Exclusive: GameSquare agrees to sell esports team for $10.4M

GameSquare Holdings has agreed to sell esports team Complexity Gaming for $10.4 million in cash to an investor group led by the team's founder and CEO.

Why it matters: The sale clears the way for GameSquare to buy a larger team and avoid esports restrictions that prevent a single owner from running more than one at the same time.

Zoom in: Complexity founder and CEO Jason Lake is buying back the team's parent organization, NextGen Tech, through an investor group that he now leads — Global Esports Properties.

• The company said the deal is expected to close shortly after receiving approval from the TSX Venture Exchange. GameSquare is also traded on the Nasdaq, with a market value of $27 million.

By the numbers: GameSquare acquired Complexity for $27 million in stock in 2021.

• Complexity's sales increased from $3.4 million in 2021 to $9.5 million in 2022, GameSquare said.
• CEO Justin Kenna said Complexity's aggregate social followers grew 10 times between 2021 and 2022.
• "While it is bittersweet to sell Complexity, there is no one better suited to take over than Jason and his team," Kenna said in a statement.

Between the lines: GameSquare is in the process of buying FaZe Clan, another esports team. That GameSquare could be the owner of two esports teams at the same time sparked concern ahead of the industry's Counter-Strike tournaments.

• The FaZe deal is expected to close in the coming days, GameSquare said.
• Kenna tells Axios that GameSquare considered a licensing deal and other strategies to keep Complexity, but the timing of the upcoming Esports World Cup and other challenges made it tough.

Zoom out: Kenna says GameSquare did not seek other buyers but was satisfied by this all-cash deal. He joined GameSquare as CEO in early 2021 after previously serving as CFO of FaZe.

• FaZe is much larger. It reported $36.7 million in revenue for the first three quarters of 2023, according to its earnings report. But it was bleeding money, reporting a $35.6 million net loss during that time.
• Complexity's audience is about 100 million, whereas FaZe's is 500 million, per GameSquare.

The big picture: In addition to owning esports teams and managing talent, GameSquare is also works with brands and publishers on larger gaming initiatives.

• GameSquare merged with Engine Gaming and Media, which owns data analytics company Stream Hatchet, last year. It also hired Twitch streamer Tyler "Ninja" Blevins as its chief innovation officer.
• It recently worked with MasterCard on a custom Fortnite experience. Kenna says he expects the FaZe deal to open more doors.

Editor's note: This story was updated with additional details.