David Beckham-backed Guild Esports faces financial crisis after burning £26.6m

Guild Esports, the David Beckham-backed gaming group, is teetering on the brink of collapse, less than four years after its high-profile listing on the London Stock Exchange.

The company, which competes in video game tournaments for titles including Fortnite and Tekken, has warned shareholders of its dire financial situation, with just £25,000 left in its accounts.

On Thursday, Guild’s share price plummeted to a record low of ¼p, reducing the company’s market value to just £1.3m. Since its initial public offering (IPO) in October 2020, Guild’s shares have fallen in value by 98%, a stark contrast to the launch price of 8p, which initially valued the company at around £40m.

Guild’s foray into the stock market was initially seen as a litmus test for the city’s interest in the fast-growing esports sector, where professional gamers compete for substantial prize money. However, the company has struggled to win over investors, posting losses of £26.6 million in three and a half years while generating just £14 million in revenue.

The company’s management has reassessed its strategic direction and released their preliminary findings this week. With £1.4m of outstanding accounts at the end of September, Guild’s financial prospects remain precarious, despite an expected income of £1.5m in the coming months.

In a recent stock announcement, Guild stated: “The company is actively exploring a range of options to meet its near-term obligations. These include securing additional financing, negotiating better payment terms with creditors and further initiatives to reduce costs.”

In addition, the board is considering broader strategic shifts, which could allow for an asset-for-cash asset realization or possibly a merger with a larger entity.

David Beckham, who was an early investor and acquired shares at a discounted rate before Guild’s IPO, has a stake of just over 3%. Despite investing around £250,000, the value of his shares has fallen to less than £50,000. Nevertheless, Beckham has benefited significantly from an influencer deal with Guild, earning around £7.625 million to date from social media promotions and public appearances.

Beckham was originally guaranteed profits of £15.25 million over five years from this deal. However, two years ago the terms were renegotiated so that Footwork Productions, Beckham’s image rights company, now receives a 20% cut on all sponsorship income and merchandise sales.