David Beckham's Sporting Success Bodes Ill for His Esports Company

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If you are a star making millions from sports, it is a good bet that the club employing you won’t—even if that sport is playing videogames.

On Wednesday, online gaming firm Guild Esports announced plans for an initial public offering on the London Stock Exchange . The company is co-owned by former soccer player David Beckham, and will use the cash raised to recruit professionals to compete in popular games “Fortnite”, “Counter-Strike: Global Offensive”, “Rocket League” and “FIFA”. Grand View Research expects the booming business of videogame competitions to be worth $6.8 billion in 2027, up from $1.5 billion today.

But investors beware: Sports clubs tend to be terrible companies to own. Players have outsize power to negotiate pay—in the profitable English Premier League, wage bills are above 60% of clubs’ revenues—and can often bypass employers through sponsorship deals. Manchester United has given investors a return of just 25% since floating on the New York Stock Exchange in 2012, compared with 181% for the S&P 500.

Mr. Beckham’s experience as a successful soccer player—and even more successful object of sponsorship—should have taught him a lesson worthy of Karl Marx: In elite sports, labor almost always trumps capital. Taking the class war to an online “battle royal” shouldn’t yield a different outcome.

A Global Asset Management Seoul Korea Magazine

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