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ESE inks multiyear agreement with FIA for marketing rights; completes Digital Motorsports acquisition

CEO Konrad Wasiela said closing the Digital Motorsports deal 'catapults our digital motorsports business to a new level, providing us with an industry leading ecommerce platform, new technologies, global Tier 1 partnerships and additional esports infrastructure'

ESE Entertainment Inc signs multiyear agreement with the FIA governing body of world motor sport for marketing rights
ESE announced a multiyear agreement with the World Motor Sport governing body FIA, which will give Digital Motorsports marketing rights for the FIA Rally Star

ESE Entertainment Inc. (TSX-V:ESE) said it has completed its previously announced acquisition of 100% of the shares of Ireland-based Auto Simulation Limited, trading as Digital Motorsports, a provider of advanced simulation racing infrastructure and technology.

Europe-based ESE said that under the purchase agreement, it acquired all the issued and outstanding shares of Digital Motorsports for C$1,681,250 in cash on closing.

In addition to the cash payment, 941,500 shares were issued on closing, and up to 8,473,500 shares will be released in six equal installments every six months. ESE said the first installment is being released on December 31, 2021, subject to certain post-closing revenue-related milestones.

READ: ESE Entertainment says its acquisition target Digital Motorsports signs multi-year deal with Formula 3 racer Jack Doohan

The company has agreed to make a €250,000 capital contribution to Digital Motorsports to fund working capital needs. The co-owners of Digital Motorsports have agreed to run the operations of Digital Motorsports after closing, to ensure “continuous business operations and a smooth transfer of Digital Motorsports’ business to ESE Entertainment,” said the company.

The entertainment and technology company paid finders fees of $42,031 and 235,375 shares to each of Zachary Dolesky-controlled ZDK Holdings Ltd., and Martin Minc-controlled Netberry OU for their roles in introducing the parties and for M&A advisory services.

In a statement, ESE Entertainment CEO Konrad Wasiela said: “Closing this deal catapults our digital motorsports business to a new level, providing us with an industry leading ecommerce platform, new technologies, global Tier 1 partnerships and additional esports infrastructure. The synergies are clear and our vision to become the No. 1 global brand for esports in the Motorsports industry remains.” 

Meanwhile, Digital Motorsports CEO Niall Maher noted that his firm has built a “pioneering global brand” that converges motorsport with esports.

“The global motorsport industry is worth approximately €159 Billion with 2.7 million motorsport participants. Digital Motorsports is set to capture market share by creating a clear bridge between professional motorsport and esports,” said Maher. “This deal gives our brand the access to the tier 1 infrastructure, resources and capital to help take our business to the next level.” 

World Motor Sport agreement

In a separate statement, ESE Entertainment announced its multiyear agreement with the World Motor Sport governing body FIA, which will give its Digital Motorsports brand marketing rights for the FIA Rally Star, the 2021 global talent detection program organized by FIA and its clubs.

The partnership will allow FIA and ESE Digital Motorsports to enhance the global reach of the FIA Rally Star project. This season, the FIA Rally Star selected drivers aged 17 to 26 from the National Finals and from 17 #RallyAtHome Challenges to move forward to next season’s Continental Finals. 

The Digital Challenge and #RallyAtHome Challenge feature the WRC 9 simulation racing game. The use of WRC 9 widens the search for the next FIA World Rally Championship star by including gamers as well as conventional motor sport competitors, explained the company. 

ESE and Digital Motorsports are focused on esports, gaming and simulated racing and are well-positioned to market FIA Rally Star around the world. 

FIA Rally Star Director Yves Matton said: “We have been delighted with the uptake for FIA Rally Star. The FIA understands the landscape is changing for the current and next generation of motor sport competitors and fans.”

“The FIA is all about inclusivity in its search for ‘The Next One.’ We look forward to working with Digital Motorsports on FIA Rally Star. The addition of Digital Motorsport alongside FIA Rally Star from here on will bring a wider-reaching understanding of what we’re doing and how we’re globalizing a talent development program,” he added.

Digital Motorsports boss Maher said the company is “very proud” to be a part of the FIA vision for an all-inclusive, all-access program for detecting young talent.

“The FIA encourages development in digital and esports sectors, which are key to engagement with new generations and will play an increasingly significant role in achieving diversity and true accessibility for all in motorsport,” said Maher. “We are completely aligned in this vision...I believe everyone can have access to a global motorsports community through our professionally operated online races and turnkey simulator solutions to be become ‘The Next One.’” 

Contact the author Uttara Choudhury at uttara@proactiveinvestors.com

Follow her on Twitter: @UttaraProactive

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Price: 1.33 CAD

Market Cap: $78.56 m

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