Simplicity Esports and Gaming Company (Simplicity Esports) has signed announced a non-binding letter of intent to purchase four esports centres.
According to the release, these four centres brought in over $1,000,000 (£777,000) in revenue in 2019.
The deal is still subject to various legal due diligence as well as approval by all four franchisees’ landlords. If completed, the transaction will take place on September 30th.
The company operates North American organisation Simplicity Esports, Brazilian esports organisation Flamengo Esports, and centre-focused Play Live Nation. The latter is primarily located in California and Texas but this would provide it with four Florida-based locations.
Roman Franklin, President of Simplicity Esports, said in the release: “On the heels of the successful acquisition of PL Gaming Texas LLC in El Paso, TX, a former franchisee owned location, we continue to execute on our strategy of growing revenue via acquisitions of existing, franchisee owned gaming centers. The role of our wholly owned subsidiary, PLAYlive Nation, Inc., as franchisor gives us direct insight into the financial performance, operations, and existing customer base of these franchisee owned gaming centers. Previously, Simplicity Esports has only reported the royalties collected from these franchisee owned locations, which is a small fraction of the overall revenue.
“These transactions, if closed, would allow us to report the full revenues generated by these gaming centers on a consolidated basis. As a result of signing leases with significantly improved terms including percentage rents, we expect each location to be cash flow positive during calendar year 2020.”
Esports Insider says: Regional esports centres are quickly growing in popularity, although the pandemic has certainly hurt business. The main player in this space is Vindex, a company from esports pioneers Sundance DiGiovanni and Mike Sepso. The company has pledged to put $300M (235M GBP) into regional esports centres. While many esports organisations struggle to find revenue streams, regional esports centres boast the three magic words: cash flow positive. (Although Allied Esports’ Esports Arenas isn’t exactly shooting the moon.)