Esports Entertainment Group (EEG) intends to take big steps forward on B2B operations, the group’s CEO informed investors, whilst also working to further cut down operating expenses.
Addressing EEG shareholders after a troubled 2022, which saw the esports group offload some key assets to streamline operations and reduce costs, Alex Igelman asserted that the firm’s efforts have enabled it to ‘dramatically’ improve its balance sheet.
As it stands, EEG has been able to reduce debt by £27.1m since 31 December 2022, largely attributed by Igelman – who assumed leadership of the esports betting company in January 2023 – to the range of auctions it has initiated in recent months.
Most notably, the sale of sportsbook unit Bethard for €9.5m, with €1.7m in cash, was cited as contributing heavily to a more ‘streamlined’ focus for the year, enabling the firm to clear around £7.5m in debt and liabilities.
Also cited were the closure of Vie.gg, an esports betting brand licenced in New Jersey and Spain, and the liquidation of Argyle Entertainment, which operated the SportNation and RedZone Sports sites in the UK, described by EEG’s CEO as a business with ‘recurring losses’.
After cutting away at its brand portfolio, EEG targeted further cost reductions through a downsizing in its employee headcount, reducing this number from 158 to 99 full-time staff members.
“As a result, annualised salaries are expected to decline by approximately 36% based on the actions being taken thus far,” said Igelman.
“Although we incurred upfront costs related to the restructuring, over time, these initiatives are expected to lower our operating expenses by over $4m on an annualised basis. In addition, we have pinpointed further opportunities for cost savings.”
This HR restructuring was also extended to the upper levels of the organisation, with Igelman explaining that ‘non-core, senior leadership positions’ were cut, although a new Chief Financial Officer was found in Michael Villani.
Looking ahead, EEG believes that there is an opportunity for esports betting providers in the US among bookmakers that are struggling ‘to comprehend and integrate seamlessly into their platforms’.
On a wider scale, the firm remains focused on both B2C and B2B operational expansion, although primarily in the latter field, eyeing an enhancement of its Idefix platform – integrating Oddin.gg’s iframe solution for esports wagering – for sale to third parties.
The CEO explained: “Through the Idefix iGaming platform and the MGA-based suite of B2C brands, together with growth opportunities in the B2B platform sector, we anticipate a unique opportunity to bridge the iGaming and esports worlds.
In the US, a B2B focus will define EEG’s strategy, specifically revolving around e-simulator tournaments and content as well as plans to further develop its ggCircuit software, such as adding new features.
Lastly, the group believes that the ‘education market’ in US esports and esports betting poses some unique opportunities for growth in domestic and international universities and in K-12 schools.
Under the leadership of CEO Igelman and Chair Jan Jones Blackhurst, EEG moves into 2023 after a rocky end to 2022, as it sought to significantly reduce expenditure through the aforementioned offloading of its portfolio, whilst also facing a lawsuit from former CEO Grant Johnson in January.
However, Igelman asserted to investors that following these hurdles, the firm remains in a strong position to capitalise on opportunities and secure future growth, concluding: “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.”