GameSquare Holdings, a leading esports company, has announced its plans to acquire FaZe Clan, one of the most popular gaming and content creation brands in the world. The deal, which is expected to close in the fourth quarter of 2023, will create a media and entertainment powerhouse that will cater to the gaming community and youth culture.
The details of the deal
According to a press release from GameSquare and FaZe Clan, the acquisition will be an all-stock transaction that will value FaZe Clan at approximately $16 million. GameSquare shareholders will own about 55% of the combined company, while FaZe Clan shareholders will own the remaining 45%. The deal has been unanimously approved by the boards of both companies and is subject to approval by their respective shareholders and regulators.
The press release also stated that the deal will bring together two complementary businesses that will leverage their media and agency organizations, gaming and esports teams, creative services, and technology capabilities. The combined company will have access to over 1 billion social followers and a robust portfolio of brand partnerships, including Porsche, Jack In The Box, Xfinity, Miller Lite, H-E-B, GHOST, and more.
The deal will also see the return of FaZe Clan’s founders, who will take on leadership roles within the organization. Richard “FaZe Banks” Bengtson will become the CEO of FaZe Clan, Thomas “FaZe Temperrr” Oliveira will become the president, and Yousef “FaZe Apex” Abdelfattah will become the COO. They will be responsible for overseeing the brand’s content creation, talent management, merchandising, and esports operations.
The benefits of the deal
GameSquare CEO Justin Kenna said that the acquisition of FaZe Clan will serve as a perfect illustration of how GameSquare has built a powerful infrastructure with expansive scale that can be used to leverage the full spectrum of resources within its ecosystem. He also said that he was thrilled to welcome back the founders of FaZe Clan and their fans, one of the most deeply engaged communities born on the internet.
FaZe Banks, who will take on the CEO role of FaZe Clan after the transaction closes, said that he was confident that with him, Temperrr, and Apex back in charge of the brand, FaZe Clan will get back to where it was in its peak years. He said that they grew up on the internet and understand the brand better than anyone ever could. He also said that he was grateful to have found a partner in GameSquare who sees that value in them and can help execute their vision.
The deal is expected to generate significant cost savings for both companies, as well as create new revenue opportunities through cross-selling and synergies. The press release stated that management expects to realize over $18 million in run-rate cost savings from the FaZe Clan acquisition, supported by reduced duplicate corporate costs and other cost savings. The combined company plans to give guidance once the transaction is closed.
The challenges of the deal
However, not everyone is optimistic about the deal. Some analysts and industry observers have raised questions about the potential conflict of interest that could arise from the merger. As reported by Dot Esports, both FaZe Clan and Complexity Gaming, which is owned by GameSquare, operate in the same partnered leagues for Counter-Strike: Global Offensive (CS:GO). These include BLAST Premier and ESL Pro League, which are considered to be quasi-franchised leagues that offer long-term contracts and revenue sharing for their members.
The issue is that these leagues have rules that prohibit teams from having common ownership or control. For example, BLAST Premier’s rulebook states that “no team or player may directly or indirectly own or control more than one team participating in a tournament.” Similarly, ESL Pro League’s rulebook states that “no team or player may be under common ownership or control with another team participating in an ESL Pro League competition.”
These rules are meant to prevent any potential collusion or match-fixing between teams that share owners or managers. However, with GameSquare acquiring FaZe Clan, there could be a situation where two teams under its umbrella face each other in these leagues. This could raise doubts about the integrity and fairness of the competition.
It is not clear how GameSquare and FaZe Clan plan to address this issue or whether they have obtained any waivers or exemptions from these leagues. Neither company has commented on this matter publicly yet.
