Valuation Of Esports Franchises Still Creating Debate Within Industry
Esports industry players discussed the hot-button issue of team valuations during a panel at the Lagardere Sports Esports Rising conference. Gen.G Esports co-Founder & President Kent Wakeford said of recent valuation rankings, “We moved from seven to six. Our VC appreciate that. What Forbes has done, creates another level of legitimacy. It’s directionally correct." However, he noted teams like Echo Fox and others have fallen off. New Meta Entertainment Chair David Abrams joked that his club, Dignitas, did not make the list despite the deep pockets of his ownership group, Harris Blitzer Sports & Entertainment. "We don’t get excited if (the Forbes list) says the 76ers are worth $3 billion," he said. "It only matters if it can be sold there." Abrams added, "There hasn’t been a real sale or an exit of an esports organization in these top 15 valuations. Until there’s a secondary market sale or some sort of financing ... that value will be much less."
BACK & FORTH: Wakeford countered that reported franchise prices have risen for Overwatch League and League of Legends teams. “You’re seeing appreciation of underlying assets,” he said. Abrams retorted that when his group purchased Clutch Gaming, they “bought at a fraction of where (Echo Fox) was reported to be sold.” Abrams: “We wouldn’t have done it unless our cost basis was a fraction of that.” OverActive Media President & CEO Chris Overholt agreed on the lack of franchise valuation transparency. "They’re worth what someone is willing to pay for them," he said. "Trying to peg them, you’re worth your latest round of financing. Until companies are public or we’re in place where there’s need of greater transparency, it’s our job to take the theory and monetize the vision."
READING BETWEEN THE LINES: Popdog VP/Product Development & Strategy Avi Bhuiyan discussed the difficulties facing investors. "Most of the value is accumulating on the publisher side -- Riot and Activision Blizzard level," he noted. "Esports teams are a way to get value downstream." He said, "This is pent-up demand that can’t be deployed in gaming for higher return on investment in capital, investors are trying to catch the upside in gaming growth.” Overholt: “The closed leagues give you best chance at downstream value. We see the most value in the Activision Blizzard and Riot Games ecosystems.” The panelists agreed that spreading bets across esports titles increases the odds of hitting winners and hedges against games losing popularity. Abrams said his company is taking that one step farther to generate returns. "It’s not just about owning an esports team. We’re trying to capture the whole pyramid," he said. "The esports vertical, content business, influencers, an investment vehicle we’ve invested in across the esports vertical. We’re looking to make acquisitions across the ecosystem. We think the ecosystem is more valuable than the franchise itself."