Q2 2020 Allied Esports Entertainment Inc Earnings Call
[music].
Greetings and welcome to the Allied E Sports Entertainment second quarter 2020 earnings Conference call.
At this time, all participants are in listen only mode.
Great question and answers fashionable follow the formal presentation.
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As a reminder, this conference is being recorded.
It's now my pleasure to introduce your host lastly, Glassen mandate managing director with Addo Investor Relations. Thank you you may begin.
Thank you operator, good afternoon, and welcome to Allied Sports Entertainment.
2022nd quarter results conference call.
Speaking on the call today is our these sports Entertainment, Chief Executive Officer, ranking and Chief Financial Officer, Tony Hawk.
The company's president and long time, WPP CEO Adam Posco.
And just Henighan who's leading the sports operations are also available for the question answer session.
For Charlie called <unk> management.
Please remember that our prepared remarks and responses to questions may contain forward looking statements.
Words, such as May will expect intend plan believe she could.
Estimate judgment targeting should anticipate goal and variations of these words and similar expressions.
Are intended to identify forward looking statements.
Actual results could differ materially from those implied by such forward looking statements.
Due to a variety of factors discussed in the company its public filings, including the risk factors discussed in documents filed with the securities.
Change Commission.
Although the company believes.
Expectations reflected in such forward looking statements are based upon reasonable assumptions.
It can give no assurance that us expectations will be attained.
Company undertakes no obligation to update for any forward looking statement, whether it's with all the new information future events or otherwise.
In addition, certain of the financial information presented on this call is non-GAAP financial measures.
Companys earnings release, which was issued this afternoon and is available on the company's website presents reconciliations to the appropriate GAAP measure and an explanation of why the company believes such non-GAAP financial measures are useful to investors.
With that it's now my pleasure to turn the call over to Alan Sports Entertainment Yo Franking right.
Thank you Melissa and thank you everyone for joining us this afternoon.
Throw the second quarter, we continued to operate in an extremely challenging and then certain operating environment arising from the ongoing click 19 pandemic.
The shelter in place orders that began in mid March across most of the United States as well as nearly all of our markets around the globe extended for essentially the entire second quarter.
This resulted in the temporary shut down all the in person pillar of our business strategy, which negatively affected our second quarter financial performance.
Given this reality, we quickly shifted our strategic focus to the multi platform content and interactive fill us to mitigate the impact all depend damning of our business and to continue to serve our loyal communities, while strengthening ally EA sports for the future.
Overall, I'm pleased with our employees steadfast dedication and commitment as well as the team's ability to rapidly pivots and manage through this pandemic.
We believe the strategic shift what's the sessile for both our E sports and poker businesses.
Looking first at East Sports beginning March 14th we moved all about you last tournament operations in production services online.
As one of the few forms of competitive sports entertainment that continues to operate and produce competitive content during the pandemic.
We believe the east West industry has filled the void left by the end precedented suspension of traditional sports.
This led to a tremendous surge in both active game play and viewership with Nielsen recently reporting that 82% of global consumers played video games and watch video game content during the height of depend demick locked down.
Most notably since the onset of the pandemic traditional media broadcasters and sports betting platforms has turned to E sports. During this time to fill the channels and platforms with competitive content, which has accelerated the awareness and acceptance of east west amount mainstream audiences and.
The interest level for traditional brands to engage in the sport.
As an example of this all our East was Saturday Night Speedway, Mario Kart tournament at Hyperworks E. Sports Arena recently had a clip that was picked up by and share by Sps E sports on Twitter and garnered nearly half a million views on the platform in one day.
The clip is currently the fourth most watched Mario kart clip of all time on Twitch and rising.
Over the longer term we believe.
That's the pen dynamic was Hillary the growth trajectory of the east was industry and I'll business.
With the cancellations of in person World Poker tour events around the globe due to the pandemic. We also moved out W.P.D. events online and continued to leverage our interactive pilla, including the subscription based online platform club W.P.T.
Recent business highlights from the online shifts include a significant increase in new subscribers on our club W.P.T. platform, which I will discuss later in my remarks.
Based on the success of online production services and tournament for East West and W.P.T., We expect to continue these activities going forward.
With that as a backdrop, let's shift gears and review our second quarter results.
Total revenues for the quarter, a 4.6 million declined from 7.3 million in the prior year period.
