Esports Entertainment Group (NASDAQ: GMBL, GMBLP, GMBLW, GMBLZ) announced Monday that it has cut its staff down from 158 full-time employees to 99. The news was delivered Monday in a lengthy note from current EEG CEO Alex Igelman in which he details the company’s plans to restructure and adjust the business this year. Igelman says in his note that these cuts will reduce annualized salaries by 36%, “based on the actions being taken thus far.” While these moves had upfront costs related to restructuring, Igelman claims, he expects this will lower operating costs annually by about $4M USD. The company is looking for other cost-cutting measures as well, he said.
Igelman also said that the company is going to lean into “esports wagering through new betting content and offerings,” and that it is concurrently implementing strategies to expand its consumer esports wagering services through its Idefix platform and integrations of the Oddin.gg iFrame solution. The company operates its iGaming business via a Malta Gaming Authority (MGA) license currently. In the U.S., it plans to aggregate B2B solutions to other operators and to take aim at the collegiate scene using its ggCircuit software.
In his note, Igelman also said that the company was divesting some operations, and closing others. In January, it sold its “eSports Spanish Gaming license” for approximately $1.2M, and in February it sold its Bethard business for approximately $1.7M in cash and further “eliminated debt and liabilities to the Bethard business of approximately $7.5M.” In March, it closed its UK gambling business Argyll Entertainment.
Finally, Igelman said that through these sales, restructuring, and staff reductions, the company is striving to improve its balance sheet:
“We have dramatically enhanced our balance sheet. Specifically, we reduced debt and other liabilities by approximately $27.1 million since December 31, 2022. The principal amount of our Senior Convertible Note was reduced by $16.3 million, from $32.2 million as of December 31, 2022, to $15.9 million as of March 31, 2023. Other payables to the holder of the Senior Convertible Note were reduced by $2.5 million. Through the sale of the aforementioned Bethard business earlier this year, we eliminated approximately $7.5 million of debt and liabilities. Lastly, we terminated a lease, resulting in a $0.8 million reduction in lease liability. We appreciate the support of our senior lender and are working to convert additional debt to preferred equity, which we believe illustrates their confidence in the long-term outlook for the business.”