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

M A R K E T A N A LYS I S

ESPORTS

IS BOOMING

Companies and fans investing

money into sport, competitions and

star players is nothing new. With

expanding social media, media

rights and global reach, the number

of leagues turning over $1b in

revenue is ever increasing. Over the

last couple of decades, substantial

investments have seen sports teams

transition from being successful due

to their historic roots to being

successful due to their financial

muscle. Financial clout has led to a

widening of the gap between

teams, thereby introducing a phase

of dominance which looks unlikely

to wane soon.

Over time, and periods of success,

financial muscle brings expanding

fan bases, notoriety from success

and an increase in the level of

income from sponsorship, media

rights and tournament wins,

thereby increasing the value of a

team and making it self-sustaining.

This can be seen, most notably, in

sports without a salary cap, like

soccer, where teams with relatively

little history of success have won

.

titles due to strong financial backing,

Manchester City and Paris Saint

Germain are examples of changing

the status-quo as a result of strong

financial backing and interestingly

these two teams are two of the

most active and successful

professional sports teams in the

Esports world.

Another example of financial

support resulting in success in more

recent times is the promotion of

Wolverhampton Wanderers to the

English Premier League in 2018

following its backing from Chinese

owners and subsequentially

securing the highest points total by

a newly promoted team since

2001.

Large amounts of investment is

now being seen in the Esports

world.

The universal excitement to be part

of an Esports team competing for

titles in an exploding sector is

driving investment, the scale of

which is surpassing many other

mainstream sports. Over $3.3b of

capital investment has gone into

Esports teams since 2013. Teams

are currently competing to establish

themselves as the ‘Dallas Cowboys’

or the ‘New York Yankees’ of

Esports to effectively guarantee

themselves a sizeable share of the

market for the foreseeable future.

There have been multiple funding

rounds for most teams competing

at the top of their divisions as they

look to capitalise on the money

flowing into the sport.

Shareholders appear to have a

mentality that it is better to own

10% of a company valued at $1b

than 100% of a company valued as

$100m.

Figure 1: ‘Money-maker’ pathway

INCREASED

POPULARITY

INCREASED

REVENUE

1. POPULAR VICTORIES

2. LARGE PRIZEPOOLS

New investment coming in from outside the sport

is being matched from within. Similar to the

“Money-maker” effect that was seen in 2003 in

the world of poker, where poker saw the first-

place prize more than quadruple over three

years markedly increasing its popularity, Esports

(in particular Fortnite) are attempting to do

the same.

RECENT

INVESTMENTS

▪ Fortnite managed to raiseover $100m for itscompetition prize pool forthree years 2018-2021.

▪ Total prize pool of $113mfor all other competitions in2018.

▪ Total prize pool is expectedto reach over $400m by2022.

▪ First place prizes alreadyexceed those at Wimbledon,The Masters and theDaytona 500.

▪ $34m is the total prize poolfor the Dota 2 International2019.

Excluding revenues from betting, fantasy league,

and similar cash-payout concepts, as well as

revenues generated within games.

2

Figure 2: Fortnite World Cup

$456.7m+34.3%

$251.3m+41.8%

$189.2m+14.8%

$103.7m+22.4%

$95.2m-3.05%

Sponsorship Media Rights Advertising Merchandise &Tickets

Gamer PublisherFees

$1.1b2019 total Esports revenues

+26.7% year on year

3

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

Dota 2 International

winner (team of 5) ($m)9.14 10.86 11.23 13.50

The growth in media rights is

expected to provide the driving

force behind the increased

revenue in Esports. Similar to

other sports with more and more

networks and online broadcasters

wanting to get into televising (or

online streaming) matches, this is

expected to occur in Esports as

well. Amazon Prime will be

streaming their first premier

league games for the 2019 season.

There is currently a monthly

viewership of over 167m in

Esports [1].