While we generated solid growth in revenues from interactive services.
This was more than offset by reduced levels of revenue from in person experiences and multi platform content related to the pandemic that persist for the entire second quarter.
Due to the reduced level of business activity that resulted from the shuddering off it of the in person experiences Pilla, we took significant actions to reduce our expenses and minimize the negative impact on our financial position.
These actions include salary reductions across the board as well as other cost saving measures.
In total we successfully reduced our general and administrative and selling and marketing expenses by 1.3 million this quarter versus the same period last year.
Importantly, we also successfully refinanced the Companys outstanding short term debt, which significantly improved our liquidity position and financial flexibility going forward.
Tony Hawk, our CFO will discuss this in more detail in his remarks.
While it is clear that the pandemic adversely impacted our second quarter financial results, we remain confident in our ability to capitalize on the valuable positions. We created the knee sports, which has gained in popularity as a result, all to shelter in place orders.
Additionally, WPP continues to steadily build this business and has a very promising outlook.
As we have explained previously our goal is to maximize the potential of these complementary businesses through a model built around three strategic pillars, namely in personal experience. This multi platform content and interactive services.
With that let's turn to the highlights of our second quarter results as well as an update on the previously announced strategic partnerships.
Like everyone in the live entertainment and event industry.
And as noted earlier, we temporarily suspended in person first full activities during the second quarter.
As a result of the hot work and dedication of our team we place a heightened focus on interactive services and multi platform content to help carry us through these unprecedented times and simultaneously to strengthen the pipeline of new fans to fund onto our live event as circumstances begin to normal.
In particular, the shift to holding event online led to a significant boost to our interactive services below.
Looking first at the interactive pillar.
In total our east fourth produced 78 online event in the second quarter with 60 profile proprietary online event and 18 third party production across our North American and European business unit.
We believe I'll emphasis on this pilla helped grow grow I'll come to us customer base at a time when the in person pillar of our model was not available.
We have also launched a new form of monetization for all events through sports betting and recently announced the V. Aida Gigi CS go legend series, which is a two week program designed to provide sports betting operator with a robust pipeline of authentic competitive.
Really content.
The program will kick off in late August in partnership with E Sports Entertainment group and their sports betting platform via E. G.
The legend serious it's one of our longest running and most successful original tournament brand and we are thrilled to work with East Entertainment group and their VI. He thought Gigi platform to add a wagering component to our content model that will simultaneously introduce ally is forced to new consumers and.
Elevate the brand even further.
While the interactive services platform for the East was business continues to mature the platform. We have built to host online esports tournament represent an important fundamental.
Building block.
Longer term, we envision further developing the platform as an always on subscription based online service, where E sports players and fans can watch play and win with other members of the East wants community and with top East was personalities and then for answers.
This online platform, we will be closely integrated with our offline experiences to create a comprehensive and authentic esports tournament experiences for fans.
Turning to WPP.
We also shifted events that were previously held in person.
To the online environment.
In May WPC hosted is first main tour event online on party poker.
This event set the record for the largest WPP main event in 18 season with 2130 entries.
The WPC online serious festival also featured the largest wptv EXTEX event.
Ever with 3554 entries and the second most attended WPP 500 event with 4820 entries.
The overall WPC online festival attracted more than 111000 entries on party poker.
In June the first ever WPP online poker open on the party Poker US network became the first W. PD real money online gaming events take place in the United States since that unlawful interact gambling enforcement Act was adopted in 2006.
The then set the record for the largest price pool in party poker Us network history.
In addition to the online event the successful Wall Poker Tour Interactive services strategy includes the club WPP. Its online membership platform that offers a subscription based poker club with no purchase necessary.
During the second quarter Club WPC launched is 100000 club WPC Diamond Championship.
Which has proven to be a very popular amount of players.
These qualifiers, which run from June through October will result in a $100 and prize pool event in November which will constitute a largest single day tournament Prize pool in club history with the first plate taking home $25000.
On June Onest, we also launched the new premium level off club WPP membership.
WPC Diamond.
Early adoption of the new subscription level exceeded our expectation.
Thanks in part to these activities club WPC registration accelerated during the second quarter, an increased an impressive 127% from the prior year period.
This is on topped off the 40% year over year increase in retro strength.
