Esports, as an industry, has achieved sectoral maturity, meaning that any financial analysis of the space must mirror approaches to other mature sectors. Although the space retains its peculiarities, it is no longer appropriate to examine esports clubs as young start-ups with high potential — some of the biggest names carried out their first fundraising rounds more than a decade ago, and investment volumes seem to have dropped considerably in recent years.

With access to multiple years of financial data, it's now possible to accurately evaluate the fiscal standing of top esports organizations. Although there remain some under-explored revenue streams (broadcasting rights, ticketing, etc.), the ecosystem's trajectory seems to have stagnated — even if there were remaining levers capable of massively increasing revenue in the future, it's unlikely any of them could justify valuations 10-15 times the size of an organization's financial turnover.

Valuation methodology

We assume that an esports club is not a simple asset manager (franchised league seats, players, etc.) and that these assets do not allow us to directly assess its value or its prospects. The drastic fluctuations in the value of slots in closed leagues — going from several tens of millions of dollars to zero at the whim of the publisher, like in the Call of Duty League (CDL) and the Overwatch League, for example — confirm that the face price of these assets may not necessarily reflect their present value.

The value of an asset should only be assessed by the present and future value of the product it's associated with; a competitive league in which a club operates is only valuable because of the revenue and financial opportunities the league generates.

The era of speculation around esports assets seems to be slowly giving way to economic and financial pragmatism, putting sustainability and entertainment at the heart of an environment previously far more focused on sporting performance, entertainment, and expansion.

This is why the valuations that will be presented will not account for the transactional or speculative value of assets such as franchise slots in the League of Legends EMEA Championship (LEC). Similarly, the subjective growth prospects of the sector will be disregarded to avoid speculation. Still, the space is expected to continue growing — an American study by Mordor Intelligence predicted that the global esports market will be worth $5.27 billion by 2029, representing an annual growth rate of 20% on average since 2024. (1)

To build our methodology, we independently solicited a group of esports experts composed of CEOs, financial directors, accountants, and investors (professional and private). All the feedback and input made it possible to refine the trajectory and weight of each factor in calculating the valuation multiplier coefficient.

Revenue multiples

The valuation methodology will be predicated upon revenue multiples, an approach that has notably found success in analyses of traditional sports — particularly football, where DCF (discounted cash flow) methods have shown their limits — and in esports.

This methodology — recommended by the leading audit firm Deloitte and widely used in academic and professional analyses (2) — is caveated by particular adjustments to the coefficients of revenue and costs (profitability) and the necessary exclusion of certain major assets strongly influenced by the market. A general coefficient multiplier will double the firm's revenue with a variable adjustment of three points — making it possible to multiply revenue by up to five — based on qualitative criteria:

⦁ Reach, particularly through the audience
⦁ Development of growth and quality of financial management
⦁ Presence in major games and leagues
⦁ Quality and reliability of shareholders

This refinement of the revenue multiples methodology will prioritize organizations whose financial management and growth are positive, then those for which engagement and audience are most significant (data provided by EsportCharts), and finally those that draw stability from high-quality and reliable shareholders.

Unlike existing studies based on revenue estimates, we will use each organization's data on accounting closings of the last two years. Contacted about the methodology used in their article on the valuation of esports clubs dating from 2022, Forbes magazine acknowledged the "highly speculative nature of the values ​​and estimated revenues" in a period where private equity funds could apply a coefficient of twelve times the revenue generated.

The valuation will be presented as a range to be interpreted as a precautionary margin. To be considered for the ranking, teams must generate a majority of their revenue in the European market. We draw your attention to the fact that valuation on a financial basis differs from transactional valuations, which take additional important criteria into account.

To paint the best picture, we will include certain specific assets in the valuation (spots in closed leagues, outsourced events, influencers and ambassadors affiliated with the club, etc.) with their net value after accounting for associated costs and liabilities.

Esport clubs evaluated

This list exclusively includes clubs whose data collected was sufficient to appear in the ranking — some clubs explicitly refused to be listed, while others lacked convincing financial data.

This report aims to provide a realistic and rigorous evaluation of esports clubs based on proven methodologies and precise data.

