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Thursday, December 2, 2021

Magnus Inc.: The Business of Becoming a World Chess Champion

By the time Norwegian chess grandmaster Magnus Karlsson was 16, he was successful enough that his parents, Henrik and Sigrun, decided to form a small company to handle his winnings. Heinrich said at the time that he expected Magnus to earn enough by the age of 25 that, if he decided to stop playing, he would be at least financially independent.

Magnus has exceeded a relatively modest target.

Defending world champion Carlsen will turn 31 at the end of the month, just days after he will defend the title in a best-of 14-game match against a Russian Grandmaster Ian Nepomniachtchi in Dubai on November 24. , The prize pool for the event is $2 million. As much as 60 percent will go to the winner.

Yet win or lose, the payday will only add to the millions of dollars Carlson has earned over his career. He has done anything that none of his contemporaries or predecessors, not even Garry Kasparov, who won the world title from 1985 to 2000: he went on to become one of the world’s leading impresarios. has taken advantage of his fame. In the process, he has earned a small amount of money.

Carlson has several private sponsorship agreements, including Unibet, a sports betting site; Islar, a Norwegian water company; and the Norwegian law firm Simonsen Vogt Wiig. But the main vehicle for his business ventures is Play Magnus, a company he co-founded in 2013, the year he became world champion.

Initially designed as an app that allows users to imitate Carlson’s playing style and strengths at different ages, Play Magnus grew to become a company with a dozen subsidiaries, mostly acquisitions. expanded through. This now includes an online playing site, multiple learning and training platforms, and digital and book publishing arms.

According to Play Magnus chief executive Andreas Thom, the company has approximately 250 employees and nearly four million registered users of its products and proprietary learning programs. A year after Euronext Growth went public on the Oslo Stock Exchange, Play Magnus now has a market capitalization of approximately $115 million. It is the only publicly traded chess company in the world.

Magnus Chess, a private entity formed when Carlsen was 16 to handle his winnings, owns nine percent of Play Magnus, making it the second largest shareholder. Magnus Chess, in turn, is 85 percent owned by Carlsen; This brings his personal stake in Play Magnus to approximately $9 million.

Although Carlson has no role in the day-to-day operations of the company he is named after, he has a huge influence on their strategy. His father sits on the board of directors, and Magnus Carlsen is consulted on major decisions.

“We have very good communication with the management at the company,” said Henrik Karlsson. “We are in great contact. They really want to involve Magnus on every important decision. It’s kind of a symbiosis.”

Thom echoed the point. “What is important to Magnus is making the game more accessible to more fans around the world,” he said. “The ideas he stands for are certainly the backbone of the company’s faith.”

Carlson’s ideas have long had a bearing on the company’s acquisition strategy.

“When we just had apps, he wanted a play zone,” said Henrik Karlsson. So Magnus pushed for a merger in March 2019 with Chess24, one of the leading sites on the Internet.

Then, last year, with the pandemic shutting down all individual tournaments, and also postponing the world championships, the company decided to create its own competitions. Once again, Thom said, Carlson was brought in to offer advice.

“We did a lot of work with Magnus on that,” Thom said. “What could be an interesting concept to attract more fans around the world? What should the format be?”

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Play Magnus organized a series of 10 mostly online tournaments with prizes of $1.6 million. The event was attended by 44 of the best players in the world, including Carlsen.

The inclusion of top players, including the world champions, allowed the tour to attract sponsors. Those who signed up included Meltwater, a media intelligence company for which the tour was renamed; FTX, a cryptocurrency exchange; and MasterCard. Swiss wealth management bank Julius Baer became the main sponsor of the so-called Challengers Tour for budding players.

The Meltwater Tour Finals was last month, held at an esports studio in Oslo partly built by Play Magnus. Unsurprisingly, Carlsen won. He also collected the biggest chunk of the season’s purse—just over $315,000. Wesley So, an American, finished second and earned $215,000.

This made the tour built by Carlson’s company financially attractive to Carlson, a result which Thom insisted was not a problem.

“The fact that Magnus is strongly supporting the tour, playing in the tour, taking it seriously, competing, making sure other top players are playing there and doing a lot for the company.” are valuable,” he said. He argued that this was good for both the company and its shareholders.

In its third-quarter shareholder report, Play Magnus reported that the tour had 115 million live broadcast views and 29 million hours of video views — putting it on a path, Thom said, to break even financially. Still, the company reported a loss of $5.3 million for the third quarter, bringing its 2021 loss to more than $14 million. With cash reserves of about $22 million, those losses will appear to be sustainable for now.

Play Magnus has already announced that it will hold another Champions Tour with nine tournaments starting in February. The company is also conducting a regional tour in India.

“Over time,” Thom said, “we want our Champions Chess Tour to be for chess what PGA is for golf or what Formula One is for racing.”

Henrik Karlsson, who has always been by his son’s side throughout his career – part confidant, part support team – admitted that being the face of Play Magnus has put extra pressure on his son. But he said Magnus has always been able to divide his commercial and competing interests.

“It’s absurd to think about his professional results when he plays for a tournament or even a world championship,” said Henrik Karlsson.

His son favors retaining the World Championship when he plays Nepomniachtchi; He is ranked higher than his challenger and has far more match experience. But even if he loses, it may not have a material impact on the financial outlook for his business interests.

“The Play Magnus Group of companies is very diversified in terms of our revenue stream,” Thom said. “Some of those streams are more related to Magnus than others, so it’s better to have him as the world champion. But I think Magnus has reached a foothold in the world of chess because of his performance in a very long time. , which means he will forever be a legend of the game.”

According to Henrik Karlsson, Carlsen and his family believe so strongly in the company, in fact, that they have stepped in to buy the shares when the stock price has plummeted recently — about 100,000 in the past six months.

As for the goal of financial independence that he and his wife had set for Magnus at the age of 16, Henrik Karlsson now dismissed it with a wave of his hand. His son, he said, had been overtaken “far, far away”.

World Nation News Deskhttps://www.worldnationnews.com
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
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