We generated in the first quarter.
Importantly, second quarter club Wptz subscription revenue increased 50% over the same period last year.
The next pillar of our business model is multi platform content.
Where we generate content consumption on a 24 by seven basis.
This could be from content that is live streamed post produce or packaged where we retain optionality in monetizations of content via direct distribution and sponsorship.
Use of third parties to distributors or other various hybrid solutions.
Well Poker tour has a long track record of success and has effectively executed this business model for many years.
Overall demand for alternative sports during the crisis continues to increase interest for our poker television product.
Second quarter highlights include the distribution of W., Ptcs, and 12 and 13 in 77% of the syndication marketplace for Alenia TV in the U.S.
In addition, this should put w. PD into position of selling national AD buys in 2021, potentially increasing future AD sales revenues.
This allow us the opportunity to assess markets that we would otherwise not have reached previously.
In fact, menia household penetration in the second quarter was up 105% year over year.
While linear viewership also grew 43% over the prior year period. In addition.
W. PD partnered with Budweiser and wall Central kitchen to produce the kings Celebrity Poker Challenge on club Wptv, featuring gas celebrities, including Jose Andreas Jason Aleksandr and Jon Hamm among others.
This event aired on Fs, one and LTT platforms to an audience of more than 1 million nationwide viewers.
And finally with many life events cancel club Wptv provided an opportunity for WPP to pivot online by leveraging the company's asset including life Twitch streams on WPP Talend play on club WPP irregular serious of online tournament, which has promoted.
The club WPP product in front of thousands of weekly viewers.
On the East Board side of the business to move from the in person Paula I discussed earlier in my remarks continues to generate significant content that we are streaming.
During the second quarter.
We launched.
Multiple programming offerings, including proprietary and with partners, including the production of high Forex gain spotlight a deep dive episodic program focused on game developers, telling the stories behind the inspiration and evolutions of their games and east for studio, which brings tradition.
No sports assay together to compete in the video game versions of their sport.
In addition to live streaming on Twitch esports do you also aired live on Germanys sports storage lend start TV LTT platform.
We also launched the 12 edition of our proprietary legend serious program featuring Valo rent by riot games, the biggest E sports launch off the year.
Importantly, the focus on content and online tournament participation dramatically increased social media interaction across a lot useless, Twitter Instagram and Facebook accounts versus the same time period immediately before the closure of the high Forex esports arena.
Now I would like to provide an update on our strategic relationship with Simon property and Brookfield property partners.
We are working with these important partners to deliver east force experiences through integrated gaming venues and production facilities as select Simon and Brookfield properties.
Earlier in this year Simons mall of Georgia locate and the Atlanta Metro area was selected as the location for an ally E sports venue.
While the Simon project is currently halted due to the pandemic Simon remains keen on the sports concept and we have extended the milestone under our partnership agreement until the Kovac 19 crisis has ended.
We also announced a similar strategic relationship with Brookfield.
We plan to expand beyond more venue concept to an existing Brookfield retail location in the northwest and part of the United States with opening currently slated for mid 2021.
Although the pandemic has delayed it I'll timeline with expansion two malls, we remain confident in the prospect of this business initiative and we will continue to update you on our progress in future calls.
Before turning it over to Tony I would also like to provide an update on our flagship Hyperexcitability Arena Las Vegas at the Luxel Hotel and casino.
While we continue to make progress on the further development of our indirect capella.
We remain committed to that live in person segment of our business and with all recovery already begun we believe there is an exciting opportunity for long term growth in alive in person a sports business.
The facility successfully reopened on June 25th with certain restrictions and modify schedule for daily play and weekly tournament.
We are motivated by the early demand we have seen for our weekly tournament and continue to expand both our life weekly in person and online tournament offerings.
As the health and safety off guest and team members remain our top priority.
Hi breaks E Sports Arena has implemented.
Extensive sanitization political throughout the venue.
Furthermore, reduce operating hours and force. This go the syncing remain in effect lowering customer capacity by approximately 35% off pretty pandemic level.
Food and beverage services also limited.
That said, we are seeing encouraging demand pull out in arena events that bar and have earned the trust of all customers to provide a safe place to play with our enhance safety and then as I mentioned photocall.
Looking forward, we continued focus on online events and production services as the recovery of live in person event carries on.
