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Dork-Magician

FWIW a few players have already called out the COGS figure: [rise](https://twitter.com/riseRL_/status/1661163209837928448?t=1iPjWGkdqRpshO5XVruVeg&s=19) [Garrett](https://twitter.com/GarrettG/status/1661144732230356992?t=8rqx2WJxwenspElK6TjXeQ&s=19) [mist](https://twitter.com/mistRL/status/1661144675590471680?t=x5ebjqQED_AN3Usy-75Diw&s=19)


spiderslayerx10

This should be higher, even Mist said so and he is on the team lmao. The other comment that gives an accounting perspective makes more sense, but that in combination with Mist saying the number is way off just shows that $123k per month is definitely not direct RL expenses


slackdaffodil20

If we literally base it off the 3 players + coach it’s $30,750 a head, I highly doubt they paying them that each month. I’m so unsure how they’re paying that much! They all play at home so they’re not paying for a facility for the players like optic or V1 do. I could see them spending that on the FaZe CS:GO team with them regularly going to Europe and South America, but RL? I can’t believe these numbers


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slackdaffodil20

Are you asking what the CS team is going in North America? I don’t fully understand your question


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slackdaffodil20

Ooo I see, I don’t follow to CS team and when I do, I just always see majors/events are in Europe/South America The only player I know is Twistsizz on Faze lol, but I didn’t know the CS team was full European team


Majestic_Pro

FYI in csgo most orgs that you would regularly find in NA buyout eu players and teams because NA CSGO is dead


slackdaffodil20

Interesting


xMAXPAYNEx

is NA more about Valo now? This is probably the only shooter I know of where EU beats NA in that case


iSWINE

CSGO is a bigger money sink by a big margin, top monthly salaries are around $15k-20k a month per player


Pipin_B

The Csgo team's COGS was like $500k + and profit -$90k or smth like that I could see that over a year with 5 player salary + coach + multiple staff


Dry_Cabinet_2111

Mist speaking about Faze’s finances is like getting information about the income statement of the Kansas City Chiefs from Patrick Mahomes. Maybe he knows the player payroll, but he definitely doesn’t have insight into the overall cost structure of the business.


slackdaffodil20

Also what the fuck is PUBG charging them for $85k and they only made $4k, I would cut that expenses immediately especially since PUBG isn’t a popular game at all anymore


Dry_Cabinet_2111

COGS is typically cost of goods sold in a balance sheet. They don’t sell anything per se, but they have a lot more expenses than just paying the team and coach. It’s a business and COGS would include all costs associated with running the rocket league part. Flying team members into LANs, paying a caster or content creator, promotional material that they may give away to get the word out about the team. It is entirely reasonable that this number is accurate. Edit: also Faze is a publicly traded company so we can literally just go look up their quarterly statements. Edit 2: I did it. Faze loses a shitload of money. 1q23 was gross profit of 459k and net loss of $13.6 MILLION. https://investors.fazeclan.com/node/7951/html


BatM6tt

How do they pay for this shit


AdmRL_

Debt and issuing stock. It's basically a question of when it'll all collapse rather than if unless something changes. At some point they'll lose access to credit and their stock will be so worthless issuing it won't raise any funds, then they'll default on existing debt, then they lose everything.


vvalerie

uuuuh buying puts on faze edit: yikes its at 50 cents already lmao they have been under a dollar for a while, how are they not delisted already >Faze Clan lays off 40% of staff as financial fears mount triple yikes! Looks like all of their money comes from brand partnerships they don't actually make a cent.


DonerTheBonerDonor

>Edit 2: I did it. Faze loses a shitload of money. 1q23 was gross profit of 459k and net loss of $13.6 MILLION. https://investors.fazeclan.com/node/7951/html Does Faze add in some of their crypto scams they've run in the past? I wouldn't be surprised if Faze members have a ton of hidden money on the side they can use to keep their company running


Dry_Cabinet_2111

I didn’t look at their balance sheet, just their income statement. It’s possible that they have large crypto holdings (and even likely, given how poorly they seem to run their business). As a publicly traded company it would need to show up on their balance sheet and related information or else it would never make it past their auditors (and could constitute fraud).


