrating how she is one of and the most viewed streamers on
the biggest personalities in the FaZe Dubs and FaZe Megga (7th, Twitch and winning several
World Cup $187,500 each). Fortnite tournaments. The dispute
industry. When looking at this
decision from FaZe Clan, it clearly originated from Tfue stating that
A significant part of the prize
▪ Dispute with Tfue represents smart marketing. In an the contract was oppressive and
money came from FaZe Cizzorz hence breaks the law. The
environment where female gamers (1st, $336,000) who led a team in
don’t tend to enter or win contract entitled FaZe Clan to
the creative competition to 20% of all prize money won, 50%
tournaments as regularly as male victory. This competition is more
gamers, yet as the audience isn’t of Tfue’s merchandising and 50%
for fun and views where Esports of appearance fees with FaZe
dominated by male viewers it personalities and content creators
opens FaZe up to a wave of new Clan paying Tfue 20% of all FaZe
took part. Interestingly, all, but clan merchandise with which
fans from aspiring female players. two, of the top 10 from the solo
This cannot be viewed solely from Tfue’s image was used. The claim
tournament were not is that both sides owe money to
a smart business strategy either, it representing a major Esports
shows progressive thinking in a the other, but is primarily that
team. The success from the Tfue believes FaZe Clan should
way other teams are yet to catch tournament wasn’t the only
up on. There was no pressure on not be entitled to as high a
positive; FaZe Clan opened a percentage of his income, whilst
Esports or FaZe Clan to improve pop-up store for the weekend
the female side of the sport. In FaZe Clan maintains that his
that resulted in a huge turnout income would not be as high if it
FaZe Ewok, FaZe have signed a from fans. So many people
streamer who has more Twitch was not for their involvement
showed up that police had to since his contract was signed. The
followers (230k) than a lot of their close off 15 blocks due to the size
other current content creators, court case and the loss of Tfue
of the crowd. are both damaging to the brand of
making her a valuable asset.
FaZe Clan, but the team seems to
Figure 12: FaZe Ewok
be putting the trouble behind
At the recent Fortnite World Cup
them.
representatives from FaZe Clan
took home $1.5m in prize money,
7
Teams
All time prize Tournaments
Last 3 years
prize money
Last 3
years
Main Game Income C O M P E T I TO R S
AND SIMILAR
money ($m) Entered Source
($m) Rank
1 Team Liquid 33.71 1584 31.19 2 Dota 2
T R A N S AC T I O N S
2 OG 33.41 789 23.43 1 Dota 2
3 Evil Geniuses 22.86 63 9.23 4 Dota 2
4 Fnatic 14.09 841 8.80 8 CS:GO
5 Newbee 13.96 166 7.96 9 Dota 2
6 Virtus.pro 13.64 468 7.86 6 Dota 2
7 Vici Gaming 12.19 263 7.47 15 Dota 2
8 Team Secret 10.94 131 5.93 7 Dota 2
9 LGD Gaming 10.75 417 5.92 10 Dota 2
10 Invictus Gaming 10.67 23 5.79 11 Dota 2
11 Natus Vincere 9.76 423 3.86 21 CS:GO
12 Wings Gaming 9.75 657 3.47 3 League of Legends
13 SK Telecom T1 9.18 191 3.45 16 Dota 2
14 Cloud9 9.16 236 3.43 14 CS:GO
15 PSG Esports 8.99 290 3.14 5 CS:GO
16 OpTic Gaming 7.81 270 2.92 17 CS:GO
17 FaZe Clan 7.56 71 2.86 13 CS:GO
18 Astralis (Danish) 6.72 315 2.41 12 CS:GO
19 Team EnVyUs 6.48 650 2.36 18 CS:GO
20 SK Gaming 6.29 481 2.34 22 Dota 2
21 MVP 6.19 351 1.71 23 League of Legends
22 G2 Esports 6.06 55 0.74 19 Dota 2
23 Team SoloMid 3.70 401 0.60 24 League of Legends
24 100 Thieves 2.90 28 0.68 20 Fortnite
Table 8: Esports teams ordered by prize money earned, as of 2nd September 2019
Figure 15: FaZe Clan’s CS:GO 2017 team
Source: esportsearnings.com
FaZe Clan’s Competitors Similar Transactions 100 Thieves:
In the Forbes article on the Esports An Esports media and entertainment provider, RFRSH In July of 2019, 100 Thieves closed
market, it lists 12 different teams with Aps, sold a 35% stake in the company to a group of their $35m series B funding round,
their estimated valuation and revenue. venture capitalist firms for €7m in June 2017. primarily funded by Artist Capital
The valuation was based off a Representing a value of €20m for the whole company. Management which resulted in a
combination of recent transactions, the post-money valuation of $160m.
share of a team obtained from an • The team produced revenues of €1.8m the
investment and rate of increase in year prior to the acquisition; It was valued at $90m in October
market audience and revenue. Valuation 2018. A 78% rise in just 9 months.
cannot be based solely off a single article,
• Equates to a valuation to revenue multiple of
but this provides a good benchmark for
11.1x. 100 Thieves is relatively new on
the potential value of FaZe Clan of
the scene having been founded in
approximately 13x-14x annual revenue.