With that I would like to turn the call over the Tony how CFO for a more detailed update and on our second quarter financials results Hey, Tony.
Thank you Frank good afternoon, everyone and thank you for joining us today.
As Frank mentioned, the second quarter market challenging operating environment as most of our markets were shut down throughout the quarter due to the cobot 19 pandemic.
While our in person pillar was significantly impacted by the shelter in place orders, we quickly shifted our strategic focus to the development of our multi platform content and interactive pillars.
We continue to lean into these two pillar as while diligently working on the recovery of light and personally then and adhering to state and local restriction our priority remains to manage our expense base and to strengthen our liquidity and capital structure. During these uncertain time.
Now turning to our second quarter results.
Total revenues for the second quarter of 2020, or 4.6 million down 37.6% year over year, primarily due to lower in person and multiplatform content revenues, partially offset by higher revenues from the interactive pillar.
Looking at these results in greater detail in person revenues for the second quarter total 0.7 million compared to 3.2 million in the prior year period, and dig a decrease of 78% year over year as a result of the closure of most market throughout the quarter due to the spread of the pandemic.
Multi platform content revenue totaled 0.7 million compared to 1.7 million in the prior year period, a decrease of 59%.
While we have seen more demand for our content, we experienced a decrease in multi platform content revenues, primarily due to a true up on music royalties in previous quarters.
In addition, we generated lower sponsorship revenue in the second quarter of 2020, resulting from the postponement of the WPC final table due to the pandemic.
Finally interactive revenues totaled 3.2 million compared to 2.4 million in the prior year period, an increase of 34% primarily attributed to strong growth in club WPP registration and the successful launch of our premium club WPP Diamond service.
Overall total revenues in the second quarter of 2020 derived from Allied sport decreased to 0.6 million from 20.3 million in the second quarter of 2019.
Total revenues derived from WPP decreased to 4 million from 5.1 million in the prior year period.
Although the mandatory shutdown in shelter in place orders across the globe significantly impacted our E sports business.
Poker tour as mature multi platform interactive pillars allowed us still realized revenue from the transition to online services any Ben and generate year over year growth in the interactive pillar despite the pandemic.
Total cost and expenses for the second quarter were 9.4 million down from 10.1 million in the prior year period, we significantly reduced our expenses in the in person pillar by 41% or 0.3 million.
Multi platform content teller by 53% or 1 million and selling and marketing expenses by 72% or 0.7 million compared to the prior year period.
As well as general and administrative expenses by 14% or 0.6 million.
The decreases reflect the swift and aggressive actions, we took during the quarter actively reduced all nonessential spending.
The year over year decrease in total costs and expenses were partially offset by several factors.
First expenses in the interactive pillar increased 44% or 0.2 million compared to the second quarter 2019, and online operating expenses increased 124% or 0.2 million as we continue to rationalize expenses to build out online event and production services as the recovery of live in person event.
Continues.
In addition, we incurred approximately 0.3 million of stock based compensation expenses, and one and a 1.1 million impairment charge against our investment in essay versus none in the prior year period.
Total net loss for the second quarter with 10.9 million up from net loss of 2.8 million and the second quarter of 2019. The decline was primarily due to the operational result. In addition to a conversion inducement expense of 5.2 million from the refinancing agreement, which I will describe in more detail in a moment.
Now moving to our balance sheet at June 32020, our cash position totaled 14.2 million, including 5 million of restricted cash compared to 12.1 million at December 31, 2019, which included 3.7 million of restricted cash.
The increase of cash is due in large part to 2 million of additional capital raise from our chairman Lyle Berman through the sale of Allied is sport common stock.
From 1.6 million of PPP loans as well as proceeds from the sale of certain WPP employee shares for tax withholding purposes.
During the second quarter, we executed a series of activities to refinance our convertible debt and better position our company going forward.
As part of this we entered into an agreement with knighted pastures, LLC, who held the 5 million dollar convertible promissory note issued by the company.
On April 29, 90 degree to convert 2 million of the principal amount of their note into shares of the company's common stock at $1.60 per share.
On May 22nd 2020, they also agreed to convert the remaining $3 million of their bridge and out into the company's common stock at $1.40 per share.
As part of this transaction I did pastures has also agreed to an 18 month extension on the 1.4 million of accrued interest originally due in August 2020.