The valuation model builds from current revenue while taking into account certain unique characteristics of the esports industry — it aims to offer a clear and detailed vision of the actual value of leading entities in a constantly changing ecosystem.

G2 Esports 2022: Revenue $27M | Valuation $125-135M

The industry leader in revenue volume, audience, and controlled growth, G2 Esports has also built a balanced financial structure. Since 2013, G2 has worked to assert itself as the biggest esports organization in Europe — now, no other team is close. With a total workforce of around a hundred employees, G2 operates in most of the major titles in the ecosystem: League of Legends, Counter-Strike, Rocket League, VALORANT, Rainbow Six: Siege, and more.

2023/2024 Trend: Slower revenue growth with a small operating loss (less than 10% of revenue).

Fnatic 2023: Revenue $21M | Valuation $80-90M

A historic European brand, Fnatic's revenue growth seems to have plateaued — now, it must take on the challenge of stabilizing operations to limit the need for refinancing. Fnatic's cumulative cash burn is almost $50M; it's well past time for the organization to seek stabilization. However, economic and sectoral changes seem to have been favorable for the brand, which has responded well to the expansion of digital sales and the decline in sponsorship contracts. Still, the club's valuation is discounted significantly by its disappointing financial performance and slowing growth.

2024 Trend: Stable or decreasing revenue with net-loss operations necessitating shareholder refinancing.

Vitality 2022: Revenue $14.8M | Valuation $60-70M

Vitality is undoubtedly one of the strongest brands in Europe, as evidenced in particular by its partnerships with many premium non-endemic partners. With Counter-Strike as its flagship, the French club — owned by Indian billionaire Tej Kohli — has remained unable to balance its balance sheet, reporting an operating deficit equivalent to its revenue at last closing with a cumulative cash burn of almost $50M since 2019. The club's valuation is discounted significantly by its financial performance despite its impressive growth.

2023/2024 Trend: Revenue is expected to have grown relative to the reference year, with lower overall operating losses — still, these losses were significant enough to necessitate shareholder intervention. Vitality's 2023 and 2024 closings should vastly improve its valuation.

OverActive Media 2023: Revenue $11.5M | Valuation $45-55M

Listed on the Toronto Stock Exchange (TSX) and led by Adam Adamou, OverActive Media — owners of the MAD Lions, Toronto Ultra, and Toronto Defiant brands — OverActive Media is quickly becoming one of the most influential players in the space. By closing one of 2024's landmark esports deals — the acquisition of KOI and Movistar Riders — Ibai Llanos, the goliath Spanish streamer and influencer, became the organization's headliner. At the end of 2023, revenue was growing slowly, but the outlook for Q2 2024 seems extremely favorable — by the end of June 2024, OverActive had already matched its 2023 revenue. However, a discount was applied to its financial assessment due to a cumulative deficit of $74M at the end of the 2023 calendar year.

2024 Trend: Exceedingly strong revenue growth linked to the merger with KOI and Movistar Riders, with slight loss-making operations nearing or meeting overall break-even. The club's financial outlook should also improve with the recent deprecations of LEC and CDL entry fees.

Heretics 2023: Revenue $11M | Valuation $40-45M

After debuting in VCT EMEA, the LEC, and the CDL, Heretics saw its revenue jump from $5M to $11M in one year. As it entered the highest echelon of competition across titles, the Spanish company was able to fundraise several tens of millions of Euros in 2022 from private shareholders and investment funds.

2024 Trend: Slow growth in revenue with the potential to achieve balance or accept relatively small losses. The financial impact of their recent major league debuts has strained the organization's financials, likely limiting opportunities to pursue paths to sustained growth and, therefore, restricting opportunities for the organization to boost its valuation.

Karmine Corp 2023: Revenue $7M | Valuation $30-35M

Building on its national success, Karmine Corp made an impressive debut on the wider European stage and managed to end its 2023 year in balance. Its financial stability was largely buoyed by merchandising, which represented an impressive 40% of its total revenue. The club's unique economic model, driven by fan engagement, allows KCORP to shake up the financial lines of the esports sector, whether through merchandising or KCX events. Since the share of revenue from KCX is not included in the balance sheet, the asset must be evaluated separately (with KCX revenue estimated between €1.5M and €2M) to construct an accurate valuation.

