As the industry matures in a downturn, CFOs become esports C-suite MVPs
In the hype-fueled world of esports, CFOs tend to get less credit than prominent CEOs like Hector Rodriguez or Matthew “Nadeshot” Haag. But as a recession looms and esports organizations scramble to achieve profitability, they are increasingly looking to their CFOs to help shine their spotlight.
“In the face of a potential recession, it is almost necessary that the teams and professional leagues that will succeed must now build their executive suite,” said Ann Hand, president and CEO of esports company Super League Gaming.
To some extent, the rise of the CFO of esports is a natural downstream effect of the industry’s meteoric growth in recent years.
“When it comes to partnership deals, the role of the CFO is critical for reporting. This FTX deal was $200 million over 10 years – so from an accounting perspective, how did the CFO- reported this?” said Amish Shah, Founder and Chairman of ReKTGlobal. “The CFO has to come in there and own it, and that wasn’t the case five years ago when you were doing sponsorship Red Bull for $300,000. Things have really evolved. »
But the esports CFO’s ascendancy isn’t limited to general industry growth.
This is the result of several recent and significant changes in the esports business landscape. Esports organizations are rapidly diversifying their revenue streams, adopting more of a holding company model than a competition-driven strategy; this has led to increased M&A activity in the space as organizations expand internationally to reach new audiences.
Perhaps more importantly, as esports companies accumulate more private funding or go public, their investors are watching their business deals more closely. In recent years, profitability was not an issue and esports investments were largely driven by hype, making CMOs more likely to lead the conversation. These days, when esports organizations move a business or content, they are immediately beset by investors asking how it will help generate revenue or make the business profitable – so the CFO must par definition having your hands in many buckets, understanding how each element of the business fits into the larger puzzle.
“Since 2008, we were in this unprecedented period of raising capital, of money entering the venture capital market. All of the startups were actually about revenue growth, and that was part of every investment over the last 10-12 years,” said Jason Ton, CFO of esports organization 100 Thieves. “Over the past six to seven months the market has crashed significantly and everyone is now focused on the bottom line and the economics of the unit. So in that respect that has probably been the biggest change. from last year.
Ton was the sixth employee hired by 100 Thieves, so he’s always worn a range of hats around the company. But while other C-level employees at the company have seen their jobs shrink as the company grows, Ton’s job has expanded into a more operational role. It is his responsibility to understand how each part of the business works.
When 100 Thieves acquired a peripheral manufacturer, Ton became a hardware industry expert; As the organization expanded into game design, it also began to delve into that industry. “If you think about it, they’re like five very separate businesses, so the work itself has become more complex over time,” he said. “It’s a very encompassing role that spans all departments – I don’t just look at numbers all day.”
CFOs aren’t the only C-level employees who have become more important as the esports industry has matured. Despite companies’ efforts to diversify, brand partnerships still account for the bulk of revenue for most esports organizations, and more teams have begun appointing a C-level executive to specifically handle this. side of the business. This has resulted in the creation of new high-level roles: for example, G2 Esports hired Irina Shames to be its first-ever CRO in June, reflecting the organization’s focus on partnerships.
“We are proud to work with premium partners in every industry globally and offer each of them tailored partnerships that align with their brand and products within the G2 ecosystem” , Shames said. “It requires a lot of strategic planning and resources and dedicated C-level leadership, and that’s where the role of a CRO comes in to lead the initiative.”
But the future looks the brightest for esports CFOs. As companies continue to experiment with new revenue streams, partnerships could eventually be phased out, though it would certainly take some time. One thing is certain, public and private investors in esports will continue to ask where the money is coming from – and that will always be the role of the CFO.
“You could say the CFO is going to play a very important role in assessing these new opportunities and how to wisely move resources within the organization to ensure they capitalize on these new initiatives,” said Mike Olson, Version 1 CFO. “And there will be esports organizations that will be made or broken based on their ability to make the right decisions.”