Enthusiast Gaming’s Free Fall Continues
The highest-profile publicly traded Canadian esports company is in internal disarray.
Canada’s most high-profile publicly traded esports company continues to find itself in hot water, as several of Enthusiast Gaming’s high-level executives called for the resignation of its CEO in a letter to its board on Wednesday, later obtained by The Washington Post.
It’s the latest in the company’s downward spiral, which is seemingly gaining more and more momentum by the day.
In March, the company laid off nearly half of the 26-person staff of Upcomer, its esports news site that had relaunched less than a year earlier. In late May, Enthusiast’s largest shareholder, Greywood Investments, filed a letter and launched a marketing campaign calling for CEO Adrian Montgomery’s ouster, the replacement of the existing board of directors, and then, later, the nomination of Shinggo Lu, co-founder of Enthusiast subsidiary U.GG, to its board. Now, with outside confidence in the company’s leadership at an all-time low, it seems the knives have come out internally, too.
“Our primary and clear conclusion is that the company's current CEO, Adrian Montgomery, is a detriment to the company's management, operations, communications and growth strategies and Enthusiast is failing to realise its potential under his leadership and under the direction of the Board of Directors, as it is currently constructed,” Greywood wrote in its May letter.
After the Post reported the executive-written letter pressuring Montgomery to resign, the company filed its own letter. It said it will move Montgomery to chairman of the board and hire an interim CEO, while conducting a search for a permanent replacement with its existing board. It will also—somewhat meaninglessly—start a review “focused on additional opportunities for increased shareholder value.”
Enthusiast’s fall from grace could be seen a mile away, regardless of Greywood’s and its other top executives’ most recent push. In 2021, the company reported a net loss of $41.6 million in annual earnings. The year before, it lost $21.5 million. Its stock has fallen nearly 65 percent over the past year, going from more than $7 CAD ($5.43 USD) to now just $2.55 CAD ($2 USD) per share, at time of publication.
Its lavish spending on projects like Upcomer, which sources told me spent close to $2 million in its first year, never made fiscal sense. By comparison, in my group’s final year at ESPN—the fifth year of the project—we spent roughly $1.5 million, as reported by the Post.
I told Digiday in March that Enthusiast offered me $200,000 per year in salary and additional equity and bonuses totaling $100,000 to become senior leadership at Upcomer, just weeks before me and my colleagues were laid off from ESPN in November 2020.
In discussions I had during that time, the focus continued to stay on the money—not on the strategy of the business or how to recoup its costs. And while I said no to joining over concerns of stability, several of my former colleagues said yes. Some still work there, some were affected by the layoffs.
Parallel to the Upcomer layoffs in March, Enthusiast also ousted its founder, Menashe Kestenbaum, who spearheaded the Upcomer and Destructoid relaunches in 2021 and the company’s blitz into digital media. Kestenbaum, several current and former employees told The Jacob Wolf Report, always seemed driven to try something new, but executing and finding commercial success never seemed top of mind.
Perhaps most telling is that Enthusiast’s board’s most successful director, Vancouver Canucks owner Francesco Aquilini, is not seeking reelection, according to filings.
Over the course of the recruitment process for the Overwatch and Call of Duty Leagues in 2018 and 2019, Aquilini’s wealth and experience operating businesses in the Pacific Northwest played a pivotal role in deciding to buy into both and launch the Vancouver Titans and Seattle Surge, sources told me at the time. Aquilini walking away, despite his statements of confidence in the company, signals a detachment from those once-lofty operational plans.
It’s rare that the esports industry gets the level of insight provided in Enthusiast’s back-and-forth disputes—but that’s the nature of a public company, in an industry where, based on the volatility, arguably no company should be public. Margins in esports are abysmal, few people are making real money, and whether you’re Enthusiast or FaZe Clan, which will likely go public in July, that doesn’t seem likely to change anytime soon.
Enthusiast frequently touts itself as the “largest gaming network in North America,” referencing its digital media traffic and its social media metrics across its wide portfolio, from the editorial websites, U.GG and other apps, and its ownership of Luminosity Gaming and interests in the Titans and Surge.
But that title is becoming less and less sexy as the veil—concealing a business in disarray—is dropping.
One More Thing: Riot Relocates World Championship Semifinals from Toronto to Atlanta
Riot Games is relocating the semifinals for its 2022 World Championship, the largest esports event of the year, from Toronto to Atlanta, citing concerns over travel visas for international teams that will be competing at the event.
The semifinals stage is moving from Scotiabank Arena, the home of the NBA’s Toronto Raptors, to the Atlanta Hawks’ State Farm Arena.
The move, Riot told employees in a memo, comes amid concerns about multi-entry visa requirements in the U.S.—given the original event was scheduled to include a play-in stage in Mexico City and semifinals in Toronto, with a group stage leg in New York in between.
“The pandemic has dramatically expanded the timelines to secure these visas, meaning we could not with a high degree of confidence ensure that we could get all competing teams in, out and back into the U.S. to the necessary Worlds stages,” Riot’s global head of esports, Naz Aletaha, said in the company-wide memo. “That is a risk we are not willing to take, so we have made the decision to change course for the Semifinals stage and remain within the U.S. This will allow us to leverage more viable single-entry U.S. visas as we look to de-risk the event from travel-related blockers.”
Now, players will go from Mexico City to New York then Atlanta, before ending up in San Francisco for the finals event.
The semifinals will mark the largest esports event by expected attendance in Georgia’s history. Atlanta previously hosted Turner Broadcasting’s ELEAGUE, including a 2017 Counter-Strike: Global Offensive Major at the iconic Fox Theatre, as well as DreamHack Atlanta and the 2019 Atlanta Reign Overwatch League homestand. Neither State Farm Arena nor Mercedes-Benz Stadium, home of the NFL’s Atlanta Falcons, have ever hosted an esports event.
The last time the League of Legends World Championship occurred in the U.S., in 2016, it traveled from San Francisco to Chicago to New York and then Los Angeles, including gracing Madison Square Garden and the Staples Center.
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