The Los Angeles-based esports organization, FaZe Clan, has been acquired by GameSquare Esports Inc. in a transaction involving solely stocks. The joint announcement was made on Friday, placing FaZe’s valuation at around $16 million, calculated from the market caps of both entities.
FaZe Clan, according to a Digitday report from Oct. 20, has emerged as one of the marquee names in the esports world. They boast a hefty following of over 526 million across various social media platforms. However, accusations, ranging from sexism to homophobia, have marred its reputation in recent months. Its stock value has taken a significant hit, falling from an August high of $24.69 in 2022 to a measly $0.18 currently.
In developments over the past few months, FaZe dismissed about 40% of its workforce in May before subsequently seeing its CEO Lee Trink leave in September. Such occurrences made FaZe an appealing prospect for companies like GameSquare looking for affordable acquisitions in the esports space.
Based in Texas, GameSquare is a publicly-traded esports firm, supported by Dallas Cowboys owner, Jerry Jones. The company leverages entities like Stream Hatchet and Ninja Labs to assist brands in reaching the competitive gaming market.
GameSquare is set to strengthen its ties with esports enthusiasts through the acquisition of FaZe. GameSquare CEO, Justin Kenna was quoted saying:
“In my view, FaZe Clan is the only truly international gaming brand, […], which attracts a significant audience and, in turn, provides enormous potential.”
To aid FaZe’s recovery, original creators like Banks and Temperrr will resume leadership roles, while GameSquare has brought back other previous FaZe executive members like Duane Jackson and Jaci Hays.
According to Kenna, privatizing again should allow FaZe’s founders to propel the brand without the pressure faced by publicly traded companies. The goal is to return the brand to its pre-controversy stature.
Although FaZe’s brand recognition remains intact, experts suggest that GameSquare still needs to win over sponsors for this deal to be profitable. The esports industry is primarily dependent on non-recurring brand deals over consistent revenue sources.
This acquisition offers a much-needed boost for FaZe Clan in its rebuilding bid. GameSquare, with its diversified business portfolio and proven leadership team, seems primed to get FaZe back on track, albeit the transformation of the troubled esports giant still appears to be a daunting task.
Featured Image Credit: Photo by Yan Krukau; Pexels; Thank you!