Coffee, Carlsen, Kasparov & potpourri

How are you today? It is already the 28th and the last Monday of the month! Where does the time go? So many things are happening in the world right now. So many uncertainties and doubts. 

The US election. Covid-19’s second wave. How long will the schools stay open? More covid restrictions. Will the government call off Xmas? 

The list goes on…Everything is in a state of flux. That is where coffee comes in. No matter how bad things can get, I can always count on coffee…

Serbian First League

Serbia is one of those countries that is coping quite well with the virus.  In a country of approximately 7 million, 746 people have died (39 in the past month, approximately 1 per day). There is no panic: virtually all of those 33,312 who tested positive have since recovered (31,536).

The Serbian Team Championships (male and female) are taking place between the 25th of September and the 3rd of October. Masks are not obligatory. Very little social distancing. Each player has hand sanitizer. No spectators from what I can see… 

It is, otherwise, an ordinary tournament. Congrats to the organizers and players for not being afraid. It is important to carry on and live normally  even in the times of Covid-19.

Spanish Honor Division

As I wrote on Friday, the Spanish Team Championhip is taking place in Linares and will continue until the 29th.  At this championship, masks are obligatory. (Photos: FEDA)

Play Magnus Group to make history?

Anders Brandt, Chairman of Play Magnus Group, has always been one of Carlsen’s biggest supporters. Recently, Brandt decided to make the long anticipated move to go public with Play Magnus Group, listing it on the stockmarket. 

The date chosen is October 5th, and the listing will be on the relatively small-ish Oslo Stock Exchange’s Merkur Market. This can be seen as a somewhat cautious – but wise – initial move. Perhaps they just want to test the waters…

The Merkur Market has more relaxed admission and reporting requirements than, for example, the Oslo Bors exchange. Merkur does not require more than 15% of any listed company’s shares to be issued to the public, considerably less than the Oslo Bors’  minimum of 25%.

Merkur Market is a multilateral trading facility and was established in January 2016. The market place is not subject to the Stock Exchange Act or the Stock Exchange Regulations. Merkur Market is best suited for smaller and medium-sized companies or large companies that do not satisfy the admission requirements or do not wish to be fully listed on a regulated market  (Wiki)

The estimated worth of the company is given to be in the $85 million range, according to press releases. This seems to be rather optimistic (inflated) atleast in my way of looking at things, given that any business whose core activity is the unexplored world of online chess must be considered full of uncertainty and related risks.

Chess is not football, nor poker, has virtually no sponsorship , little visibility and has lost considerable prestige since Garry Kasparov first lost to Deep Blue in 1997.

Brandt is, no doubt, betting on World Champion Magnus Carlsen’s name and direct involvement in the project to change things around into his favour.

“The company has developed enormously from a stand-alone app to become an industry leader with an ecosystem of innovative chess services,” claims Play Magnus Group chairman Anders Brandt, who’s been part of Play Magnus from its beginnings as a co-founder of the app. “Our ambition is to create the world’s best experiences for playing, learning and watching chess.”

Déjà Vu?: Kasparov 2.0

The Brandt decision is not without risk. There is speculation that this decision to go public right now is driven by pressure from the Chess24 owners to try to sell their stake in Play Magnus Group before the end of the year. Chess24 is by far the largest shareholder in the company.

The speculation continues that when Chess24 originally partnered with the Play Magnus Group in early 2019, it was already planned to go public shortly before the 2020 World Championship match, profitting from the public interest in the pre-match buildup.

When the pandemic put an end to this scenario, but still wanting to maintain the same time table, the  Chess24 and Play Magnus Group invested heavily — especially with its online activities —  including the Chess Tour, which offered a million dollars in prizes.

The idea was to keep Carlsen’s name in the news for as long as they could afford to.

Now the big question is whether all of this will have been able to generate any REAL interest when things go public on October the 5th.

Most online chess startups are funded by hedgefunds or rich individuals who are willing to take a chance.  After a number of years, the investment is again re-evaluated and a decision to either pull out or continue is taken.

Most  pullout. Historically, online chess has been notoriously unprofitable. Readers might remember the excellent online server ‘Chess Network‘ (which is where ‘banter chess’ originated).

Millions of dollars were invested by a Malaysian billionaire to develop a state of the art platform, but, after a number of years with no real earnings, the investor decided to cut his losses and sold its assets to the Internet Chess Club in 2007.

Ditto Kasparov’s dreams of becoming a billionaire with his KasparovChessOnline project at the height of the DotCom bubble at the turn of the century. 

Kasparov managed to get some $12 million startup from investors (You might also want to read more here) to develop a ‘one stop shopping ‘ platform for chess players, chess teachers, etc, and then go public with an IPO within one year.

It was a brilliant concept on paper — almost identical to what Play Magnus Group has created — and one of my friends (a very respected professional investor) thought that it would be an amazing success that would make Kasparov and his investors all billionaires.

None of this transpired. To make the story short, it was soon discovered that there was a limited market/interest for such chess ventures. It never got to the IPO stage.

The whole project crashed and burned. By September 2002 the company ceased to exist when the board of directors decided to close down operations due to lack of funds. At one point the company had 60 employees.

Every penny of investment was lost. Kasparov would later be dogged by legal problems connected to this project (LINK).

A bitterly disappointed Kasparov remarked that he had misjudged the chess opportunities that existed online. That there were none.

As written elsewhere here on this blog, there have been persistent rumours in recent years that Chess24 has not been making money.  That the owners want to cash out.

Perhaps the timing of this Brandt decision to bring Play Magnus Group public is influenced by this. 

In any case, we shall soon see how good this decision is. It would be a great pity if there is no real interest in Play Magnus and that at the end of the day Carlsen & Company will have to  buy back their own shares.

I wish Mr. Brandt and gang the very best of success with their plans! It would be an historic moment in online chess…and will answer the question about whether Kasparov was a visionary — or not — when he first sought to push chess into the online world twenty years ago…