CSGO Tournament organizers and third party platforms ESL and FaceIt acquired by Saudi Arabian Sovereign Wealth Fund backed group for $1.5 Billion

[niofalpha]

Summary

ESL has run about 80% of all high tier tournaments in CS since 2020. ESL is the parent company of DreamHack and ESEA, while FaceIt is one of their 2 competitors. FaceIt is the platform that best competes with ESEA in most of the world. They were both purchased by Savvy Gaming Group, which is backed by the Saudi Arabian Sovereign Wealth Fund. They claim they will begin providing stipends to "up and coming" players to foster competitive play.

Quotes

Quote

Esports Insider: According to the official website of the newly-founded ESL FACEIT Group, the two entities will continue to coexist in the esports ecosystem. Craig Levine and Niccolo Maisto will be appointed as co-CEO’s of the new company, and ESL Co-Founder Ralf Reichert will move into a non-operational role as Executive Chairman.

Savvy Gaming Group is reported to have paid $1bn (~£740m) for ESL and $500m (~£370m) for FACEIT.

 

Savvy Gaming Group is backed by the Saudi Arabian government’s Public Investment Fund. The fund recently purchased English Premiere League football team Newcastle United.

 

Reuters: MTG, which owns 91.46% of ESL Gaming, corresponding to $960 million, said it was expecting net proceeds of around $875 million from the deal, including transaction-related costs.

 

My thoughts

This, clearly, is an attempt at washing the Saudi Arabian Government's image. However, I don't think the current path of Esports' growth would've been sustainable, without literally throwing away money with no plan to see any financial ROI. As someone who used to be fairly involved with the low-mid tier competitive scene, I think this will be a good thing, since more prize pools and better servers is always a good thing. However, I think this can potentially lead to the Esports scene becoming even more franchised than it currently is. I wouldn't be too shocked if we see similar funds start buying stakes in teams, raising questions of conflict of interest, which have plagued the scene for years. Additionally, I'd raise questions regarding ESL's plans for a Woman's League, and whether talent who are vocal about Saudi Arabia's Human Rights Abuses (among other things...) will be "uninvited" from events they host. I expect we may see Valve take a stance towards this near monopoly.

 

I'm not too familiar with Dota's circuit, but I know ESL was involved with it a few years ago as well.

 

As someone who follows the Finance Side, the $1.5B deal is absolutely massive. Fairly sure this is the largest M&A in Esports.

 

Sources

https://esportsinsider.com/2022/01/esl-faceit-group-bought-saudi-1-5bn/#:~:text=Two of esports' biggest tournament,bn (~£1.1bn).

https://www.reuters.com/article/modern-times-esl-gaming/mtg-sells-esl-gaming-to-savvy-gaming-group-for-1-05-billion-idINL8N2U463A

 

[Quackers101]

"washing the Saudi Arabian Government's image", yes and this is not what one would like to hear, also this could become a bit too "political".

Maybe we can be wrong, but since it's them putting all this money into this. we know where it could go.

 

v below post, that is the issue "Live Events and Live Sports" and the talked about whitewashing. what china does with tencent is different although not that great either, if it grows too much and more censorship is taken place. not sure how much censorship is done by the west tho.

 

 

Edited January 25, 2022 by Quackers101

[Taf the Ghost]

Tencent is an oligarchical arm of the Chinese Communist Party. Tencent owns Riot Games (and a lot of other gaming companies), which makes League of Legends and is the largest esports competitor organization. Riot wholly controls the LoL esports scene compared to the more open nature of most other scenes. So, really best to not bring the geopolitics into this.

 

The better question is how they think they'll get a return on investment with this. Live Events and "Live Sports" are clearly the plays for investment in that space, and while near monopoly control of the European Esports scene (not counting LoL) is worth something, I'd question if its worth that much. Feels a bit too much like there's a couple 100mil in there that's more about "networking benefit" to the Sellers & the Buyers' Reps. Wouldn't be the first time a Sovereign Wealth Fund got taken for a ride by a group of local dealmakers.

 

By the same measure, with how much some of the bigger Teams have gone for, there's very much an Asset Investment approach to it all. Doesn't mean it's worth that much, but the Denver Broncos of the NFL are likely about to trade hands for >4 Billion USD. So, things have changed.

[niofalpha]

51 minutes ago, Quackers101 said:

"washing the Saudi Arabian Government's image", yes and this is not what one would like to hear, also this could become a bit too "political".

Maybe we can be wrong, but since it's them putting all this money into this. we know where it could go.

 

v below post, that is the issue "Live Events and Live Sports" and the talked about whitewashing. what china does with tencent is different although not that great either, if it grows too much and more censorship is taken place. not sure how much censorship is done by the west tho.

 

 

Regarding the censorship from the west, the first thing that comes to mind was the scandal a few years back where some streams (ESL or Eleague I think) were banning people in Twitch Chat who said "War Crimes" whenever a US Air Force Ad (They sponsored the tournament) was broadcast.

[dizmo]

Well this thread won't last long. 

[Doobeedoo]

Injecting money, well then. Then again not sure what Valve would do about this even.