• Whilst not directly comparable, as it is a 2017, but in that time, it has had 3
media platform rather than an Esports team, funding rounds raising a total of
Due to the nature of the industry and over $60m. As a business, they are
what it does demonstrate is the huge
stage (early/growth) a multiple of not too dissimilar to FaZe Clan,
expectations within and around Esports at
revenue seems the most widely used both place a major emphasis on
the moment about this accelerating sector. A
and accepted valuation type. their digital content and e-
valuation of 11x revenue is a large multiple
and is due to the ever-increasing value of the commerce branches; however, in
With FaZe Clan’s social profile beating Esports market. The 11x revenue valuation both these departments FaZe Clan
all others in the Forbes article and is also not too dissimilar to the range is significantly further developed
sharing similar prize money won by established from the Forbes report. turning more revenue and having a
Cloud9, Optic Gaming, Team EnVyUs much larger fan base than 100
and G2 Esports, its value can certainly be Thieves. Hence, it could be
In December 2015 Critical Hit Gaming released an
placed above the $105m of G2 Esports. expected that FaZe Clan’s
article which lists the top five Esports teams with the
Also, due to the large social following valuation would be higher than the
top team being Fnatic valued at $42.6m. A comparison
and, hence, its ability to scale up in the $160m valuation of 100 Thieves.
of the teams listed by Critical Hit Gaming to those in
future it can be expected to have a
the Forbes article shows an increase in value between
valuation to revenue ratio around the
3-10x over the 3-year period. This is significant and
top end of the range detailed in the
demonstrates why so many investors are so keen for a
report. This would place FaZe Clan’s
share in the market and hence, why the valuations of
valuation among the top teams.
the teams are so high.
8
CONCLUSION
Figure 16: FaZe Clan’s 2019 PUBG championship winning team
Immortals and Optic Gaming: The Optic roster spot will have Conclusion:
been valued as an asset and will
In June 2019, Immortals acquired have contributed to the large Based on this evidence it would be
Optic Gaming’s parent company; acquisition price. Optic also has easy to value FaZe Clan at 13x –
Infinite Esports for over $100m. an Overwatch team, with an 14x its annual revenue.
This is similar to the valuation estimated value of between
from the Forbes list, adding more $60m - $80m; however,
It must be noted that without the
justification to a potential valuation Immortals already has an
participation in top Esports
of 13x revenue. However, this Overwatch franchise and
leagues FaZe Clan cannot be
deal has a significant number of Esports rules specify that two
valued in the same way as Cloud9
layers to it. Immortal’s fan base is teams within the league cannot
or Immortals. Having the
one of the smallest among the top be owned by the same owner.
Overwatch and League of Legends
Esports teams, being less than Therefore, at the end of this
franchises will improve the value
500,000 across all platforms. In year Immortals will be looking
of the assets owned by a team
acquiring Optic Gaming, Immortals to recoup some of the funds
and the lack of FaZe Clan’s
have purchased the third largest they have since spent on Optic
presence in some of the top
Esports team’s audience and by selling the Overwatch
leagues does not help its valuation.
effectively increased its social franchise they acquired from
On the other hand, as was seen in
media reach by over 5.5m fans. As Optic (perhaps an opportunity
the RFRSH transaction, media and
well as the fans, Optic will have for FaZe Clan to buy it). It is
entertainment-based Esports firms
acquired the producers of estimated that Immortals’ new
are valued just as highly with
Immortals’ social media content, value when merged with Optic
respect to their revenue. Taking
which will allow them to grow is over $250m, making it one of
the most similar companies from
their own fan base when Optic the most valuable Esports
the Forbes article to FaZe Clan, an
merges into Immortals. teams in the sport today. This is
estimate for FaZe Clan’s worth
a valuation that again matches
The social media following of a can be made. Taking the top 3
up with the report from Forbes
team has a huge impact on its teams from the list in terms of
of the combined value of
value. their fan base size (Team SoloMid
Immortals and Optic.
7.2m fans, Optic Gaming 5.6m
Another key reason for Immortal’s fans and Fnatic 5.1m fans), which
acquisition is the obtaining of have a total prize winnings
Optic’s League of Legends reasonably similar to FaZe Clan’s,
Championship Series roster spot. a valuation range of 10x – 13x
A single roster spot is valued at revenue seems reasonable and
$50m. Immortals were unable to compares to the valuation of
obtain a spot themselves and is a RFRSH at 11x revenue. This could
huge opportunity for potential make FaZe Clan one of the most
winnings and exposure that they valuable Esports brands in the
have now acquired. world.
9
Aalto Capital
Esports Discussion
August 2019
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