2024 Trend: Revenue growth of around €11M with losses of less than 5% of revenue. The next two fiscal years, though, will be strained by debt repayment to Astralis for the LEC spot.

The notable absentees:

BDS

The data collected for Team BDS was insufficient to include the team in the ranking, and the club did not choose to respond to our requests for more information.

SK

The data collected for SK Gaming makes it possible to estimate a valuation based on assets and losses for 2022 (SK's losses were lower than its estimated revenue but with a cumulative deficit of several tens of millions of euros). However, since the company refused to disclose detailed revenue data, we were unable to achieve the requisite level of precision. We have therefore excluded SK from the ranking.

NIP

Although historically European, NIP now only draws 1/7th of its revenue from Europe — since the vast majority of its revenue is now generated in China and Asia, we chose not to include it in a European ranking.

Virtus.pro

Given the opacity of its shareholding and financing — and recent ownership changes — we have decided not to include Virtus.pro in the ranking.

OG

Despite a convincing track record in 2021 with more than €8M in gross margin and a net result of $5M, OG's gross margins at the end of 2022 and 2023 were $0.8M and $3.5M, respectively. Beyond profits or losses, we observed significant variation in financial indicators — year-to-year fluctuations closely linked to the cash prizes won in competition, especially by its Dota2 team. Since event prize pool earnings aren't indicative of an organization's overall fiscal standing, OG was excluded from the list.

Evolution and corrections:

Sheep Esports will continue to explore prospects for evolving the methodology used in this study — including, in particular, the integration of the market value of players under contract, which could be factored into the overall valuation of the club.

This process of continuous iteration of the ranking methodology aims to maintain up-to-date data while reinforcing the precision of the calculations and adjusting the weighting coefficients used. A forthcoming article will introduce a second wave of teams to be added to this valuation ranking, establishing their financial standing and outlook compared to other European clubs.

The ranking is designed to evolve, providing updated insights for esports valuations per financial news and disclosures. It will be updated regularly and continuously — a tool to evaluate and compare the valuations of European esports clubs in the ecosystem.

For any request to be added to the rankings (no minimum revenue required) or to modify data deemed incomplete or incorrect, we invite you to contact us by e-mail: administrator@sheepesports.com. Alternatively, you may speak directly with the author.

A word from the author

"If you have come this far, it's because my writing has sparked your interest or aroused your curiosity, and I thank you warmly. It has now been over a year that I have devoted my meager free time to sharing and analyzing the finances of our shared passion, esports. Many of you have read, reacted to, and shared the articles I have had the immense pleasure of writing — always prioritizing an educational tone with as much objectivity as possible. Once again, thank you!

Thanks to your unexpected enthusiasm for this subject, which can be unpleasant to discuss, clubs have been increasingly willing to disclose this information. I am only the intercessor of your insatiable curiosity on this topic.

Without realizing it, you have fueled the industry-wide shift towards greater financial transparency in esports. Although some cling to opacity, you have demonstrated that the future of esports relies on a transparent and responsible approach from all stakeholders — starting with the teams at the heart of the scene.

I would also like to thank those who supported me in the creation and continued iteration of the methodology. Your feedback is invaluable, and your kindness is proof of your sincere commitment to the scene and its fans. For me, this article represents the culmination of a crucial first step that will lead us to address new substantive topics soon, particularly with publishers.

Finally, thank you to Sheep Esports for their unwavering trust.

— Mehdi"

Appendix

Calculation

Details of the valuation methodology (x): x = (c + f + q+2)*a

Calculation Basis - Revenue excluding taxes (a).

1. 2-point multiplier representing the natural growth prospects of the sector.

2. Analysis of average growth: 0.5pts max (c)

3) Analysis of financial performance and average solvency: 2pts max (f)

* Maximum scoring for companies that are at break-even or profitable
** 60% weighting to establish operational stability as a key criterion
***Financial ratio to assess the company's financial strength, highlighting the impact of debt

4. Additional Qualitative Criteria: 0.5 pts max (q)

An alternative scenario to the presented model is possible, based on pessimistic sectoral forecasts. This approach reduces the impact of sectoral growth to focus more on an individualized company calculation, detailed as follows:

Sources

Deloitte: Deloitte Football Money League 2024

Academic doctrines: