The future of Gfinity (GFIN:AIM) is a looking a little less uncertain after the eSports business announced it has won its first major sponsorship deal, sending shares up 5.9% to 27p this morning.

The group, which specialises in video gaming on a competitive level, has signed a two-year agreement for The Sun newspaper to become its official partner and title sponsor of its 2015 and 2016 championship series which will take place at the newly-opened 600-capacity Gfinity Arena in Fulham Broadway.

In the second year of the contract The Sun will also be lead sponsor of Gfinity’s High Performance Programme, which helps develop UK eSports players, and title sponsor for its weekly online tournaments.

Getting a deal with a well-known company is a very positive development for the £19.9 million cap, which until today had failed to sign any sponsorship agreements since floating in December. Frustratingly Gfinity hasn’t revealed how much the deal is worth.

GFIN - Comparison Line Chart (Rebased to first)

Sponsorship deals are critical to the group’s success as it only gets a small amount of revenue from tickets, merchandising and online users. Revenue in the second half of 2014 was £145,401 which reflected ticket revenue of £70,000 from its G3 event in August, together with some income from sponsorship and premium subscriptions to its website.

Gfinity also hopes to sell the broadcasting rights to its eSports live tournaments but so far no contracts have been signed.

Today’s news is encouraging but we’ll need to see a lot more deals before we have faith in the group’s future income stream. The group admits there is an ‘education process’ to go through with sponsors who haven’t engaged with the sector before.

Issue Date: 17 Apr 2015