Asia has the largest

online population

79% of viewers are

under 35 years-old

YouTube and Twitch

audiences are larger than

HBO, Netflix and ESPN

combined

As the popularity increases

younger viewers will start

watching each year and fans at the

top end of the age range will not

stop supporting the sport as they

get older, therefore expanding the

audience.

A single Esports fan provided an

average revenue of $5.50 in 2018

from merchandise sales and

subscriptions.

Table 1: Comparable tournament prize winnings, Source: Individual tournament websites

Figure 5b: Esports industry 2022 revenue streams

Figure 4a, b, c: Viewership Statistics

Sponsorship38%

Media Rights15%

Tickets9%

Advertising21%

Other17%

2017 Revenue ($600m)

Figure 5a: Esports industry 2017 revenue streams

Sponsorship35%

Media Rights40%

Local4%

Advertising14%

Other7%

2022 Predicted Revenue ($7.5b)

[1] Goldman Sachs Equity Research, 12th October 2018

COMPARABLE

BROADCASTING

RIGHTS

▪ EPL £3.0b per season

▪ NFL $6.5b per season

▪ Esports expected to be $3b by 2022

This number is expected to

increase, reaching over 275m

by 2022 with a total media

audience of 550m, due to the

demographic of Esports fans,

increasing popularity of gamers,

increasing prize pools and

media rights.

Over 15% of millennials watch

Esports on a monthly basis. This

will increase over time as fans

expose others in their age

range to Esports and it

becomes ingrained in popular

culture.

This gives an audience of 550m

people a value of over $3b.

M A R K E T A N A LYS I S

Figure 3: DOTA 2 International

Source: Goldman Sachs Equity Research

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Gen. GEsports

Echo Fox Immortals CounterLogic

Gaming

100Thieves

EnvyGaming

G2 Esports TeamLiquid

Cloud9 Fnatic OpTicGaming

TeamSoloMid

FaZe Clan

Nu

mb

er o

f fo

llow

ers

tho

usa

nd

s

Spread of followers including FaZe Clan

Youtube Instagram Twitter Facebook Twitch

4

Social Media

Fig. 7 compares the 12 teams listed in an article by Forbes

(the Forbes article, October 2018) against their social media

following per platform. It is very clear that FaZe Clan’s social

following is significantly greater than all other Esports teams

with a total following of more than double any other team. A

limitation with this graph is that it doesn’t account for

potential overlap across different platforms; however, this

doesn’t affect FaZe Clan’s results significantly. This is because

the followers from YouTube (the most valuable following)

alone is greater than the total following of all other teams, but

one.

YouTube is the primary platform used by gaming teams and

players to distribute their content and earn revenue from

their social media accounts.

• The revenue from a YouTube channel is strongly based

on the daily views, rather than subscribers.

• Daily views are strongly correlated to the number of

subscribers, but views earn the channel advertising rates.

FaZe Clan is significantly further ahead of the competition in

this category and, therefore has the most valuable channel.

Scale up potential; PewDiePie, the most followed gaming

streamer, has been included to show the potential of a FaZe

Clan’s channel if audience engagement continues to grow.

In a sector dominated by sponsorship, media rights and

advertising it will be teams like FaZe Clan with the larger

followings who, not only shape the sport, but also command

the greatest percentage of revenues, provided they are also

reasonably successful ‘on the pitch’.

• 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

style of their online profile.

• FaZe Clan seem to be mastering this.

As more money and more fans come into Esports this is a

factor which will maximise the profitability of FaZe Clan and

its potential to be one of the first household names in the

sport.

Esports Results

Whilst FaZe Clan’s social media presence cannot be denied

and certainly not ignored, it has less appealing figures when

looking at their Esports tournament success where it ranks

16th among Esports teams for total prize money earned

($7.54m) over the team’s entire history.