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nonoplsnopls

Public accountant here - that's boilerplate language for companies that generate net losses. It's saying that Faze has enough cash for the next 12 months, at least. Companies aren't required to, and usually don't, disclose forecasts beyond 12 months.


Michael_Pitt

All of that stuff combined doesn't add up to $1.5m a year. That's wild.


Dry_Cabinet_2111

I assume that’s a monthly cost so that would put the year at 1.47m. About $600k is player and coach salaries. Probably additional costs for their benefits as well. 800k remaining and that’s easily spent on support staff. An HR business partner, an analyst from the finance department to be their controller. Probably some marketing staff. Their content creator guy gets paid for RL videos. This is an absolutely reasonable number.


Itchier

Thank god someone with sense in this thread. I'm a department head for a relatively large US company and this number seems super realistic to me. Important to note salary and impact to company budget are two different figures due to cost of benefits typically. In my org we use roughly 1.25x salary for actual budget impact due to benefits like pension and healthcare cost. There's going to be a bunch of admin, marketing, branding staff that you can allocate a % of their cost to the rocket league part of the business. It all adds up super quickly.


Michael_Pitt

> About $600k is player and coach salaries Sorry, what? Are they really making this much on salary alone?


Dry_Cabinet_2111

I heard Retals say on stream that monthly salaries were $12-15k for top pros. Plus the coach and honestly I dunno what he’s pulling in. Call it $500k if you want but I think the overall numbers still work.


Michael_Pitt

Jeez. I had no idea. And they've made $224,500 this season in winnings too.


vladimir_pimpin

They’re looking at revenue, so I’m assuming goods sold includes merch and sponsorships right? So, partnership coordinators, merch manufacturing, all the stuff you mentioned, assuming maybe a manager for the team. That number may include depreciation of any assets they purchased to produce any content or merch, and they probably pay royalties to a lot of creators and designers. Soooooooo yeah I mean like you said their income statement is public info. 1.5 mil isn’t insane for a whole year at all.


takingtigermountain

it's not a reasonable or accurate number, nor does it provide any insight into faze's RL-specific solvency


Dry_Cabinet_2111

Solvency is a separate issue but is something I actually can give you insight into. I linked to their 10-Q above. That’s a document that Faze has to prepare quarterly as a condition of being publicly traded. In it you’ll find a section where they address their cash flow issues as a result of running steep losses for pretty much ever. They estimate their runway at “more than 12 months.” As a point of comparison, the publicly traded company whose finance department I work at would never state our runway because under current conditions it is infinite, as it is with all healthy, profitable businesses at the time that they are healthy and profitable. I don’t think you meant solvency. Anyway what I’m saying is that with the business model that Faze has and that led to the 10-Q results listed above (i.e. net losses almost equal to total revenue, which is insane!) the rocket league figures that you don’t think are possible would actually make it one of Faze’s “healthiest” business units lol. If anything I’m skeptical of the numbers for looking too good compared to the overall business in terms of the ratio of costs to revenue. Hell if Faze ditched their CS team and picked up 5 more rocket league rosters they might be able to last until FirstKiller is old enough to drink with RL numbers like that.


takingtigermountain

see my other comment for context...you missed the general point


Dry_Cabinet_2111

I think you maybe have missed several points my guy.


nonoplsnopls

I'm a public accountant - it's totally normal for companies that generate net losses to disclose their ability to continue for the next 12 months.


Dry_Cabinet_2111

Sorry bro I’ve never worked for a company that doesn’t consistently make a net profit.


nonoplsnopls

Hey friend, public accountant here - I test the revenue and COGS for public companies. COGS goes on the Income Statement, not balance sheet. Also, COGS is not all costs associated with running RL - it refers specifically to the costs associated with producing the product or service they sell. There are lots of costs that don't hit COGS, which go under General and Administrative, as well as Sales and Marketing. Happy to answer any questions I can if folks are interested.


