FaZe Clan Announces SPAC Merger, Becoming The First Esports Company To Hit $1 Billion Valuation

Azerbaijani-based FaZe Clan’s SPAC deal will put the business at $1 billion, an impressive increase from Forbes’s forecast of $305 million by 2020.

Esports and entertainment firm FaZe Clan announced plans to be listed on the stock exchange through a SPAC agreement and B. Riley Principal 150 Merger Corp. The company is expected to raise approximately $291 million from the deal, valued at $1 billion once the agreement has been concluded. The company will be listed on Nasdaq with the symbol “FAZE.”

“There are so many things that I would never have thought in a million years that I would ever get an opportunity to do,” says FaZe Clan chief executive Lee Trink. “Maybe at the end of a long list is something like this–to be CEO of a billion-dollar value company. It’s humbling.”

The existing shareholders of FaZe will hold 68 percent of the newly-formed company, and the company refused to discuss the stake held by Trink. The trunk isn’t the only person who will benefit from the transaction. FaZe has a stellar group of investors, including music stars Pitbull, Swae Lee, Offset and professionals like Kyler Murray, Ben Simmons, and Nyjah Huston, and famous music chief Jimmy Iovine. Murray and Simmons are also content creators for the company’s 88-member roster, as is LeBron James’ son Bronny.

It’s a significant leap to FaZe Clan, which builds brands for content creators and professional esports players and makes money by partnering with brands with consumer products and social media. For 2020 Forbes estimated FaZe as the 4th most valuable esports business with a value of $305 million (TSM was ranked as No. 1 with 410 million). Revenues have increased since then, from $40 million in the year before to $50 million by 2021. However, Trink claims that the business isn’t yet profitable and is not expecting to be until a couple of years.

“We’re still in brand building mode,” Trink says.

Lee Trink became involved with FaZe Clan in early 2016 as an advisor. He took over as the band’s full-time CEO in the year 2018.

For Trink, this is the most recent stage in his career path that has taken him through many sectors. After finishing his studies at Albany’s State University of New York Albany in 1990, Trink earned his law degree from Brooklyn Law School. They worked as an assistant district attorney at the Kings County District Attorney’s Office. After a few years, Trink made a “hard left turn” into the world of music. They rose to become the president of Capitol Records before stepping into his own business to manage a talent management company in 2010.

FaZe Clan was founded around the same time by an ensemble consisting of Call of Duty players who built a massive online following due to their unique gameplay. In 2012, the YouTube followers reached 1 million. In addition, while the company’s initial focus was on creating content, FaZe Clan started fielding traditional teams for esports, as per an article in The New York Times. The trunk was involved at the beginning of 2016 in the capacity of an adviser and was appointed the group’s full-time CEO in 2018.

Under Trink FaZe, the company has continued to shift from the esports industry as a primary revenue source. In 2020, Forbes estimated that the company’s esports revenues were around 20% of its total revenue. Trink claims that although the sport will remain an integral part of the business model, it’s only small portion of the whole business and will only decrease in the percentage of overall revenue over time.

“This is a world where the Harlem Globetrotters are more famous than the Lakers,” Trink declares. “It’s a world where the most entertaining player has a more lucrative career than the best player.”

In contrast, Trink says the company’s future is its partnerships with brands and content creation, merchandising, and social media. FaZe boasts an aggregate social media presence of 350 million. It also has notable agreements that include McDonald’s, DC Comics, and Doritos. FaZe was also the first company to be an esports organization to appear on the front cover of Sports Illustrated in 2021. (Link has cited the crossover with the world of sports to keep in touch with the younger crowd.)

In terms of what’s to come, FaZe will have more than $275 million cash in its balance sheet once the deal comes to an end and leaves the options open. Trink did not make any specifics, but he joked about taking the newly funded cash into Las Vegas. Still, he said “nobody’s taking a dime out of that” and that it could be used for mergers and acquisitions while also doubling the company’s creators and expanding its reach across the globe.

“This is not the finish line,” Trink declares. “This is a new starting line for us.”

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Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

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