FaZe Clan Could Soon Be Bankrupt — What Next?

Samson Amore

Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.

The FaZE Clan.
Courtesy of the FaZe Clan

According to a report last week in Forbes, FaZe Clan, an esports team owner and content powerhouse could soon be bankrupt. The company is failing to generate enough revenue, and what’s more, once a “lock-up” agreement on the stock is lifted following FaZe’s public merger in January, all FaZe employees will be able to sell shares if they wish.

The news comes as the talented gamers, streamers and influencers that make up FaZe’s roster are seeing their follower counts grow by the day.


What’s unclear is if the FaZe players themselves could jump ship. It’s also uncertain if this talent has such a sizable fan base because they’re tied to FaZe, or if they could take this following elsewhere if they were to defect.

It’s worth asking though: what would motivate creators to wait that long, especially if they’re offered lucrative solo deals? It could be about exclusivity; we haven’t seen their contracts and it’s possible FaZe has locked these players down for quite some time. The agency also invests heavily in talent, which might not be the case for other outfits looking to quickly capitalize on their celebrity to make a fast buck.

In other words, there might be companies eager to throw sponsorship deals at FaZe creators. But those companies might not provide the support, endless hype, and in some cases, living and working space the talent is used to. Also, some of these creators are already well-paid through their association with FaZe, which has incubated them since the beginning of their careers.

In a recent YouTube video, FaZe creator Lucas “FaZe Blaze” Mosing disclosed he was paid $15,000 for a three-hour stream. But, he noted that other creators make up to $50,000 for the same work. That’s significant because brand deals are where these creators really profit. In a recent filing, FaZe disclosed it only makes an average revenue per user (ARPU) of 36 cents on YouTube. That’s a paltry number even compared with some of its top talent on the platform and ironic since YouTube is FaZe’s overall most popular platform. Overall FaZe’s total reach is an estimated 526,268 million people, up from about 358,000 last year.

“It’s been tough,” Bilko said. “[FaZe are] not the only ones that are having a tough time monetizing, but they're also spending money to reach beyond that consumer and haven't been able to monetize them either.”

If Mosing and other FaZe stars could maintain their followings but exit FaZe, would they still command the same lucrative brand propositions?

Most likely, the answer is yes. These deals are calculated chiefly by the prospective size of the influencer’s network, not what platform or company they’re loyal to. Just look at Tyler “Ninja” Blevins, the mega-popular streamer who leapfrogged his audience from Twitch to Mixer then back to Twitch two years ago.

FaZe’s finances are also in peril partly because of an outsized investment in celebrity deals, which industry experts say are a mixed bag in terms of return on investment. They’ve also invested heavily in a demographic (Gen Z) that isn’t paying off yet.

“We've seen a plethora of organizations tying celebrities to their brand that doesn't really have anything to do with the esports space, hoping that it will make them succeed, but it's rarely the case,” said Felix LaHaye, founder and CEO of United Esports. “But overall, the celebrities of gaming, the influencers, and the players, are really the celebrity power that you should be looking to obtain and leverage.”

So far, that strategy isn’t yielding dividends. FaZe is still in the red; it lost $130.6 million in its third quarter.

“They've spent a lot of time, effort and capital, to break through to the more mainstream consumer,” said Brendan Bilko, founder and creative director of Los Angeles-based sports brand agency studio Robin. Bilko cited FaZe rival Culver City-based esports outfit 100 Thieves as the only other similar company to have become mainstream names. But, Bilko noted, “the question becomes, by doing these mass [market] plays does that help their core business; are they reaching someone that’s going to convert and become a paid customer in some way?”

Both Bilko and LaHaye said that celebrity investments rarely pay off. Bilko said that sometimes, he advises clients to go after micro-influencers instead, people with smaller and more loyal followings more likely to pay for products they hawk.

FaZe’s CEO Lee Trink has been clear about his goals to bring FaZe into the mainstream the same way most sports are, and even spearheaded a deal with the NFL in August. But Trink’s ambitions to turn his players into worldwide superstar athletes could backfire, if they outgrow the organization.

Bilko compared FaZe talent to traditional sports icons like Michael Jordan or Kevin Durant, who fans were prone to root for regardless of their team affiliation. “FaZe [has] a bunch of personalities that people really like and resonate with their core audience,” Bilko noted. He added that since FaZe’s esports business is clearly doing well, its players won’t have a hard time finding work: “There's opportunities for them going forward.”

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🚁 One Step Closer to Air Taxis in LA
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🔦 Spotlight

Joby Aviation, a pioneering electric air taxi company, has achieved a significant milestone by successfully flying a hydrogen-electric aircraft demonstrator for 523 miles with only water as a byproduct. This groundbreaking flight showcases the potential for emissions-free regional travel using vertical take-off and landing (eVTOL) aircraft, eliminating the need for traditional runways. The company's innovative approach combines its existing battery-electric air taxi technology with hydrogen fuel cells, paving the way for longer-range, environmentally friendly air travel.

For LA residents, this development holds exciting implications for future transportation options. Joby's technology could potentially enable direct flights from LA to destinations like San Francisco or San Diego without the need to visit conventional airports, offering a cleaner and more convenient alternative to current travel methods. The company's progress in both battery-electric and hydrogen-electric aircraft positions it at the forefront of next-generation aviation, promising to revolutionize urban and regional mobility.

Notably, Joby Aviation has already made strides in Southern California by securing an agreement with John Wayne Airport earlier this year to install the region's first electric air taxi charger. This strategic move sets the stage for LA to be among the initial markets where Joby will launch its electric air taxi service. With plans to commence commercial operations as early as 2025 using its battery-electric air taxi, LA residents may soon have access to a fast, quiet, and environmentally friendly mode of transportation that could significantly reduce travel times and traffic congestion in the region. In the not too distant future, LA might find itself in an identity crisis without traffic and excess smog 🤞🤞.