Table 2: YouTube Channel summaries across Esports teams, Source: Youtubermoney.com

Figure 7, Source: Individual Team Social media pages

Team

Total

subscribers

(m)

Daily views

(k)

Monthly

earnings ($)

Equivalent annual

earnings ($)

PewDiePie 98.30 18,000 1,020,000 12,240,000

FaZe Clan 6.90 1,000 55,000 660,000

Team

SoloMid2.20 112 6,500 78,000

100

Thieves0.46 118 5,900 70,800

Fnatic 0.49 119 5,900 70,800

G2 Esports 0.22 72.5 3,900 46,800

Cloud9 0.37 54.6 3,000 36,000

Team

Liquid0.29 30 1,600 19,200

Optic

Gaming1.50 12.6 590 7,080

FaZe Clan is an American Esports team with a significant presence on social media as well as an e-

commerce arm. Founded in 2010, FaZe Clan has entered over 250 tournaments and its social

media following is greater than any of its competitors. FaZe Clan is primed, with one of the biggest

fan bases in Esports, to establish itself as a global franchise similar to the New York Yankees.

The current largest revenue stream in Esports is from sponsorship (Fig. 5a). The main reason for

sponsoring is the number of people that can be impacted and the audience that will be reached. In

the gaming world, publicity and fame not only come with success but with social media publishing

and content. The most valued platforms are YouTube and Twitch, both of which are video

streaming platforms.

FA Z E C L A N S U M M A RY

Figure 6: FaZe Clan Fortnite squad

Along with Fortnite, it is games

like FIFA and Call of Duty with

huge followings that have given

FaZe Clan its large social media

fan base; however, these games

aren’t profitable in terms of

winnings.

As Esports enters the

mainstream it can be expected

the games with large followings

will gain more sizeable prize

pools, but for now the money

lies elsewhere.

With FaZe Clan’s large social

presence, it will be a prominent

part of Esports for the

foreseeable future; however,

dynasties and great franchises

are not solely built on the size

of a fan base. The wealthiest

teams in sport today, from

Manchester United and Real

Madrid to the Dallas Cowboys

and the New York Yankees,

have all had their moments in

the sun, typically in the

formative years of their

respective sports, where they

have dominated.

• That is how a loyal, vocal

and sizeable fan base is

built and that is what FaZe

Clan must ensure becomes

the case over the next

decade.

5

Of the six games in which FaZe

Clan competes, only three

(Counter-Strike: Global Offensive

(CS:GO), Fortnite and PUBG) are

in the top 10 games ranked by

total prize money awarded.

Notable omissions from its list are

Dota 2 and League of Legends

which are 1st and 4th on the list

of total prize money awarded at

$181m and $68m respectively, as

seen in Table 3. Of the list of top

players by prize money earned,

before the Fortnite World Cup,

the top 38 all play Dota 2.

FaZe Clan is missing out

significantly on success and prize

money by not participating in

certain games.

By not entering the most

profitable competitions, it is no

surprise that FaZe Clan doesn’t

have a single player who has won

over $1m throughout their career.

11 other teams have a total of 48

players who have passed the

million-dollar mark. With the

$100m dollars raised for the prize

pool by Fortnite, of which only

$20m was distributed in 2018,

Fortnite can be expected to rise

from its 4th place ranking in prize

money offered. FaZe Clan will be

well placed to take some of this

prize money with the current 2nd,

3rd and 4th most successful

Fortnite players.

No. GameNumber of

tournaments

Prize

money ($m)

FaZe Clan

Participation

1 Dota 2 1172 181.78 No

2 CS: GO 4207 80.40 Yes

3 Fortnite 387 71.51 Yes

4League of

Legends2327 68.16 No

5 StarCraft II 5450 30.82 No

6Heroes of the

Storm451 18.03 No

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

Focusing on The GamersWhen looking at the personnel on

the teams there are two distinct

groups of gamers;

1. Those who enter

competitions and make their

money from prize money;

and

2. Those who may enter the

occasional competition, but

their social media presence is

what drives their income.

