Game developers Blizzard Entertainment and Riot Games, creators of Overwatch and League of Legends have both formed franchised leagues in the past year (OWL & NALCS) which offers organisations the opportunity to obtain a permanent league spot through the application and buy-in process. Through following a franchise model similar to the NBA grants organisations stability that have invested a substantial amount of capital into the league stability.
Esports is believed to have a market value of around $650m in the past year, and estimations of achieving a market value of over 1 Billion Dollars by 2019 so it’s not surprising that there is interest from outside investors to help these organisations financially.
The price of an individual spot is not clear cut, but ESPN reported that every organisation had to pay at least $20m to join season one of the Overwatch League. Whereas the fee for NALCS was a rumoured flat fee of $10m plus an additional $3m for newcomers to join the league.
Furthermore, as these leagues continue to grow, the price for expansion teams to join will increase. It is already being reported that at the end of the inaugural season 1 of OWL a spot could cost as much as $60m.
Multiple franchises within American sports have heavily invested in Esports organisations to help them obtain a spot within the league:
Overwatch League (OWL) notable sports investors:
- Robert Kraft, Owner of New England Patriots – Boston Uprising
- Neil Leibman, Co-Owner of MLB’s Texas Rangers – Houston Outlaws
- Fred Wilpon, Majority owner of New York Mets – New York Excelsior
- Comcast Spectacor. Owner of NHL Philadelphia Flyers – Philadelphia Fusion
- Stan Kroenke, Major shareholder of Denver Nuggets, LA Rams and Arsenal FC – Los Angeles Gladiators
- Andy Miller, Co-Owner of NBA’s Sacremento Kings – San Francisco Shock
North America League Championship Series (NALCS) notable sports investors:
- Joe Lacob, Majority Owner of NBA’s Golden State Warriors – Golden Guardians
- Wes Edens, Owner of NBA’s Milwaukee Bucks – Flyquest
- Tilman Fertitta, Owner of Houston Rockets – Clutch Gaming
- Dan Gilbert, Owner of NBA’s Cleveland Cavaliers – 100 Thieves
Noah Whinston, CEO of Immortals and OWL team Los Angeles Valiant believes that there is a necessity for “permanent partnerships, to grow real infrastructure and stability for players and organisations”.
In regards to the players Riot Games ensure that all players earn a minimum salary of $75,000 and introducing a players association.
Blizzard’s model of franchising is slightly different to NALCS as every team selects a geo-location to ‘play from’ as they are focused on trying to build local fan bases. This is why all organisations who purchased a slot were subject to create a separate brand, for example OpTic Gaming’s Overwatch team is called Houston Outlaws.
This does not seem to have much impact at the moment as all 12 teams play their live matches from LA, however it is a strong possibility that we see every team have a ‘home’ stadium by season 2 of OWL, as Whinston notes that he will not be solely focused on sponsors but also looking to sell tickets when it is time to play from their home stadium. The LA Valiant have declared their home stadium to be the Microsoft Theatre in Los Angeles.
The Franchising of these leagues gives investors, advertisers and sponsors the opportunity to engage with a young male audience as a survey from Limelight shows 18-25 year old males prefer watching Esports more than traditional sports or TV Shows online, which is why it cost online streaming site Twitch.tv $90m for a two year streaming deal for the Overwatch League.
Not all of the AAA Esports titles have franchised however, as CS:GO, a first person shooter launched back in 2012 by developer valve has not been franchised and still attracts millions of viewers as IEM Katowice 2017 had 46 million unique viewers across the event.
Instead CS:GO focuses on national rankings based on placings in minor and major tournaments that happen around the world. This allows for all organisations to compete and not those they get capital injections from outside investments.
Cloud 9 and London Spitfire CEO Jack Etienne believes that if Valve were to build some sort of a permanent partnership or franchise would create stability for players in Counter Strike.
It is unknown whether franchising is the future for all Esports titles, but it is clear to see that certain developers are hoping that through a streamline franchised league, that follows the model of traditional sports such as the NBA through creating stability for not just the organisations that take part within the league but also its players.