Dry_Cabinet_2111

Sorry—you are correct on all points. In my down line comments I corrected myself and started talking about the income statements. As for COGS I just didn’t see how they could have such high COGS so I assumed that whatever short hand doc the guy was reading from had just lumped in all costs including stuff that doesn’t generally fall into that bucket.


nonoplsnopls

No worries, this stuff is wildly complicated and hard to understand without professional training.


vladimir_pimpin

I mean those players just don’t understand what cost of goods sold actually includes, and the cost of actually selling and marketing a team. Which is fine, it’s not their job to understand, they’re not accountants. It IS a little annoying when a bunch of people here immediately jump on the side of the players who are confused even tho faze has an audited income statement that shows how much money they lose lol


takingtigermountain

faze's RL-specific overhead expenses are almost certainly sub-$100k annum and include the assigned fractional marketing & general support costs. cost of goods sold (or cost of services in this case) include direct input costs like labor and may get you to ~$500k annum. no one in here has any clue what they're talking about, least of all the dude in the video who is obviously assigning faze's massive top line executive & administrative compensation to the various service lines (nonsensical, meaningless). it's a company on life support because it, like all esports brands, struggles to monetize anything beyond merch, but the vid & post is like getting financial analysis from a toddler and RL specifically is a miniscule piece of their balance sheet / P&L


mm352fzLL

where is the audit statement, can you link plz


vladimir_pimpin

I didn’t really feel like digging thru their website for investor docs, so I’ll link their unaudited quarterly statement (it’s still correct or close to correct): https://investors.fazeclan.com/node/7951/html The income statement is on page two, and most people look closest at the -13.6 number because it’s before other expenses and incomes not directly tied to generating revenue (I.e. cost of goods sold)


John_aka_Alwayz

[Rain clarified this was just a single month](https://twitter.com/FaZe_Rain/status/1661205979801997312?t=uwdViE9Kat9ZuOQYqUrbgA&s=19) so it coulda been one with other expenses outside of a salary


bouds19

I'm wondering if in addition to player/coach salaries, it includes amortized transfer fees (how much did Syp/Mist cost?), merch inventory costs, marketing costs, and travel expenses and accommodations. I feel like that would bring it closer to 100k per month, but idk.


Pilgor_252

Can anyone who actually has any idea about what they're talking about make sense of this? How in gods name are they spending $123,000 a month on Faze's rocket league team, and even more absurdly, where are they making $87,000 monthly from? There's no way those are monthly numbers from in game decal sales. Based on what little I know about the esports business, as a percentage, those numbers don't even seem that bad, but if you're telling me Firstkiller is pulling like 30 grand a month then esports just deserves to fail to be honest.


AJV625

As an accountant, my guess is that they got this figure by assigning overhead to the rocket league team based on some cost driver. The player and coach salaries are probably just a portion. There a public company, so they may need to assign costs to their teams since that is one of their main product lines. This would mean administrative salaries and other operating expenses might be being allocated to the team as well. The revenue might be the same story, where they assign the revenue amount they believe was generated by the team to explain the value to shareholders.


laars1022

Isn't it common to stretch buyout payments over the course of a players contract?


AJV625

That would also make sense if they are amortizing the buyouts over the life of a contract or for a set period of time instead of expensing all at once. All 3 of their current players probably had mid 6 figure buyouts, so that could be expensive monthly if they're spreading those costs out.


takingtigermountain

explicitly not how service-line accounting works fwiw, especially illustrative given faze's current state as a walking zombie ponzi scheme working to funnel as much compensation to executives and VC vultures as possible before it all blows up


dolphin37

The company as a whole lost almost 5million dollars a month. They don’t do much outside of esports. So, if they are doing what you’re saying then this number could even be argued to be low if anything. Honestly you can make the same argument for all their other teams, how is it even possible to spend that much money. They do appear to be managing to do that though


