Starting with its esports venue
Former World Poker Tour owner Allied Esports Entertainment is reportedly considering getting out of esports altogether, a move which would include selling the HyperX Esports Arena at the Luxor in Las Vegas.
According to the Las Vegas Review-Journal, this isn’t just a “well, anything is possible” situation, but rather a serious discussion. In an earnings call on Monday, Allied Esports president and CEO Claire Wu said that talks of a sale are beginning to “accelerate” and that the company has hired investment banking firm Lake Street Capital Markets as an advisor.
As people stayed home last year during the pandemic, the popularity of esports and other internet-based entertainment jumped. Though this would seem, then, like a bad time to get out of the business, it is something at the company has been thinking about for a while. The good news for Allied Esports Entertainment is that because of the surge in esports, its business could be seen as more valuable. There are no concrete suitors or offers on the table at this time.
One of the big reasons why Allied Esports may sell the HyperX Esports Arena is simply because of its location. It is located inside a casino on the Las Vegas Strip, yet the average age of its customers is just 16. Thus, its patrons bring little extra value, since they can’t legally drink or gamble. The Review-Journal also noted that some experts recently “criticized the arena for a lack of programming and follow-up investment after its initial launch.”
See-saw negotiations for the WPT
As mentioned, Allied Esports was the parent company of the World Poker Tour. It just sold the Tour to Element Partners, closing the $105 million deal on July 12.
It was a back-and-forth with multiple bids spanning the first half of this year. Element was the first bidder for the WPT, offering $78.25 million in January. Of that, $68.25 million would have been cash, with the other $10 million coming from a 5% draw on WPT tournament fees for three years.
Though Allied Esports agreed to the offer, in early March, Bally’s Corporation offered to buy the entire company for $100 million, as long as the World Poker Tour was included. Bally’s revised the proposal a couple weeks later, offering $90 million cash for Allied’s poker business.
Allied accepted that offer, but as with its previous deal, had an out in case another “Superior Proposal” came about. Element came back on March 19 with an offer that was $500,000 more than Bally’s, plus some other favorable changes to the terms of the agreement. On March 25, Bally’s returned with a $105 million offer for the World Poker Tour.
Four days later, Element matched the Bally’s deal and Allied Esports Entertainment accepted, ending the bidding war.
Claire Wu said that it will use the money it made from the World Poker Tour sale plus a sale of its esports business to possibly move into online entertainment or online gambling.