This divide is also present within

FaZe Clan, with a significant

number of gamers in each section.

At the current stage of Esports

there are very few personalities

who cross the gap and make

significant money from both

tournaments and social media.

The current state of Esports

means that unless you are winning

the top competitions then there is

relatively little income to be

earned. This income figure can be

dwarfed by the top earners on

social media platforms.

FaZe Clan Esports

Games

▪ Counter Strike: Global Offensive

▪ Fortnite

▪ PUBG

▪ Call of Duty

▪ FIFA

▪ Tom Clancy’s Rainbow Siege

G A M E PA RT I C I PAT I O N

6

Personalities:

Personalities with a viewership eclipsing

the majority of their rivals can earn up to

$12m on YouTube

just from running adverts. The income

stream is slightly more complicated on

Twitch. Channels receive an income

from adverts and there are two other

streams purely supplied through Twitch.

• Firstly; subscriptions, these

have three tiers:

o Tier 1 costs $4.99/month and

entitles the subscriber to

exclusive content, chat

rooms, ad-free viewing, alerts

and emoticons;

o Tier 2 costs $9.99/month and

provides 1 extra exclusive

emoticon; and

o Tier 3 costs $24.99/month

providing 2 extra exclusive

emoticons.

For a channel with over 1,000

subscribers Twitch typically splits

the proceeds 70% for the channel

(the personality) and keeps 30% as

commission. The most popular

Twitch channel can have around

50,000 subscribers.

• Secondly; donations:

o This works with fans

purchasing ‘bits’ (effectively

Twitch’s currency) and

purchasing donations with

these bits to give to

personalities and channels;

his breakout season, he also placed

10th in shirt sales in the entire

league. JuJu has quickly shot to

fame as can be seen from his

Instagram followers: he is 9th in

the league. This places him in the

company of some of the greatest

and most established players in the

league currently, whilst also

beating a significant number of

other top players. One attribute of

significant interest is the level of

engagement that he has from his

fans, with a percentage of 5.49%,

second to only Tom Brady. JuJu’s

Instagram followers have also

more than doubled in the last year

from 1.2m in June 2018. This is

likely due to a his on field

performances and social media

activity likely being helped at every

stage by FaZe Clan.

This branch of FaZe Clan

demonstrates the breadth of their

talent management and, combined

with their demonstrated success in

building a brand, shows the power

they have across content creators,

influencers and icons. The success

FaZe Clan has seen has also lead

to being approached by other high

profile figures from the NFL and

NBA and even rappers enquiring

as to how FaZe Clan can help

them.

Pos. Years

in NFL

Times

in Pro

Bowl

Instagram

Followers

(m)

Engagement Engaged

followers

Odell

Beckham JrWR 5 3 13.56 3.26% 442,190

Tom Brady QB 19 14 6.39 7.57% 483,976

Cam Newton QB 8 3 4.16 1.95% 81,161

Russell

WilsonQB 7 6 3.89 1.53% 59,514

JJ Watt DL 8 5 3.63 2.30% 83,555

Antonio

BrownWR 9 7 3.35 1.13% 37,910

Rob

GronkowskiTE 9 5 3.31 4.27% 141,213

Ezekiel Elliott RB 3 2 2.78 4.66% 129,408

JuJu Smith-

SchusterWR 2 1 2.74 5.49% 150,647

Dez Bryant WR 9 3 2.32 1.37% 31,724

Richard

ShermanDB 8 4 2.04 1.41% 28,777

Table 4: Most followed players in the NFL, Source: socialblade.com

Figure 9a, b: Sommer Ray, JuJu Smith-Schuster

Lifestyle Icons

FaZe Clan has also branched out

into the world of lifestyle icons.

Whilst this may be considered a

departure from their profile in the

world of Esports it is another

huge market which they can have

a foothold in. The most notable of

these icons is Sommer Ray, who

had 15m followers before joining

Faze Clan in July 2017 and now

has over 21m followers on

Instagram alone. She is an

American fitness model who

regularly posts workout videos

with a predominantly male

follower base. FaZe Clan have

significant potential in the media

and influencer market.