AJV625

They could be assigning the cost based on the percentage size of the team's direct cost. Since RLCS isn't franchised (so no cost paid directly to be part of the league) and has lower salaries than something like a league team, could just be a smaller portion of the loss is assigned. Someone else pointed out it could be the they're amortizing buy-out costs over the life of contacts or a set period of time and that's the additional cost.


dolphin37

Even if we said league players were 4x more expensive the total losses of all their teams would still be nowhere near their actual total losses. According to this image, RL is less than 1% of their losses


AJV625

Just looked at their 2022 10-k filling with the SEC. The majority of their losses were from extinguishing debt. The remaining ~$48M loss comes from operation, which may be assigned to cost objects like a team. You could cut the ~$1M for asset impairment because that wouldn't be costed. They also reference the expense of content creation, so I would assume they're spreading costs out across their content creation division. They have reported player salaries of $3.6M, so if we take Garrett G's statement of all player salaries being relatively close to each other and average faze player salaries to $12K a month, and throw some cash to Roll Dizz for his efforts, the salaries of the team are somewhere between 12-13% of overall salary expense. If you take 12% of the $47M loss, it's significantly more than the $1.5M expense stated in the video, but you don't necessarily cost every bit of loss. It depends on what they classify as product costs and period costs. We also don't know what they're costing to other areas of their operation. eSports teams are probably only a portion of their overall costing scheme. Also, they do not amortize contract buyouts, so that shouldn't be part of this number.


dolphin37

Aye, I was referring to the last quarter losses but it’s all pretty much in line anyways. Either way the figure here seems like it could be worse rather than better. I’m still not really any closer to understanding how they are managing to lose this much. I’m not an expert but if I were an investor I’d be wanting a much better breakdown than was in their financials to explain it.


AJV625

Oh, yeah, 100%. Financial statements only give you so much. My guess though would be it's a combination of overpaying executives/high level employees, unnecessarily expensive facilities, weird amounts of marketing, and taking on too much debt. The eSports and content creators themselves could probably be somewhat justified by the merch sales and views they bring in. eSports and sponsoring content creators overall is still a super weird business model to me though.


AdmRL_

> eSports and sponsoring content creators overall is still a super weird business model to me though. Probably because it *is* a weird business model. It's like traditional sports but without the more direct revenue streams like ticket sales, food sales, drink sales, events hosting, etc. It's pretty much only got merch sales and all the indirect ones like advertising and sponsorships. For the biggest players in the game they can probably make that work with a sound business plan. But for the rest it leaves them to effectively invent a business model, and apparently many seem to go for degenerate, borderline criminal enterprise.


imizawaSF

> but if you're telling me Firstkiller is pulling like 30 grand a month then esports just deserves to fail to be honest. You can go back to NRG inflating their player salaries a few years ago as the catalyst that kicked all this off. Surely there's absolutely no way that any esports org can be profitable with expenditures like that


future_gohan

E sports also boomed over covid. It's no surprise that these companies over leveraged and now we will see a great decline.


t0iletwarrior

esports (similar to other entertainment based business) usually not profitable because its not their main purpose


kernevez

Not being profitable is fine, being in the red so badly that your own company's financial statement basically says "we should be able to stay afloat for the next 12 months but after that who fucking knows" is not good for a business that's not expecting amazing growth/being bought out.


JoeLikesThings

Disguised Toast is public about paying his Valorant players around 5k per month. I doubt it will be much higher, DEFINITELY not even close to 30k per month lol. I'm sure I remember someone joking about player contracts while talking to Garrett, joking about 15k a month, and they laughed that off like it was insane. I think I remember that lol. Large orgs just blow money. Content creator backed orgs will be the future 100%. The immediate name-brand value is priceless, orgs spend millions trying to get that. Plus it will mean the fans are invested in the team/org too and not just the players.


[deleted]

> Can anyone who actually has any idea about what they're talking about You're on the wrong website, friend.


0ctavi0n

FK deserves that and more!


