Fnatic: A Widening Gap

On Wednesday 11th September, the holding company of the Fnatic group published its annual accounts for 2023. The British club announced that it had achieved a turnover of €21 million last year, the same as for 2022. Fnatic's growth seems to be stabilizing, and the club's business model appears to be reaching maturity. But this stabilization also highlights changes in the distribution of revenue sources, reflecting a sectoral evolution affecting all the major players in the ecosystem:

Historically the main source of income for many clubs, Fnatic's sponsorship has fallen sharply between 2022 and 2023. This loss of over two million euros is more than compensated for by the explosion in digital revenue. Thanks to a 121% increase in this type of revenue - mainly linked to the sale of stickers on Counter Strike and the LOCK//IN Knife and Champions bundle on VALORANT - Fnatic earned a total of €5.91 million in 2023 single-handedly from this source. The Black and Orange are among the structures that benefit from this change in the ecosystem. As a historic club, Fnatic is present in numerous games and enjoys a dedicated fanbase who is willing to pull out their wallet to support their favourite team.

In order to improve profitability, Fnatic has reduced personnel costs by €2 million, in particular by limiting recruitment in marketing and production, and by capping management remuneration at around €180,000 per year. Despite these efforts, the company's total expenses amount to €26.86 million in 2023. As a result, Fnatic ended the year in the red, with a net loss of €6.37 million. This annual loss represents around 30% of turnover. It widens the club's historical deficit to over €50 million.

Fnatic is counting on the strength of its brand to refinance its operations. This includes :

In the short term, the company is due to collect around 3M€ from its various creditors... but it also has to repay short-term debt of 8.82M€.

Fnatic seems to have reached a plateau in sales growth, and now faces the challenge of stabilizing its operations to limit need for refinancing through dilution. Economic and sectoral transformations appear to be favorable to the brand, which is responding well to the expansion of digital items and the decline in sponsorship contracts. However, the structure will have to intensify its salary and functional reorganization to reach financial equilibrium.

*Contacted several times by Sheep Esports to comment on these figures, Fnatic did not respond to our requests.

EDIT: The wording used in this article has been changed from a negative "net profit" to a positive "net loss" for clarity