Another icon signed up, after an

impressive first season in the

NFL, is JuJu Smith-Schuster in

2018. The Pittsburgh Steelers’

wide receiver is one of the most

popular players in the NFL. He

finished 5th in the league for

receiving yards in his second

season. This was partially helped

by the Steelers’ starting receiver,

Antonio Brown, sustaining an

injury. Antonio, who is widely

considered amongst the best wide

receivers to have played the game,

left to join the Oakland Raiders,

leaving JuJu as the first choice.

Signing with FaZe Clan wasn’t

only followed by a significant

improvement in JuJu’s on field

performances; following ….

FA Z E C L A N T E A M

o For every 100 bits

donated to a

broadcaster the channel

receives $1 and 100 bits

can be purchased for

$1.40. A typical FaZe

Clan channel could

receive over $2,500 a

month in donations;

however, some

channels can make

more by offering

exclusive benefits, like

personnel snapchat

handles, in return for a

donation of a certain

size. Though a lot of

personalities believe this

isn’t in the best interests

of the fanbase and so

are much less active in

requesting donations.

A channel with c.50,000 followers

and 500 subscribers can expect an

income of $3,000/pm, but this can

increase to over $0.5m pm for the

top streamers. Whilst this income

stream is sizeable, the majority of

the income on YouTube and

Twitch comes in the form of

sponsorships. Increasing revenue

requires a high level of engagement

from the audience. Revenue can

eclipse $1m/pm for streamers such

as Ninja who have 14 million

Twitch followers.

This is an area where FaZe

dominates, having an estimated

annual income for their gamers’

channels of over $4m solely from

Twitch.

………

Youth Pop

Culture

Icons

Gaming

Content

Streamers

Esports

Tournament

Players

Figure 10: FaZe Clan team strategy

FaZe Clan recently got into a legal

dispute with one of their most

profitable gamers, Turner “Tfue”

Taylor, he is one of the few

gamers who not only has a large

online following (11m YouTube

subscribers) as well as a significant

level of tournament success

($575,000). Tfue signed a contract

with FaZe Clan in 2018 and

subsequently exploded onto the

Esports scene becoming one of

the most viewed streamers on

Twitch and winning several

Fortnite tournaments. The dispute

originated from Tfue stating that

the contract was oppressive and

hence breaks the law. The

contract entitled FaZe Clan to

20% of all prize money won, 50%

of Tfue’s merchandising and 50%

of appearance fees with FaZe

Clan paying Tfue 20% of all FaZe

clan merchandise with which

Tfue’s image was used. The claim

is that both sides owe money to

the other, but is primarily that

Tfue believes FaZe Clan should

not be entitled to as high a

percentage of his income, whilst

FaZe Clan maintains that his

income would not be as high if it

was not for their involvement

since his contract was signed. The

court case and the loss of Tfue

are both damaging to the brand of

FaZe Clan, but the team seems to

be putting the trouble behind

them.

7

Figure 11: New York pop-up queue

On the 28th July 2019, straight

after the Fortnite world cup, FaZe

Clan signed a 13 year-old deaf girl,

the first female to join the team.

She is more of a streaming

personality than a tournament

gamer, having streamed with some

of the biggest names around.

Notably she played with Tyler

“Ninja” Blevins despite him

announcing that he would not be

streaming with female players,

demonstrating how she is one of

the biggest personalities in the

industry. When looking at this

decision from FaZe Clan, it clearly

represents smart marketing. In an

environment where female gamers

don’t tend to enter or win

tournaments as regularly as male

gamers, yet as the audience isn’t

dominated by male viewers it

opens FaZe up to a wave of new

fans from aspiring female players.