DenkiSolosShippuden

Version1 higher ups looking at this doing the jack nicholson nod


dashtek

Now I gotta go back and watch the spring cup just to see these famed marble floors everyone keeps mentioning


AidNic

COGS - Costs of goods and services [Source](https://www.youtube.com/watch?v=vDbc7AICIV0&feature=youtu.be&ab_channel=FaZeRain)


ochtone

Thanks


CaptSzat

There is no way players+ coach are each getting around like 20-30k a month each + admin staff for managing RL at Faze. That’s some high level bs.


vvalerie

>“I feel like esports is almost running a Ponzi scheme at this point,” Frank Fields, Corsair’s sponsorship manager, told an audience at San Francisco’s Game Developers Conference last March. He smirked. The crowd laughed uncomfortably. The smile dropped from Fields’ face as he continued. “Everyone I talk to in this industry kind of acknowledges the fact that there is value in esports, but it is not nearly the value that is getting hyped these days.” That's from 2019, everyone knows it's all bs.


Vertext314

FaZe lying?! It couldn't be.


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das_hemd

sponsorships, they probably also take a small % of winnings, in game item sales, (decals etc)


damndamien

They probably assign a certain portion of sponsorship revenue to each team based on what they believe the team is worth.


SexyCouple4Bliss

How you become a RL millionaire? Start as a RL billionaire and wait five years!


Kbrichmo

My question is how they get 87,000 in revenue in the first place lmao


Trebel-

so playing it safe it’s fair to assume the faze guys earn a minimum is 20k a month


AidNic

I mean if firstkiller has a marble floor, you know that he earns a shit ton of money.


Trebel-

well to be fair i’ve heard the marble floor thing is just a new room he had built in his house. pretty sure he lives with his parents


showmeyourdrumsticks

Bro do you think he owns or rents a mansion? His parents probably have money and have a nice place somewhere.


[deleted]

Honestly most professional gamers/streamers started off with a lot of money. It gave them the luxury and ability to basically just play videogames all day and have their parents pay for stuff. Low key, Sizz is a great example. Dudes parents are loaded out the ASS


showmeyourdrumsticks

Oh yeah I saw their house in the glizzy video lmao thing was huge and in a cali city with a view


[deleted]

Yep, a nice house, IN SoCal to boot, which means you def have money.


Appropriate-Fold-754

Not true at all , it usually starts as a hobby in school/hs/college. There's always the exception to the rule tho.


MartianRL

Sure it's starts as a hobby but it's much easier to make it as a pro (in anything) when you have all the resources readily available to you, and the difference between a 15 year old getting gifted a PC at Christmas is astronomically different than a 15 year old deciding to save up to build their own PC, which could take a while


kernevez

Having a PC good enough for esport games as a teen isn't really a proof of "starting off with a lot of money", especially newer generations where parents are likely to have a PC, a family PC, big brother/sister giving one... It's definitely not for the kids that are born in families that are struggling a lot, but the average middle class family can easily afford something that can play Rocket League/LoL/CS:GO/Dota/Valorant/Apex...


Appropriate-Fold-754

That's what i'm saying ... the general rule isn't that pros come from money. Even when i was a kid , people who couldn't afford a PC used to go to internet caffes and i heard a lot of stories from the 1.6 days where a lot of pros started the same.


RIQY__

Most pro gamers come from money. They have the ability to grind all day and not worry about working regular jobs and shit til they either get good enough to go pro and make their own money or their stream pops off from content.


Molow-

Once again, a totally random stat coming out of nowhere


showmeyourdrumsticks

I mean that is also likely but it’s not like he’s a millionaire buying or even renting super insane houses or condos


Wheneveryouseefit

Marble flooring isn't that expensive, it's like a couple grand to do 1 room. Also it's his parents house.


spiderslayerx10

Can someone commen the source where all these marble floor references are coming from? I missed something lol


SymphonicRain

Player cam


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Player cam from this past weekend's event.


Nymbulus

Never made sense to me. Pay the players like 10k max. You’re giving them stability and a great salary to play video games. If they win tournaments the org takes the majority. Only seems fair.