Allied Esports Entertainment will sell the World Poker Tour (WPT) and other entities after agreeing to a sale with Element Partners.
The sale will include all of Allied’s poker-related business ventures. Both parties expect to close the deal either later this month or in February.
World Poker Tour’s acquisition will cost $78.5 million, which Element will pay both an up-front fee and other installments.
A strategic move
Allied chose to sell WPT as part of its strategy to focus more on its esports-related entities. Much of its reasoning behind this is because of the vertical’s growth since the beginning of the COVID-19 pandemic.
Going forward, the company has suggested that other sales might be possible to help them reach these objectives.
WPT enjoyed a successful 2020. The flagship ClubWPT platform generated more registrations than had been the case in the previous year. This included a 61% year-on-year increase in Q3.
ClubWPT also hosted a $100 million guaranteed prize pool, which was its biggest-ever event. Meanwhile, subscription revenue in Q3 2020 represented a 56% annual rise.
Element Partners’ purchase will include a $68.25 million up-front payment. The investment company will also pay 5% of the revenue share for all of WPT’s tournament entry fees on its owned or licensed gaming solutions.
The 5% revenue share is equal to up to $10 million and will be spread over a three-year period once the deal is completed.
“Substantial, impactful results”
Commenting on the sale of WPT, Allied Esports Entertainment Chief Executive Frank Ng said the following.
“Despite the many challenges caused by the Covid-19 pandemic, the WPT business has delivered substantial, impactful results, specifically through its online platforms and services, and has made meaningful contributions for the Company.
“In addition, Allied Esports, with its world-renowned HyperX Esports Arena Las Vegas and best-in-class production services, has generated market attention as the esports industry gained momentum during the pandemic.”
Meanwhile, Adam Piiska – Chief Executive of WPT – said: “I want to thank Frank Ng and the entire AESE management team for their support in allowing WPT to flourish during this period. My management team and I are excited about this next chapter and the tremendous new opportunities for the WPT brand and business.”
What next for Allied Esports Entertainment?
Alongside his above-mentioned comments, Ng also mentioned that the capital generated from the sale will help Allied to seek new opportunities. These will be pursued if they can bring faster stakeholder returns.
Allied has considered selling the business to raise capital for its esports opportunities. To do this, it has partnered with Lake Street Capital Markets. Right now, however, no buyer has been found and there are no ongoing negotiations.