Two additional existing convertible bridge note holders collectively holding 2 million of the company's debt also agreed to an 18 month extension on the maturity of their respective holding.
And finally, a group of new institutional investors agreed to refinance net of fees and interest the remaining 7 million and convertible bridge no principal and the associated accrued interest held by the company into senior secured notes maturing and 24 month.
With the completion of these transaction Allied is sports entertainment has significantly improved liquidity position and is now address the entire $14 million of outstanding debt and $3.7 million of accrued interest that was scheduled to mature on August 20, Threerd 2020.
This refinancing will provide the company with additional financial flexibility over the net 18 to 24 month as we continue to look for opportunities to optimize our capital in a manner that allows us to better navigate economic uncertainties during coat, the cobot 18, pandemic, while creating value and growth for the future.
Finally as detailed in an 8-K filed on July 24th we entered into an amendment to our existing term sheet and share purchase agreement with CBS.
Which eliminated our future 2 million commitment for various strategic initiatives and our obligation to further invest in and develop new sports platform for the Mexican market in turn allowing us to conserve more cash.
In return, we're releasing TBS pickup from the 24 month lock up that prohibits CBS second selling our transferring their shares of our common stock and if they do not generate at least 1.6 million of gross proceeds from the sale of their stock then on March Onest 2021, we will contribute additional capital to the parties strategic alliance and amount equal this.
Thats shortage.
In summary, despite the unprecedented environment and significant impact we felt on the pandemic, we continue to rightsize, our business and pivot to offering more multi platform content and interactive services using the successful WPC model to guide the expansion of the Allied is sports business.
We are thrilled with the reception of our online event and production services that we are generating.
We remain optimistic in our growth opportunities as we continue to accelerate the development of the areas of our business that can realize benefits and the current operating environment, while optimizing our operation and strengthening our balance sheet.
We will now open the line for acuity operator.
Yes.
Thank you we will now be conducting a question and answer session. If you would like to ask your question. Please press star one on your telephone keypad.
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One moment, please what we offer your question.
Thank you. Our first question comes from the line of Brian Kinstlinger Reliance Global Partners. Please proceed with your question.
Great. Thanks, so much we've taken some renewals I didnt quite.
Tony pick up the discussion in the details around your TBS ticker deal can you just.
Reiterate.
Well theres.
Details behind that and the capital what they need to sell in.
And just I, just wasnt able write down fast enough.
Sure Ryan I'd be happy to do that and thanks for joining the call.
As you May recall, our original agreement with TV AD Tech.
We had a commitment to invest 7 million into the strategic partnership that we had with them 5 million of which has already been invested so we had 2 million remaining of ongoing commitment due over the next two years.
Part of the recent amendment.
We have now eliminated that the 2 million of additional commitment. So we basically have fulfilled our entire obligation.
And then on the flip side.
What we've also done is Tvs Tech a shares which they had purchased as part of the original strategic partnership were subject to lock up those are now being released as well and then essentially there is a make whole on that so to the extent that they sell those shares and don't receive 1.6 million of gross proceeds from those.
Sale, then we will do a make whole on the on the difference between what they actually receive and 1.6 million.
And how many shares do they have can you just remind me when you sure it's about.
Just around 750000 shares.
Great and then.
Moving to the business can you talk about the trend in your in person you gave a lot of details around what's going on right now, 35% less capacity much lower food and beverage.
In light of the sound like 75% to 80% decline revenue in the first quarter should that be something more like 50% to 60% decline with.
Late open ended the quarter, a little less capacity, but much lower numbers you know how should we think about that and is there any way to predict it always actually starts to increase even further.
Yes, it's difficult obviously as you know brand within person not knowing exactly how the.
Endemic it's going to play out, but I definitely feel that were kind of reached the bottom end are starting to trend back up again, and so as you mentioned not on in person we had already been seeing a stable base of revenues coming from you know the sponsorship revenues that were receiving tied to the Las Vegas arena as well as some of the online event revenues.
So for US I think as you mentioned as we.
Now have the E Sports Arena open again for a full quarter, you'll start to see that trend up again and.
And then I think that bigger.
Other big factor will be once we start booking more and more of those third party event that we had been doing pre covered as well.
Have you done any of those yet maybe have you started at least will come into the future not yet.
