Guild Esports Sells Assets to DCB Sports Amid Financial Turmoil

Guild Esports PLC, the London-listed esports organization co-owned by former soccer star David Beckham, announced the completion of its asset sale to California-based DCB Sports LLC. The transaction marks a significant turn for Guild Esports, which has struggled financially since its much-publicized initial public offering (IPO) in 2020.

DCB Sports Acquisition Details

DCB Sports has acquired 100% of Guild Esports’ assets, including the Guild brand, in exchange for assuming all disclosed liabilities exceeding £2M ($2.6M) and making an immediate cash payment of £100,000 USD ($130,000 GBP) to Guild Esports PLC. The assets will be operated under a new entity, Guild Esports and Gaming Ltd., with DCB Sports committing to provide the necessary working capital to stabilize and grow the business.

“The transaction provides certainty to the company’s staff, customers, and suppliers,” Guild Esports stated in its announcement. The £100,000 cash infusion will serve as working capital for Guild Esports PLC as its directors consider the company’s next steps, including a proposed name change to Cassel Capital PLC to avoid confusion with the new entity.

Financial Struggles and Strategic Review

Guild Esports’ financial woes were highlighted on June 28, 2024, when the company announced a “material uncertainty” about its ability to continue as a going concern. This was despite aggressive cost-cutting measures that reduced expenses by 38% year-on-year, amounting to £3.5M ($4.6M) in savings between 2022 and 2023.

The company’s unaudited financial statements for the six months ended March 31, 2024, revealed a continued pattern of losses:

• Revenue: £2.1M ($2.73M)
• Operating Loss: £1.68M ($2.18M)
• Loss After Taxation: £1.8M ($2.34M)
• Retained Earnings (Accumulated Losses): £26.55M ($34.5M)

With dwindling cash reserves—only £17,000 ($22,000) in cash and cash equivalents as of March 31, 2024—the board initiated a strategic review to explore options, including equity fundraising, securing loans, further cost reductions, asset sales, or finding a new owner. However, these efforts proved insufficient, leading to the asset sale as the “best course of action.”

Impact on Shareholders

For shareholders, the asset sale signifies a substantial loss. Since its IPO in October 2020, where the company raised £20M ($26M) at a market capitalization of £41.2M ($53.6M), Guild Esports has struggled to generate sustainable revenue or profits. The company’s share price has plummeted, eroding shareholder value.

Notably, David Beckham’s involvement drew significant attention but also came at a high cost. Prior to becoming an investor, Beckham entered into a five-year influencer agreement valued at £15.25M ($19.78M). Guild Esports agreed to pay Beckham’s company, Footwork Productions, annual fees ranging from £2.25M to £4M, irrespective of the company’s financial performance.

This arrangement raised eyebrows among investors and industry experts. The substantial payments to Beckham were guaranteed through an escrow account containing £5.5M ($7.13M) to cover the first three years of fees, even if Guild Esports became unable to pay.

Leadership Changes

Following the completion of the transaction, Guild Esports CEO Jasmine Skee resigned from the company and stepped down from the board with immediate effect. “The board sincerely thanks Ms. Skee for her significant contributions and strategic leadership under difficult conditions,” the company stated.

The board will now consist of non-executive directors Derek Lew and Brian Stockbridge, who will oversee the company’s transition and future plans.

DCB Sports’ Entry into Esports

For DCB Sports, the acquisition marks its first foray into the esports sector. The California-based investment firm specializes in emerging sports teams and novel leagues. Its portfolio includes investments in the Big3 basketball league, The Bay Golf Club in partnership with NBA stars Steph Curry and Klay Thompson, Italian soccer team Venezia FC, and TMRW Sports, co-founded by Tiger Woods and Rory McIlroy.

“We’ve long followed esports, and with Guild, we have found the perfect opportunity for us to enter the sector for the first time,” said Gary LaDrido, Managing Partner of DCB Sports. “We look forward to working with Guild’s impressive list of clients as well as building new relationships around the world.”