Adam Pliska, the longtime president and chief executive of Irvine’s World Poker Tour, isn’t reported to be a big gambler or frequent poker player.
One may not have guessed that, after the local area exec oversaw much of the high-stakes negotiations that’s resulting in WPT—whose television show is seen worldwide by more than 150 million people annually, and whose global events have awarded more than $1 billion in prize money over the years—being sold for about $78.3 million, well more than the firm’s prior valuation of around $50 million.
The transaction, announced on Jan. 19, is expected to close in a matter of weeks.
The result is a sale that will end WPT’s affiliation with parent company Allied Esports Entertainment Inc. (Nasdaq: AESE) and mark a big payday for the Irvine esports company, whose market value stood around $75 million late last week (see story, this page).
Pliska, who counted a sizeable stake in Allied and who was on the company’s board of directors, will leave the esports firm at the conclusion of the deal.
The exec, whose looks often get comparisons to ex-president Barack Obama, told the Business Journal last week that he expects WPT—which he’ll remain in charge of, post-sale—to ramp up growth under the new ownership group.
Expect an emphasis on international expansion for the firm, whose business includes live events, online services, as well as televised broadcasts, and whose industry competitors include the World Series of Poker and other online tours.
The base of WPT, which earned some $14.2 million in revenue for the nine months ending Sept. 30, up nearly 2% year-over-year, will stay in the area, he said.
“Our headquarters will remain here,” Pliska said. “I was raised and live in Orange County, [and] I’ve collected the most experienced team in the industry, many of which live in the area.”
Paper Deliveries to Poker
Pliska, 48, has been with the World Poker Tour since 2003, a year after its founding. Prior to that, he had stints as a a lawyer and as a TV producer.
The one-time paperboy for the Orange County Register, who funded his University of Southern California film school education through a T-shirt business he ran, is one of the longest-serving executives in the poker industry and was named the American Poker Awards Industry Person of the Year for 2014.
The Newport Beach resident has seen his share of corporate changes during his tenure at WPT.
PartyGaming bought WPT in 2009 for $12 million and an additional revenue share. In 2015, WPT was purchased for $35 million by China-backed Ourgame International Holdings Ltd., and then in 2019 it was acquired by blank-check firm Black Ridge Acquisition Corp. as part of a larger deal that led to the public listing of Allied Esports.
The 2019 deal valued WPT at around $50 million.
The latest move to sell WPT began with discussions headed by Pliska in September, regulatory filings last week indicate.
After being introduced by a mutual friend to a representative of the eventual buyer, listed in SEC filings as Element Partners LLC, a series of negotiations were held. Element initially offered $48.5 million for WPT in November.
Pliska indicated at the time to the prospective buyers that he believed the proposed purchase price was “significantly lower” than what Allied’s board considered a fair value for WPT.
A $70 million to $80 million range was suggested by Allied’s team, and the ultimate price of $78.3 million, which includes a $68.3 million stock purchase and another $10 million in future payments, was finalized around the start of the year, filings indicate.
Forward Focused
Pliska said last week that he wasn’t able to comment on specifics of the sale to Element Partners, as the deal had yet to close.
“WPT will continue to focus on international growth and localization as the popularity of poker worldwide is never been greater,” he said in a statement to the Business Journal.
“Additionally, 2020 and the adjustments under a COVID environment demonstrated that WPT could not only pivot to bring much of its touch points and business online, but it could also thrive there as well. Consequently, we will continue to develop as many innovative ways to bring the WPT brand online as possible.”
WPT not only has one of the largest libraries in poker, it has a successful distribution business, Pliska said. “Whether it’s traditional linear distribution or the continued emergence of digital platforms, WPT distribution will look to play an ever-increasing role in the distribution of sports and lifestyle content,” he said.
Ownership Ties
Questions remain over the new ownership group.
SEC filings detailing the transaction only note that Element Partners “is owned by an investment fund.”
Other news outlets incorrectly pegged the buyer as a Pennsylvania-based private equity firm operating under the same name.
Business Journal research, based on a reading of legal documents pertaining to the sale, indicates the buyers count ties to several professional poker players, as well as a Foster City-based tech firm, Variant Labs.
That company’s technology is said to be used by “the largest mobile gaming platform in Asia.”
Overseas Expansion
Dealing with out-of-town execs isn’t new to WPT, which has international offices in London and China, according to regulatory filings.
Pliska said with WPT management across the globe, the company is “very well connected daily with video technology.”
“Normally, with events in five continents, we travel a lot, so location for employees is less important than a centralized place to connect to others in media and other partnership brands and Irvine is great for that, especially with the airport down the street,” he said.
In addition to keeping a home base in OC, WPT will continue to keep its production facility in Los Angeles, he said.
Allied Esports Considers Next Moves
Allied Esports Entertainment Inc. (Nasdaq: AESE) in Irvine is shedding its World Poker Tour business unit and according to carefully worded statements may be heading toward “real money gaming” online.
Allied, which runs online and in-person gaming and esports events, said Jan. 19 it is selling the WPT to Element Partners LLC.
Allied Esports also said in a statement that an additional sale of its well-known esports business is being considered, although “no potential or particular buyer has been identified and there are no initial or ongoing negotiations in respect of the sale of the esports business.”
The company, which went public via a reverse merger in 2019, had a market cap of about $68 million as of late last week.
Possible Future
If there is a sale of the esports business after the WPT deal, the company said “we would proceed, under a new corporate name, as a publicly traded holding company focused on using our cash resources to explore opportunities in online entertainment, including but not limited to, real money gaming and other gaming sectors.”
Real money gaming refers to quasi-gambling online sites where real money is wagered.
“The company does not have any specific merger, asset acquisition, reorganization or other business combination under consideration or contemplation,” Allied Esports said, adding it will continue to be a public company.
While the statements about real money gaming raise all sorts of questions, Allied Esports says it can’t reveal further details due to legal restrictions on it as a publicly listed company.
Online video games and esports have gained popularity during the pandemic as people are stuck at home. For example, shares in Irvine-based Blizzard Entertainment’s parent company Activision Blizzard Inc. (Nasdaq: ATVI) have risen about 50% over the past year.
Significant Capital
“Due to COVID-19’s impact on the company’s overall revenue generation and profitability timeline, we believe the forthcoming sale of the WPT business will garner significant capital and an avenue to determine new opportunities that will deliver accelerated returns for our stakeholders,” said Frank Ng, chief executive of Allied Esports Entertainment.
He said that despite the COVID-19 challenges “the WPT business has delivered substantial, impactful results, specifically through its online platforms and services, and has made meaningful contributions for the company.”
Allied Esports had revenue of $5.9 million in the three-month period ending Sept. 30, down 2.5% from the same quarter a year earlier.
