The ownership of the World Poker Tour (WPT) has officially changed hands. This announcement was made by Allied Esports Entertainment as they revealed that they had finalized the final steps of selling off the WPT. The new owners of this poker institution will be Element Partners LLC. In a process that began on the first day of July after the stakeholders approved the sale, the new company had to part with $105 million in acquiring the business.
In addition to the WPT, Element would also get ownership of all other businesses and assets associated with poker which previously belonged to Allied. The management of Element now has a new baby to look after and all eyes in the industry will be on them as they steer the WPT to new heights.
Speaking at the time of breaking the news of the change of stakeholders, the CEO of Allied Esports Entertainment, Frank Ng, agreed that the handover will be an exciting opportunity for both companies. For AESE in Particular, Ng shedding off some weight from their business was going to enable greater focus on business progression. He had such good will for the WPT team in NJ and wished them success in the new chapter they are walking into.
What we cover
The bidding process
With Allied having sort permission from stakeholders to sell the WPT wing of their business, they chose to go the bidding way. As is popular with bidding, the back and forth appeared to be headed in a certain direction but actually ended up somewhere else; this did not happen once but several times. Element Partners were evidently not stopping with acquiring WPT. They made the opening bid at $78.25 – $68.25 million was supposed to be paid in money value while the remaining $10 million was to be collected from entry fee revenue collected for the next 3 years.
The $10 million balance that would be cleared over a 3 year period after closing the deal required an intense campaign for the WPT to manage payments from just 5% from event entry tickets. Allied Esports Entertainment agreed to this proposed first bid but on condition that a superior bid proposal would not be made.
The deal held up as the best for a period of two months before Bally’s broke the monotony and with a counter bid of $100 million. The main condition for wanting to buy the WPT was that the WPT would be part of the larger Allied Esports. While Allied Esports Entertainment Company was excited that Bally’s had offered them a better deal than Element, the deal breaker was the proposal to sell the entire company which they did not want to consider.
A few weeks after Allied Esports had rejected the offer that Bally’s had initially made, they received a revised offer for $90 million which only covered the poker business. At this point, it appeared that Bally’s had surpassed Allied Esports’ deal by a margin of $11.75 million. Allied was ready to close the deal with Bally’s but Element was not about to give up.
The battle for ownership
With just a few days to counter the bid before bidding was to close, Element decided that 15 million bucks was nothing compared to the desire they had to make WPT a part of their business. Allied did not have any choice but to name Element as the top bidder and start handover preparations. The seller however gave a chance to Bally’s to redeem their stand with a better offer and they did exactly that.
Unfortunately for Bally’s they quoted the same bid amount that Element had named – it appears that Allied preferred Element because they readily took Element’s offer. There are many factors that Allied might have considered now that profitability was out of the question. From a list of common business partners, collaborations in development projects, support in past WPT events or even a heads-up mentioned during past interactions.
The announcement that would settle all speculation about who will be taking over control of WPT from Allied Esports came during the last week of March. Instead of announcing the winner of the bid, the management of the selling company announced that Element has increase their bid price slightly. They went ahead to term the proposal superior between the two leading options. They gave the opportunity to Element to top up the offer because there was a tie in the bid amounts which they wanted to break.
At this point, it appears that the two leading bidders had exhausted their resources and no one was willing to go any higher. When Element increased its bid to an amount that matched that of Bally’s, no significant profit was realized; in fact the offer on the table was still the same for the two companies.
What does the buy-off mean for the WPT?
Well, the top decision makers are a new set of executives but the WPT already has a preinstalled management team. Things are expected to run as usual – no one will even notice that the entire organization has since been uprooted from original ground and planted elsewhere. There is a notable change though in the schedule used for the HyperX Esports Arena. This Las Vegas event will now move to PokerGo’s studios as the betting arena is the property of Allied Esports.
Conclusion
The WPT was created to promote poker among groups that were traditionally excluded from active poker tournaments. The organization has been partnering with strategic stakeholders to promote poker as an intelligent sport like chess and monopoly. It is only a matter of time now before the new team at the helm settles in office and they too contribute to the growth of poker. Those who play poker professionally can still rejoice in the fact that the annual tour will continue indefinitely.
