Esports giant FaZe Clan slashes workforce by 40% amidst industry-wide financial turmoil
In the midst of significant financial challenges impacting the professional video game industry, FaZe Clan, the esports organisation that achieved a valuation of $725 million when it went public last year, has recently announced a 40% reduction in its workforce.
As reported by Digiday and other media sources, FaZe Clan CEO Lee Trink communicated in an internal email to employees that the layoffs were a result of the company's commitment to controlling costs and restructuring its organisation. The goal is to not only navigate the current challenging macroeconomic conditions but also position the company for a promising future.
Following the layoff of approximately 20% of its workforce in February, FaZe Clan is now undergoing its second round of job cuts this year. The organisation's stock, which initially debuted at $13 per share, has experienced a significant decline and is currently valued at around 59 cents per share. Consequently, FaZe Clan faces the possibility of being delisted from the Nasdaq.
Despite reporting a loss of $52 million in the previous year, FaZe Clan's substantial social media presence has paved the way for lucrative content agreements with notable figures like NFL star Kyler Murray and Bronny James.
On the other hand, the company successfully engaged in sponsorship collaborations with prominent entities such as the NFL, McDonald's, and DoorDash.
According to The New York Times, Team SoloMid (TSM) has revealed its decision to sell its slot in the League of Legends Championship Series, with an asking price reported to be around $20 million. TSM, considered the most valuable esports company globally, was valued at $540 million by Forbes last year.
The League of Legends Championship Series (LCS), Riot Games' premier esports league in the United States, has experienced a 13% decline in viewership during the spring season of this year compared to 2022. Estimates from Esports Charts, as reported by The New York Times, indicate a 32% drop in viewership since 2021.
Investments by traditional sports owners in the esports industry, such as James Dolan's Madison Square Garden Company (MSG), have decreased recently. In 2017, MSG acquired a majority stake in the esports team Counter Logic Gaming for a sum exceeding $10 million.
However, with no prospective buyer found, MSG Sports made the decision in April to merge Counter Logic with NRG Esports, which is helmed by Andy Miller, co-owner of the Sacramento Kings.
