Madison Square Garden Acquires Majority Stake in CLG
Counter Logic Gaming and the Madison Square Garden company (owner of the New York Rangers and Knicks) announced a ground-breaking deal this week which saw MSG take a majority stake in CLG, marking the first time that CLG, one of the most storied and successful brands in esports, took formal outside investment. Catalyst Sports & Media advised CLG on the dea
This is the most high profile partnership between a major endemic esports brand and a major traditional sports/media company in industry history, and continues the trend of traditional sports teams and investors making long-term bets on esports being a crucial part of their future.
Major traditional sports teams do not have esports in their DNA, which is one reason why many are either aggressively hiring endemic experts (e.g. the Houston Rockets hiring Seb Park, former CEO of Team Archon) or partnering with endemic esports teams like CLG or Dignitas, as the 76ers and MSG have done.
That said, these organizations are some of the best in the world at building merchandising, ticketing, and sponsorship infrastructure, all of which the vast majority of endemic esports teams have only begun to scratch the surface of possibilities of.
As traditional sports and esports continue to embrace, expect to see more cross-promotion and high-profile showcasing of esports content in indoor venues and arenas, and not just basketball arenas.
Overwatch League (OWL) Releases New Details
Earlier this month, OWL announced the first seven teams for the inaugural season. OWL just released new details surrounding some of the questions industry experts and fans alike have been waiting for.
- Players will sign one-year guaranteed contracts with a one year option.
- Minimum salary for all players is $50,000/year.
- Players will receive health insurance and retirement plans.
- Teams must distribute at least 50% of performance bonuses to players (Total prize pool for Season 1 is $3.5M with $1M going to the champion).
- Team must have a minimum of six players and a maximum of twelve.
- No restrictions on region locking (where players are born or currently reside).
- Teams must provide housing and training facilities to players during the season.
The player rights standards set by the OWL are not new in the esports industry and some are even subpar compared to other leagues and current team practices. For instance, requiring teams to distribute 50% of performance bonuses to players is far lower than common practices. The majority of teams distribute 80-90% of prize pool winnings to the players. I’m aware of one leading team that pays out 110% of winnings to their players and coaches. In addition, it is standard practice for esports teams to provide housing and practice spaces to players. While I believe it is necessary to include these features in the league’s bylaws, we should not look at this announcement as tone setting across the industry.
However, it is good to see that the league will require a minimum salary and benefits for players. Although many teams have begun providing healthcare and retirement plans for players, some of the smaller orgs have not yet caught up. As for minimum salary, since Overwatch’s ecosystem has essentially revolved around a state of temporary tournaments in anticipation of OWL, the market will soon determine if the $50,000 minimum salary is appropriate or inaccurate.
Four European LCS Teams Apply for NA LCS Franchises
According to a report by ESPN, four European League Championship Series teams have applied for charter membership in the North American League Championship Series. The rumored applicants are G2 Esports, Fnatic, Splyce and Misfits, who all reportedly submitted applications before the July 28 deadline.
In the case they are accepted, those teams would need to relocate their League of Legends operations to Los Angeles, from their current homes in Berlin. They would also need to drop the majority of their players, because of the two-player import rule via Riot Games’ interregional movement policy.
Riot Games will announce its members in November.
When Riot Games first announced that the NA LCS would be moving to a franchising model and the EU LCS would not, you knew that there would be a serious imbalance in power between the two. In terms of potential earnings for both teams and players, the franchised league would undoubtedly be able to offer a more robust opportunity through revenue sharing. The application by these four teams serves as a confirmation of what we already knew, which is that the NA LCS provides a more transparent and overall opportunity for growth.
Despite a competitive balance between North American and European LoL teams, the NA LCS draws larger viewership levels and has a more developed infrastructure in terms of venues and sponsors. In addition, the transition to a franchising model provides a level of security, as teams no longer have to worry about the threat of relegation.
Despite being amongst the best teams in Europe, the chances that one of these teams is accepted into the NA LCS look slim. Splyce and Misfits executive operations are both based in North America, so the relocation wouldn’t be quite as uprooting. Fnatic and G2 Esports, however, are based in Europe and would have to relocate both their staff and operations.
The applications highlight that even the European teams see the tremendous potential in the NA LCS and believe in the positive benefits of franchising. Although it signifies a better outlook for the NA LCS, I don’t think it necessarily reflects as poorly on the EU LCS as one may think. The EU LCS will continue to draw high levels of viewership and grow as it has year over year. This is a situation where just because one side gets better, it doesn’t dilute anything from the other. While Riot has yet to indicate any sort of plans for franchising in Europe, you can bet that a successful launch will have these European teams clamoring for a transition.