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FaZe Clan, the esports and gaming lifestyle and media brand, is going public today in a deal that valued the company at $725 million.
The company is making its bid to be the harbinger of mainstream youth culture, even though it still has challenges making money as we’re heading into a possible recession. [Update: The stock opened at $13.02 a share, and it fell 29% to $9.23 a share in early trading.]
One of the big advantages FaZe has is breaking into mainstream culture and generating a lot of brand value. In 2022, Forbes estimated that FaZe Clan is worth about $400 million, up 31% from 2020.
But in an amended SEC filing on April 29, FaZe said it was revising its forecasts downward. The company reported a $36.9 million net loss on revenues of $52.9 million in 2021. FaZe was fourth in Forbes’ list of the top 10 esports companies.
Part of the financial challenge is that in-person esports events have taken a huge hit during the pandemic, as rolling coronavirus scares have meant that people are still avoiding crowds. Ticket sales have tanked. But online viewership numbers have climbed.
The company is listing today on the Nasdaq stock market under the ticker symbol FAZE. The company’s executives are ringing the opening bell at Nasdaq in Times Square at 6:30 a.m. Pacific time. It’s a big day not only for the company, but for esports and gaming culture — and geeks everywhere.
Back in October, FaZe Clan said it would go public through a special purpose acquisition company (SPAC), which circumvents the lengthy regulatory process for going public via an initial public offering (IPO). It said at the time it was worth $650 million and had ambitions of hitting a valuation of $1 billion.
In a SPAC transaction, a private company merges with a public “blank check” company for the purpose of going public. In this case, FaZe Clan merged with B.Riley Principal 150 Merger Corp.
FaZe Clan is the first Gen Z native brand to go public and is the biggest brand in gaming culture with a global fanbase network of over 500 million, the company said.
The company said that Gen Z will have $33 trillion in spending power by end of the decade and that it sees a “massive shift underway as Gen Z drives spending, commerce, and culture.” FaZe Clan said it sits at the intersection of technology and culture, with a loyal fanbase and know-how to engage this coveted audience.
The company’s existing business drivers include sponsorships, content, consumer products and esports. It’s a heritage brand of over 12 years that has been a content, media company since day one before gaming and esports gained popularity.
FaZe Clan also has a talent network roster of more than 100 influential names that include prominent global celebrities, professional athletes, esports athletes and content creators, including Snoop Dogg who is a member and sits on the board, NFL star Kyler Murray, Lebron James Jr. and more.
Advent of Web3 will provide new tools and experiences to accelerate the company’s ongoing shift into creator economy and “Influencer 2.0” businesses.
FaZe Clan’s 11 competitive esports teams have won 35 championships worldwide. According to Esports Earnings, FaZe Clan is the 13th top team in terms of earnings with $13.3 million across 529 tournaments. Add to that revenue from sponsorships and media revenues.
The company produces premium content, merchandise, and consumer products and creates advertising and sponsorship programs for leading national brands.
With approximately 80% of its audience between the ages of 13 to 34, FaZe Clan has unlocked key relationships with a coveted demographic that has long proven difficult to reach for traditional media companies and advertisers.
FaZe Clan was founded by a group of teenagers who met online playing Xbox and ultimately ended up turning their passion for playing video games into lifelong careers, not only creating a living out of something that had never been done previously but building a global brand. The founders and key members critical to the growth of the brand since the beginning include FaZe Temperrr, FaZe Banks, FaZe Apex, FaZe Rain, FaZe CBass, FaZe Rug, FaZe Adapt, FaZe Teeqo, FaZe Blaze and FaZe Jev.
CEO Lee Trink assumed his current role in 2018 after joining the Company as an adviser in 2016. Formerly president of Capitol Records, Trink has over 20 years of media and entertainment experience working with artists like Kid Rock, Katy Perry, Lenny Kravitz and The Rolling Stones.
Zach Katz, president and chief operating officer, joined in 2022 following a 20-year music industry career including president of BMG US, cofounder and CEO of record label and music publishing company, Beluga Heights (a partnership with Sony Music, Warner Music & Universal Music).
“This is a landmark event for gaming culture and Gen Z, as FaZe Clan becomes the first Gen Z native brand to go public,” said Trink, in a statement. “It provides us the access to capital and global profile to enable our long-term growth objectives, and for the first time gives our fans the opportunity to own a part of our future. As this generation rises to economic power and influence, FaZe will continue to use its voice to pioneer and innovate at the intersection of technology, entertainment and culture. We thank our partners at B. Riley and look forward to engaging with our shareholders. FaZe Up.”
FaZe’s top games include Call of Duty: Vanguard, Counter-Strike: Global Offensive and Valorant. It also has a variety of other teams.
The owners include Trink, Michael Stang Treschow, Yousef Abdelfattah, Richard Bengston, Thomas Oliveira and Nordan Shat.
B. Riley Securities, Inc. acted as capital markets advisor to BRPM and as sole placement agent on the PIPE. M. Klein and Company and Evolution Media Capital served as financial advisors to FaZe Clan. Skadden, Arps, State, Meagher & Flom LLP is acting as legal advisor to FaZe Clan. White & Case acted as legal advisor to BRPM. McDermott Will & Emery acted as legal advisor to the PIPE placement agent.