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Fuel Innovation: 7 Unforgettable Team Building Experiences in LA
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In today's competitive business landscape, team building activities have emerged as a crucial tool for fostering a positive work environment, enhancing productivity, and crucially, improving employee retention. Studies have shown that such activities help employees feel valued, with one report indicating that 93% of those who felt appreciated were more motivated at work. Importantly, team building events may improve retention rates, as employees who feel connected to their colleagues and company culture are more likely to stay long-term. With these benefits in mind, let's explore some of the most engaging and effective team building activities available in Los Angeles.

Pickleball

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Pickleball is a fantastic team bonding activity because of the easy-to-grasp rules and gentle pace make it perfect for everyone, regardless of age or fitness level. The game thrives on communication and teamwork, as players must collaborate and strategize to outplay their opponents, boosting team cohesion. Plus, the lively, fast-paced action sparks friendly competition and laughter, creating a fun and spirited atmosphere that brings everyone closer together. Los Angeles boasts numerous pickleball courts that are easy to rent if you have your own equipment. If you need additional assistance organizing your pickleball outing, there are plenty of full-service companies ready to handle every detail for you.

Resources: Pickle Pop, Corporate Pickle


Escape Room

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Escape rooms are a great way to build camaraderie. They require participants to work together, combining their problem-solving skills and creativity to overcome challenges and puzzles. The immersive and time-sensitive nature of escape rooms fosters collaboration and communication. Additionally, the shared experience of tackling complex tasks and reaching a common goal helps build trust and foster positive emotions among colleagues.

Resources: The Escape Game, 60Out


Day Trip to Catalina Island

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Catalina Island is a perfect day trip for a team because it provides a break from the usual work environment, allowing team members to relax and connect in a new setting. Shared experiences during the trip, such as exploring new places and participating in fun activities, help build stronger relationships and foster a sense of camaraderie. There are numerous team-building activities such as an arboreal obstacle course, an island tour, scavenger hunts and more.

Resources: Catalina Island Group Activities


Top Golf

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Topgolf is an excellent team building event because it provides an inclusive, relaxed atmosphere that accommodates players of all skill levels, fostering personal connections and improving team morale. The unique blend of competition and entertainment creates an ideal setting for building trust, enhancing communication, and revealing hidden skills among team members. Additionally, Topgolf offers structured team building packages with guided activities, discussion prompts, and lessons on culture, change, collaboration, and strategy, making it a versatile and effective platform for strengthening relationships and boosting overall team performance.

Resources: Topgolf El Segundo


SoFi Stadium Tour

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A SoFi Stadium tour offers a unique, behind-the-scenes experience of one of the world's most advanced sports venues, allowing team members to explore exclusive areas like premium suites, team locker rooms, and the player tunnel together. The tour provides a shared, memorable experience that can foster camaraderie and spark conversations among team members, regardless of their interest in sports. Additionally, the stadium's state-of-the-art features and impressive architecture can inspire creativity and innovation, while the group setting encourages interaction and collaboration, making it an engaging and enjoyable activity for teams of various sizes and backgrounds

Resources: SoFi Stadium Group Tours


Corporate Volunteering

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Volunteer work serves as an excellent team building activity by uniting employees around a shared, meaningful cause, fostering a sense of purpose and collective accomplishment. It provides opportunities for team members to collaborate in new ways, often revealing hidden strengths and leadership qualities that may not be apparent in the regular work environment. Additionally, engaging in community service can boost morale, enhance the company's reputation, and instill a sense of pride among employees, leading to improved workplace relationships and increased job satisfaction.

Resources: Habitat for Humanity, L.A. Works, VolunteerMatch


Corporate Improv Sessions

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A corporate improv class encourages spontaneity, creativity, and quick thinking, skills that are valuable in the workplace. It promotes active listening and collaboration, as participants must work together to create scenes and respond to unexpected situations, fostering better communication and trust among team members. Additionally, the playful and often humorous nature of improv helps break down barriers, reduces stress, and creates a shared positive experience that can improve team morale and cohesion long after the event.

Resources: Improv-LA, Groundlings, Improv for the People

🎬 Paramount and Skydance Are Back On
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Happy Friday Los Angeles! Hope you all had a fantastic Fourth!!

🔦 Spotlight

Paramount and Skydance Media have rekindled talks to merge after negotiations abruptly halted in June. The proposed deal, contingent on approval from Paramount’s board, aims to combine Paramount’s extensive media holdings—including CBS, MTV, and Nickelodeon—with Skydance’s film expertise showcased in hits like "Top Gun: Maverick." This merger signals a potential transformation in the media landscape, positioning the new entity to compete more effectively amid challenges from streaming services and the decline of traditional cable TV.

Led by Shari Redstone, Paramount’s controlling shareholder via National Amusements, the deal represents a pivot towards revitalizing Paramount’s strategic direction amidst financial struggles and shareholder concerns. The involvement of major investors like RedBird Capital Partners and David Ellison underscores the financial backing aimed at stabilizing Paramount’s operations and addressing its $14 billion debt burden. Importantly, the agreement includes provisions to protect National Amusements from potential legal challenges, addressing previous hurdles that stalled earlier negotiations.

The deal also includes a 45-day period for Paramount to explore alternative offers, highlighting continued interest from other potential buyers like Barry Diller’s IAC and media executive Edgar Bronfman Jr. This flurry of activity underscores the significant stakeholders’ interest in Paramount’s future and its potential as a key player in a rapidly evolving media industry.


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