Simplicity Esports Takes Over Brazilian Gaming Team

A US-based esports organization has signed a takeover deal to manage the gaming division of a Brazilian soccer club.

Simplicity Esports and Gaming Company (OTCQB:WINR) has made a move into the Latin American gaming space after taking over the management of Flamengo Esports, the esports branch of Rio de Janeiro-based football club Clube de Regatas do Flamengo.

Flamengo Esports recently won the 2019 Campeonato Brasileiro de League of Legends (CBLoL) Championship that took place in September.

The deal has initially been set at three years, but Simplicity does have the option to renew the contract, according to official documents for the agreement.

Simplicity is now looking to purchase a League of Legends franchise through CBLoL after video game developer Riot Games, the company behind League of Legends, announced last week that it is transitioning the league to a franchise system.

“The ownership of a franchise in CBLoL Brazil would be a monumental step for Simplicity Esports and we believe we are on a direct path toward such ownership in one of the largest esports regions in the world,” said Simplicity CEO Jed Kaplan in a statement released last Friday (January 24).

With the deal, Simplicity has positioned itself in the quickly growing market for esports. According to a report from Newzoo, esports revenues in Latin American were up 19.5 percent year-over-year to US$32 million in 2019. The bulk of that amount — US$24 million — was generated by brand investment.

Viewership has grown in Latin America as well. In 2019, the number of esports viewers went up 17.5 percent year-over-year to 45 million people across the region.

Currently, Simplicity boasts a roster of teams for titles including Gears of War, Halo and Mortal Kombat; it also has esports gaming centers across the US.

As head of the company, Kaplan already has experience in the sporting world. He is a minority owner of the Memphis Grizzlies and of the Swansea City football club in the Champions League.

In its results for the quarter ended on November 30, 2019, Simplicity reported that it had a total of US$10.2 million in assets and US$2.5 million in liabilities.

The company ended its most recent quarter with US$245,498 in revenue, but did reduce its loss from operations to US$573,807, down from US$3.14 million reported in the same quarter in 2018. The drop translates to a US$0.07 loss per share, down from a loss per share of US$1.21 in the same reporting period a year prior.

Shares of Simplicity fluctuated during trading last week. The firm slumped 16.2 percent from market open this past Tuesday (January 21) to midday on Friday.

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Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.