Guild Esports have revealed that they’ve renegotiated their five-year agreement with the David Beckham-owned image rights company, Footwork Productions Ltd.
The new arrangement between the duo will ensure that Footwork Productions receives an increase in its share of Guild Esports’ revenue from merchandising and sponsorship. The development will take the place of the guaranteed minimum fee, which was the initial plan at the onset of the collaboration.
The former pro footballer was also mentioned as the brand ambassador of Guild Esports under the agreement. Beckham acquired a “significant minority stake” in the British esports company two years ago.
The previous partnership between the two parties stated that for a period of five years, Guild Esports were mandated to pay Beckham’s firm around 15% of their merchandising and sponsorship revenues. This had amounted to £15.25 million minimum on the five-year mark.
Guild revealed that they had turned in the first two instalments as per the agreement, and by the end of the year, the third instalment of £3 million would be handed over to Footwork. The last two payments will reportedly be £3.5 million and £4 million, respectively.
Per the new agreement, Guild Esports’ minimum payment obligations will be reduced to £7.5 million over the next two years. On the other hand, they will have to increase their merchandising and sponsorship revenue by 5%, making it 20%.
Beckham’s initial position as Guild Esports’ ambassador is reportedly still in place.
The new changes will “significantly reduce” the company’s cash requirements and ensure that the fees align with the performance. It will also provide significantly greater financial liquidity for Guild Esports.
The organization will provide Footworks with warrants for around £25.9 million worth of shares. The provided warrants have five years before they expire and a 2.7 pence exercise price.
Blue Star Capital PLC announced that it was “delighted” that Guild had moved to reduce their cash requirements in the deal. The investment fund has a 4.3% stake in the esports company.
Despite the favorable changes, Guild’s move to renegotiate the agreement and offer a higher percentage of their merchandising and sponsorship revenue has led to speculation about the state of their coffers.
Earlier this year, Guild Esports closed a number of significant partnerships, one of which was with Samsung, an electronics manufacturing company. The deal mandated the company to supply Guild with QLED TVs to be used in their academy as well as their London headquarters. The esports team also recently partnered with Sky UK.
Despite those deals, Guild Esports recorded a £4.96 million loss. The loss spanned a period of six months, which ended on March 31, 2022.
Guild also announced that they had cut their staff by 15, reducing the total number of active employees to 30. The reported loss is not much higher than the amount recorded during the same period last year.
At the moment, neither Beckham nor his company have said anything concerning the new renegotiation with Guild Esports.