Yes, I can probably provide a little bit more color there, but we have started to do.
With that we just did one the other day with our with our truck in that we're starting to do some at the arena as well.
Yes, we have made Tony thank you.
Sure.
And then you you highlighted the dropping multi content revenue.
You mentioned music true ups sounded like a little less sponsorship great I assume is AD demand and maybe some timing for events could you maybe spoke to three buckets up on what the decline.
Result, how much of the decline was from each wind and then.
Specifically.
Talk about what a music true up is.
Sure, Yes, it's a little confusing because I had a business level. We are seeing continued increased demand for our content, but music royalties is little complicated because we typically will get those paid in about six months in a rare so theres a little bit of a lag period, there and so the vast majority of the.
Decrease in pillar to our multimedia content revenues. This quarter came from a result of those true up from music royalties. The other piece that I mentioned earlier that also impacted but not as much was on the.
On the sponsorship side, because we have sponsorship deals in place, but some of them. We don't recognize those revenues until the final tables are done and because of the cobot 19 pandemic those final able got postponed so when those come back then we'll be able to recognize those revenues, but that also had an impact when compared to last year.
So what would the music royalty royalties for the second quarter this year versus last year.
Yes, the music royalties that you're talking about.
Nearly 300000.
Versus last year, it was about 700000 for the quarter.
And then so so there is there with that and then also some of the true up.
Right into the trip was how much.
So to true up makes up the other differences about.
300000.
Roughly.
Yes, and then I think this is more long term and high level of strategic question, but maybe talk about your thoughts.
Your strategy at malls at a high level.
It sounds like your plans for breaking construction as soon as you'd hope to hope in mid 2021, but.
Given the reluctance for and we think.
Consumers to head to the mall. How are you is there any change in your thought process to how you go about this business in the near and medium term.
Yes.
I think in general.
We still are closely monitoring the situation is of how the fact that make us moving along and we're in constant dialogue with all of those partners.
In fact, we talk to one of them and they are thinking more like in that we're in near future whenever things are easing up a little bit more when they do some pop up activity that some of their locations.
Whereas others would still talking on the permanent locations than meantime, we trying to figure out the better business arrangement that that that will cater for those kind of situations. So we're in meantime, also discussing those arrangement with these partners but.
But certainly hasn't saying which is half through.
Keep watching that the situations when things are getting better lewisville around that we still have some believe and this will be a very good good.
This is area for us to focus on in a long run.
Oh I.
I assume one mid 2021, it sounded like it in the northwest and you'd hope maybe to have a second by the end of year. So a good scenario for 2021 is having two locations would that be an accurate statement you review.
That would be a good scenario, but again, we really have to see how how the economy is being open up what that's what the pacing on bad debt.
Yeah last question I have.
May have missed that there were so many details on W.P.T. online do you talk about how many subscribers you have at the ended the quarter, how does that compare versus margin a year ago period, and then last question is how many diamond.
How many diamond subscribers.
Yeah, Brian This is Tony again, so we havent publicly disclose the actual subscriber numbers.
But I'll give you kind of a ballpark there in the five five figure range.
Then Adam I don't know if you want to share a little bit of color in terms of you know how well the.
The online piece of the WPC businesses than doing.
Sure.
So in terms of.
We started to actually see a tick up.
At the beginning January because that's when we started our new initiatives.
As the cold crisis it increased in more people were at home.
That just magnified in addition to that we were we get transferred our talent online so they became streamers.
Which are good best practices that we will continue long. After this is done so what we really saw before diamond.
Was a substantial uptick in the overall club WPP when we started in May.
When I can say is that we had we were hoping to convert.
A certain amount, but our expectations were.
Quickly realized within a week or so.
And and what we thought that first month would be I think that.
Hello.
We are now.
Yes, we are now confident the diamond will become a significant and that then indefinitely the fastest growing part of the PT.
The remainder of the year.
Great. Thanks for taking all my questions.
Yes.
Thank you next question is something a lot of southern Collyer security. Please proceed with your question.
Hi, Thanks for taking my questions.
My first question relates to the online events compared in person. So now you guys have sort of had a full quarter of online offense.
I was wondering if you got to strip out the food beverage merchandise revenue.
From your typical in person event, how has revenue per event from your online events performed.
Relative to your traditional in person events, and then maybe relative to what you guys expected to get from an online event.