This cannot be viewed solely from

a smart business strategy either, it

shows progressive thinking in a

way other teams are yet to catch

up on. There was no pressure on

Esports or FaZe Clan to improve

the female side of the sport. In

FaZe Ewok, FaZe have signed a

streamer who has more Twitch

followers (230k) than a lot of their

other current content creators,

making her a valuable asset.

At the recent Fortnite World Cup

representatives from FaZe Clan

took home $1.5m in prize money,

making it the most successful

tournament in the team’s history.

Winning prize money from the

solo competition was:

FaZe Mongraal (13th, $150,000);

and

FaZe Dubs (15th, $150,000).

In the duos competition:

FaZe Mongraal (6th, $225,000)

winning with an outside partner;

and

FaZe Dubs and FaZe Megga (7th,

$187,500 each).

A significant part of the prize

money came from FaZe Cizzorz

(1st, $336,000) who led a team in

the creative competition to

victory. This competition is more

for fun and views where Esports

personalities and content creators

took part. Interestingly, all, but

two, of the top 10 from the solo

tournament were not

representing a major Esports

team. The success from the

tournament wasn’t the only

positive; FaZe Clan opened a

pop-up store for the weekend

that resulted in a huge turnout

from fans. So many people

showed up that police had to

close off 15 blocks due to the size

of the crowd.

Press:

▪ First female; FaZe

Ewok, 13 year-old

deaf girl

▪ $1.5m in winnings at

the recent Fornite

World Cup

▪ Dispute with Tfue

Figure 12: FaZe Ewok

R E C E N T P R E S S

8

Table 8: Esports teams ordered by prize money earned, as of 2nd September 2019

Source: esportsearnings.com

FaZe Clan’s Competitors

In the Forbes article on the Esports

market, it lists 12 different teams with

their estimated valuation and revenue.

The valuation was based off a

combination of recent transactions, the

share of a team obtained from an

investment and rate of increase in

market audience and revenue. Valuation

cannot be based solely off a single article,

but this provides a good benchmark for

the potential value of FaZe Clan of

approximately 13x-14x annual revenue.

Due to the nature of the industry and

stage (early/growth) a multiple of

revenue seems the most widely used

and accepted valuation type.

With FaZe Clan’s social profile beating

all others in the Forbes article and

sharing similar prize money won by

Cloud9, Optic Gaming, Team EnVyUs

and G2 Esports, its value can certainly be

placed above the $105m of G2 Esports.

Also, due to the large social following

and, hence, its ability to scale up in the

future it can be expected to have a

valuation to revenue ratio around the

top end of the range detailed in the

report. This would place FaZe Clan’s

valuation among the top teams.

Similar Transactions

An Esports media and entertainment provider, RFRSH

Aps, sold a 35% stake in the company to a group of

venture capitalist firms for €7m in June 2017.

Representing a value of €20m for the whole company.

• The team produced revenues of €1.8m the

year prior to the acquisition;

• Equates to a valuation to revenue multiple of

11.1x.

• Whilst not directly comparable, as it is a

media platform rather than an Esports team,

what it does demonstrate is the huge

expectations within and around Esports at

the moment about this accelerating sector. A

valuation of 11x revenue is a large multiple

and is due to the ever-increasing value of the

Esports market. The 11x revenue valuation

is also not too dissimilar to the range

established from the Forbes report.

In December 2015 Critical Hit Gaming released an

article which lists the top five Esports teams with the

top team being Fnatic valued at $42.6m. A comparison

of the teams listed by Critical Hit Gaming to those in

the Forbes article shows an increase in value between

3-10x over the 3-year period. This is significant and

demonstrates why so many investors are so keen for a

share in the market and hence, why the valuations of

the teams are so high.

100 Thieves:

In July of 2019, 100 Thieves closed

their $35m series B funding round,

primarily funded by Artist Capital

Management which resulted in a

post-money valuation of $160m.

