Esports Entertainment Group axes 37% of workforce in latest strategic pivot
CEO confirms commitment to B2C platform as Bethard sale and redundancies reduce debt levels
Esports Entertainment Group (EEG) has cut 37% of its headcount as the beleaguered operator looks to slash costs as part of a strategic repositioning of the company.
In a letter to shareholders, EEG CEO Alex Igelman confirmed the workforce had been reduced from 158 full-time employees at the end of December 2022 to 99, at the time of writing, including planned reductions.
As a result of this, EEG expects annualised salaries to decline 36%, which will have a knock-on effect of reducing overall operating expenses by more than $4m a year.
Additionally, Igelman confirmed the company had realised $1.7m from the sale of sportsbook and casino site Bethard in February and is in the process of liquidating Argyll Entertainment, after pulling its RedZone and SportNation brands from the UK earlier this year.
The group also secured $1.2m from the sale of its Spanish esports gaming licence in January.
Igelman also said EEG has reduced its debt by around $27.1m since 31 December 2022, including $7.5m of debt that was accrued by Bethard and subsequently eliminated through the sale of the business.
EEG also reduced the principal amount of its senior convertible note from $32.2m to $15.9m by the end of Q1. Other payables to the holder of the senior convertible note were reduced by $2.5m.
The measures come following a review of the company led by Igelman, who replaced Grant Johnson as CEO in Q4 2022.
Igelman confirmed in the letter that EEG will renew its focus on B2C operations with “new content and offerings” across its brands licensed by the Malta Gaming Authority (MGA).
EEG is also set to expand its B2B offering with the sale and distribution of its esports betting platform to third parties.
In the US, the operator will focus on the wider esports industry with tournament organisation and education on college and university campuses.
Reflecting on the work done on the strategic shift, Igelman said the esports betting landscape lacked “uniformity” and that the vertical had been hampered by being viewed as a by-product of sports betting, as well as the lack of understanding by US operators of how to derive value from the ecosystem.
Igelman said: “I strongly believe that our achievements over a short three-month span are truly noteworthy. However, this is merely the starting point of our journey. Our team now comprises seasoned gambling executives, former regulators and video game industry professionals, all of whom are committed to realising this vision.
“We are also diversifying our sources of revenue to create a more resilient and sustainable business model. With the right leadership, direction and financial discipline, I am extremely confident we can establish Esports Entertainment as a leader in this rapidly emerging market, while unlocking value for shareholders,” he added.
In February, EEG initated a reverse 1-for-100 stock split to help salvage its languishing share price. EEG stock sits at $2.08 at the time of writing.