Guild Esports Agreed to Pay David Beckham $20M Before He Became an Investor
British esports organization Guild Esports made its debut on the London Stock Exchange (LSE), becoming the second publicly-traded pure-play esport company after Astralis Group’s initial public offering (IPO) on the Nasdaq OMX Nordic. Before completing its IPO, Guild Esports made headlines in mainstream media by securing an investment from British soccer legend David Beckham.
While the narrative of Beckham being a co-owner of Guild spread like wildfire and secured the company media and investor attention, this article will shine a light on the business facts behind this storyline.
Guild Esports was incorporated on Sept. 3, 2019, as The Lords Esports before changing its name to Guild Esports on Apr. 17, 2020. The company went through several financing rounds in quick succession, starting with a £100K GBP ($130K USD) investment on Sept. 13, 2019. Between Oct. 21 and Dec. 30 in the same year, Guild raised another £317.5K ($412K).
Before Beckham became an investor of Guild Esports, the organization entered into an influencer agreement with Footwork Productions, a Beckham-owned company that was set up for “the exploitation of David Beckham’s name and image rights.” The five-year deal, which was inked on May 4, 2020, compensates Beckham for becoming the “face of Guild Esports” with a minimum amount of £15.25M ($19.78M) during the term of the contract.
The details of the influencer contract between Footwork and Guild includes a non-exclusive, non-transferable license to use Beckham’s name, voice, biography, image, and likeness and signature to advertise and promote Guild Esports for the five-year term. Additionally, Beckham has to complete one photoshoot, make one TV/video content shoot, make two public event appearances, and complete 12 social media posts about Guild annually.
In return, Beckham is entitled to an annual fee of an amount equal to 15% of the proceeds of all of Guild’s merchandising sales and sponsorship revenues during the term. However, Guild Esports agreed to a minimum payment of £2.25M ($2.92M) in the first year, £2.5M ($3.24M) in the second year, £3M ($3.89M) in the third year, £3.5M ($4.54M) in the fourth year, and £4M ($5.19M) in the final year of the contract.
Each annual payment is due in advance and the first was made on the commencement of the agreement, which exceeded Beckham’s investment back into Guild Esports by more than £2M ($2.59M). In case Footwork’s entitlement to fees exceeds the minimum payment for a year, Guild is required to make a balancing payment at the end of the relevant twelve-month period.
Moreover, Footwork negotiated a safety feature to ensure Beckham’s payment for the first three years of the deal in case Guild Esports becomes unable to pay during the term. With Guild’s admission to the LSE, the company made a £5.5M ($7.13M) deposit in an escrow account, which covers the minimum payments of years two and three of Beckham’s influencer contract.
Between March and August of this year, Guild continued adding a total of £4.78M ($6.2M) in capital through several fundraising rounds. This sum includes Beckham’s £245,735.29 ($319K) investment made on June 12. Beckham’s investment was made via his investment vehicle DB Ventures at a per-share price of £0.01 ($0.013), allotting 24,573,529 ordinary shares, representing a 9.29% stake in the company prior to its listing. In total, Guild raised £5.3M ($6.87M) in pre-IPO funding rounds.
Through its float on the London Stock Exchange, Guild raised gross proceeds of an additional £20M ($25.94M). Following the placing, Beckham is the fourth-largest shareholder with his 24,573,529 shares representing a 4.78% stake in the company.
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