Back back in May.
Sure.
Let me why don't I go ahead to start and then just can can fill in a little bit as well, but you know the size of the of the third party event. They can vary from anywhere from kind of five figures to the mid six figures depending on the size of those event.
But I think overall, we've been pretty pleased with the with the with how those have been playing out in Jed I don't know if you want to add a little bit more color in terms of this event.
Well, let Larry what I'd add to this is Derek is the frequency of which we can do event online. So if you're comparing one event to an event in arena. There there are different economics, there versus what player my paper I want to enter in one particular event online versus the coming in for an arena experience.
However, the frequency of which we can do things online.
As much greater and detailed show.
I think thats kind of the main difference and in just our operating practice, there and online versus in arena.
Okay, and I wanted to I would just want to.
So I can also add to that is just.
This is the BDC part of it yes, BDC part of course food and beverage, we'll have some impact and all the read jump on half coming back, but as we were doing more and more of these online E band Gino will also joining in new customers you engagement on the Btv side like for example, we have announced Yi.
The sports betting series that we're doing encore again as a pure online event, which we never had those opportunities before and we were running at the moment in the valor into is for the official serious fourth line its.
It's pure offline online you've and again and this is something that we never had before so as we do more of these online you guys were I also attracting a lot of those new BD opportunities, which can be easily give us well.
Okay. Derek this is Adam I know your your question is more focused on the sports side of the business, but the W.P.T. has also put its events online. During this time and its this will be a substantial impact and it will be a substantial impact going forward. It basically.
Which is the margin when you're not.
Flying.
The whole group of people to Miller cash or Uruguay or wherever it is and you are and the scale.
Is.
It is even greater so as indicated by Frank We had a main tour event, which was our largest main toward that of all time, we have an event going on right now the party poker that that event and May was so successful the party poker has a jump behind it and put a $100 million guarantees.
Under the events that are going on right now.
So.
Do you feel like that is a substantial opportunity to really flip the cost where we've always looked at the first pillar for.
For the WPP at least as that's where you build your brand that's where you probably we'll see in the long term the lowest margin but.
In this case things change and you're able to run events at 24 seven and.
And so we think thats going to be a great growth area going forward.
And then just kind of to piggyback on that some of these points with some of your team working in different locations and maybe your servers being in different locations are you guys limited at all to the number of events you guys can hold online concurrently.
I think actually first of all the services that were using they all the game service provided by their fathers or so so wherever they have to service we get money that.
We have been working team on directly owned by Us in Germany, and one in United States, and where partner seem in Mexico in other locations as well so with all this big network, we can pretty much run around it.
The clock online tournament.
More than 24 hours that we need to so so I think there we don't see any limitations once we get online and in fact, it's really pleased me up and up production capacity of will we increased Mack dramatically because you know we're actually engaging in online now.
Okay, Great and then just one final one back to the the real money gaming I know you'd mentioned that a little bit before but I was wondering if you can maybe remind us how large of an opportunity that is for you guys and then.
Maybe when we might to start see.
Those opportunities really start to materialize on the topline.
Okay. That's a step is a major first staff for US we have never done any content on tournament in this area. Before this is a first trial, but I think that has a lot can do with I believe we believe tournament ease for as they meant to GE complement business objectives, and we have been designing a lot of.
The value again.
Great and entertainment the meantime, we must satisfy our partners business objectives and this time is our partner E G, which they want to launched their new online betting solutions.
First time, VI, you're not GGP and and so we take one of our most.
Popular.
There is limited the sudden theory is which we have been doing for a long time in Europe, and we adjust the format a little bit so that it will enable a more engaging experience where he's what's been purposes for our partner.
So again is the first time and it's a license arrangement we license our link.
As a means to them.
And we designed some of the features of the stream and also the format of the tournament. So that it will help there of them to achieve their goals a better and hopefully on the rupture deal you know, we should be able to get something.
Much more meaningful in the long run.
Great. Thanks.
[noise] third no further questions at this time I'd like to turn the call back over to management for any closing remarks.
Okay. Thank you.
Thank you for your support everyone and joining us on today's call.
We look forward to speaking with everybody again, when we report out 2023rd quarter results in early November. Thank you again for a time and attention. This morning, and please stay safe and happy.
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Okay.
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Okay.