Guild Esports: how to invest alongside David Beckham

Esports is one of the fastest growing industries on the planet and there is one UK-based company that has garnered the support of none other than David Beckham to help spearhead its expansion.

For the uninitiated, esports is a term used to describe competitive video gaming. Where it differs from standard video gaming is that esports is competitive in the sense that humans take on other humans, and it usually has a spectator element to it, just like conventional sports. 

Incredibly, the esports market is projected to have more US viewers (84 million of them) than the MLB (Major League Baseball), NBA (National Basketball Association) and NHL (National Hockey League) leagues in 2021, and is forecast to grow at a compound annual rate (CAGR) of 13.7% from $1.1 billion in 2019 to $1.6 billion in 2023, according to research from NewZoo. 

However, despite such a rapid and widespread uptake and some very impressive industry growth stats, the esports market is still at a very early stage of its development. Revenue per esports enthusiast is currently just $5.05, which compares to $37-$89 per fan for the top conventional sports teams. Together with the fact that esports enthusiasts represent just 8% of total gamers worldwide, this suggests ample scope for the industry to grow significantly in the coming years. 

An opportunity to create a UK market leader

Guild Esports (LON:GILD) is a London-based esports franchise and global brand with teams across multiple esports disciplines. The company plans to generate revenue through sponsorship, tournament winnings, digital marketing, membership, merchandise sales and promotional tours/events. Guild sees an opportunity to establish the leading UK esports brand and plans to become a top ten global esports franchise over the next three years. 

To aid it in its endeavours, the company has managed the remarkable coup of securing the support of soccer legend David Beckham, who is to be the face of the company’s brand. The company has a licence to use David Beckham’s name, voice, biography, image and likeness and signature to advertise and promote the company for a five-year term. Each year, Beckham is contracted to complete one photo shoot, make one TV/video content shoot, make two public event appearances and complete twelve social media posts about Guild.

With David Beckham the 31st most followed person on Instagram and operating the 59th most liked page on Facebook, that is no small beer. What’s more, given that he has a 9% shareholding and has invested £240,000 of his own cash into Guild, Beckham looks set to take a hands-on interest in his investment, with plans to support player signings, influencer activity, partnership signings and merchandise drops.

But if David Beckham is the face of Guild, its brains come in the form of CEO Kalum Lee Hourd and Executive Director Carleton Curtis (no offence Mr Beckham). Hourd was previously an advertising executive with Directwest Limited, working directly with large corporate advertisers across Canada and the US. Meanwhile, Curtis was previously Vice President of Programming at Activision Blizzard, and was responsible for the global strategy of Overwatch League, Call Of Duty League and Major League Gaming. This experience will no doubt prove invaluable in an industry where the big drivers are all about sponsorship and marketing.

Strong progress to date points to considerable upside potential

Last year, Guild raised £20 million in an IPO, which puts it among the top 10-15 best funded esports teams globally. Putting the proceeds to use, the company plans to generate £5 million of sponsorship revenue, £1 million of merchandise revenue, and £0.6 million of revenue from media activities on an annualised basis within 12 months of the IPO. Progress to date has been strong, with the company already having signed a £3.6 million three-year sponsorship deal with a European fintech company and, more recently, a multimillion-pound deal with Subway. More looks set to follow shortly, with Guild saying that it “looks forward to announcing new sponsors in due course.” 

If the firm is successful in its efforts to create a leading UK esports brand, the rewards for shareholders could be considerable. According to broker Zeus Capital, the average esports sales multiple for private transactions is around 14x, versus a range of 6x-9x for conventional sports teams. The broker’s ‘base case’ sees Guild posting an EBITDA loss of -£1.3 million on revenues of £7.2 million for FY2021, rising to a profit of £2.6 million on revenues of £13.4 million in FY 2022. Those forecasts look interesting against a current market capitalisation of around £29 million.