Last month, the company that acquired Complexity Gaming had made a new deal to help better monetize the Frisco-based esports firm’s media assets.
GameSquare Esports, of which the Jerry Jones Family and other Complexity shareholders have a 47 percent stake, acquired Los Angeles-based marketing agency Cut+Sew and its gaming-focused subsidiary Zoned in a $7.85 million cash and shares deal.
Cut+Sew spun off Zoned last year to focus more on the growing esports industry. The company helps other brands – interestingly, including Dallas esports franchise Envy Gaming – break into and grow the space. It also operates a venture arm that has invested in organizations like FaZe Clan, PlayVS and DropLabs.
“We have seen amazing growth in gaming + esports and the convergence that is taking place with traditional sports,” Cut+Sew Co-founder Matt Hilman said in a statement.
Despite the news, GameSquare’s stocks were trading at 30 cents per share around Friday at noon, a 16.3 percent decline in the past five days.
The move comes just a couple of weeks after GameSquare acquired Complexity in a $27 million all-stock deal. With that deal, Complexity shareholders, which include Goff Capital and the company’s CEO Jason Lake, along with the Jerry Jones Family, took about a 47 percent stake in the company. It also included a multi-year agreement making GameSquare the agency of record for the Dallas Cowboys. Following the deal, Jones and the Goff family invested an additional $8.5 million (Canadian) in GameSquare, which has its headquarters in Toronto.
At the time, Complexity, which generated $5.1 million in unaudited revenue in 2020, said it saw a 71 percent year-over-year revenue growth rate in the three-month period ending on March 31. The combined companies said they expected to see $28 million in revenue by 2022.
“I believe that connecting the Dallas Cowboys with global esports fans represents limitless possibilities to grow revenue and profitability,” GameSquare CEO Justin Kenna said at the time. “We will continue to build GameSquare organically and with future acquisitions, and by bringing innovative and authentic ideas and activations to America.”
While continuing to lead Complexity, Lake took over the role of global head of esports at GameSquare. Tom Walker, CFO of the Dallas Cowboys, and Travis Goff, president of Goff Capital, joined the company’s board.
In addition to Complexity, GameSquare owns an esports agency and consulting firm Code Red Esports and esports franchise Team Reciprocity.
North Texas has long been home to the gaming industry. It’s host to several video game developers, including id Software, which well-known titles Wolfenstein, Doom and Quake, and Gearbox Entertainment, bought by Embracer Group in a nearly $1.3 billion deal. In addition to professional league teams from Envy and Complexity, the region is host to the 100,000 square-foot Esports Stadium Arlington, which claims to be the largest esports-dedicated facility in North America.
It’s also bolstered by big-name investors. Including Jones and Goff, current Texas Rangers President and COO Neil Leibman, who formed Infinite Sports & Entertainment, acquired by Houston’s Immortals Gaming Club in 2019 and helped develop Arlington’s stadium with its facility management division NGAGE. Other notable names include Mark Cuban, who has invested in esports industry-adjacent startups like betting platform Unikrn and formed Mavs Gaming in 2018, and former CEO of private equity firm NGP Energy Capital Management Kenneth Hersh, who has invested $35 million of Envy Gaming.