It was valued at $90m in October

2018. A 78% rise in just 9 months.

100 Thieves is relatively new on

the scene having been founded in

2017, but in that time, it has had 3

funding rounds raising a total of

over $60m. As a business, they are

not too dissimilar to FaZe Clan,

both place a major emphasis on

their digital content and e-

commerce branches; however, in

both these departments FaZe Clan

is significantly further developed

turning more revenue and having a

much larger fan base than 100

Thieves. Hence, it could be

expected that FaZe Clan’s

valuation would be higher than the

$160m valuation of 100 Thieves.

C O M P E T I TO R S

A N D S I M I L A R

T R A N S AC T I O N S

Figure 15: FaZe Clan’s CS:GO 2017 team

TeamsAll time prize

money ($m)

Tournaments

Entered

Last 3 years

prize money

($m)

Last 3

years

Rank

Main Game Income

Source

1 Team Liquid 33.71 1584 31.19 2 Dota 2

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

Conclusion:

Based on this evidence it would be

easy to value FaZe Clan at 13x –

14x its annual revenue.

It must be noted that without the

participation in top Esports

leagues FaZe Clan cannot be

valued in the same way as Cloud9

or Immortals. Having the

Overwatch and League of Legends

franchises will improve the value

of the assets owned by a team

and the lack of FaZe Clan’s

presence in some of the top

leagues does not help its valuation.

On the other hand, as was seen in

the RFRSH transaction, media and

entertainment-based Esports firms

are valued just as highly with

respect to their revenue. Taking

the most similar companies from

the Forbes article to FaZe Clan, an

estimate for FaZe Clan’s worth

can be made. Taking the top 3

teams from the list in terms of

their fan base size (Team SoloMid

7.2m fans, Optic Gaming 5.6m

fans and Fnatic 5.1m fans), which

have a total prize winnings

reasonably similar to FaZe Clan’s,

a valuation range of 10x – 13x

revenue seems reasonable and

compares to the valuation of

RFRSH at 11x revenue. This could

make FaZe Clan one of the most

valuable Esports brands in the

world.

9

Immortals and Optic Gaming:

In June 2019, Immortals acquired

Optic Gaming’s parent company;

Infinite Esports for over $100m.

This is similar to the valuation

from the Forbes list, adding more

justification to a potential valuation

of 13x revenue. However, this

deal has a significant number of

layers to it. Immortal’s fan base is

one of the smallest among the top

Esports teams, being less than

500,000 across all platforms. In

acquiring Optic Gaming, Immortals

have purchased the third largest

Esports team’s audience and

effectively increased its social

media reach by over 5.5m fans. As

well as the fans, Optic will have

acquired the producers of

Immortals’ social media content,

which will allow them to grow

their own fan base when Optic

merges into Immortals.

The social media following of a

team has a huge impact on its

value.

Another key reason for Immortal’s

acquisition is the obtaining of

Optic’s League of Legends

Championship Series roster spot.

A single roster spot is valued at

$50m. Immortals were unable to

obtain a spot themselves and is a

huge opportunity for potential

winnings and exposure that they

have now acquired.

The Optic roster spot will have

been valued as an asset and will

have contributed to the large

acquisition price. Optic also has

an Overwatch team, with an

estimated value of between

$60m - $80m; however,

Immortals already has an

Overwatch franchise and

Esports rules specify that two

teams within the league cannot

be owned by the same owner.

Therefore, at the end of this

year Immortals will be looking

to recoup some of the funds

they have since spent on Optic

by selling the Overwatch

franchise they acquired from

Optic (perhaps an opportunity

for FaZe Clan to buy it). It is

estimated that Immortals’ new

value when merged with Optic

is over $250m, making it one of

the most valuable Esports

teams in the sport today. This is

a valuation that again matches

up with the report from Forbes

of the combined value of

Immortals and Optic.

C O N C L U S I O N

Figure 16: FaZe Clan’s 2019 PUBG championship winning team

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Esports Discussion

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