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And by run it I mean run it in what I would consider to be the proper way, that is, having paid players in a team house.
1) First variable is the number of people involved. Let's say that you have about 2 of each race, so 6, maybe 7 players. Go with 6 for now. Managers? Def at least 1. Let's say you take care of marketing, so 1 team manager who handles league/supervises training. So we're up to 7 total people.
2) Pay. I do not know how much ROI teams get/expect. Let's pretend we've got 7 grad students. Grad students at pretty good universities average about $25k-$29k per year.(source). This amount seems to keep them happy and focused on research. Of course, one's mental state might be different since playing SC2 does not lead to a generally useable degree/research experience...anyways let's go with $25k/yr. This brings us to $175k/yr.
3) Room. In Raleigh, NC you can get a 4 bd home (2players/room + manager's room) for between $11 00 to $1500 for a decent place. You could go lower depending on where you go. I imagine the cost of living in Malaysia where the FXO house is is a lot lower than pretty much anywhere in the US. So, let's go with $1.1k/month despite it likely being an overestimate. That's $13.2k/yr, and our total is now $188.2k/yr.
4) Food. Let's assume our intrepid grad students err players get their own food.
5) Competition expenses. Assume weekend long events. That's about $500/weekend per room. 7 grad students will probably take 2 rooms with good squashing, so that's $1k/weekend. Suppose for a moment we are in the US. US to US flights will result in probably about $350-$400/person, so let's say travel is around $2600/event. MLG also has a $70 entry fee, which brings us to $420/MLG. IPL's are also qualifier based (and for IPL3 it's $20/qualifier), so let's assume similar entry fees. This brings us to about $3500/event. MLG has 5 events per year. IPL3 is lan, but for that travel/hotel seems to be covered. Let's assume something similar prevails, and we just have the cost of qualifying. So, let's say 5 IPLs as well, which means about $2k in fees for IPL. NASL fees are refunded and travel is covered, so not much there to worry about in terms of non-recoverable costs. This puts us at $19.5k for a year of NA events. Include random small lans and whatnot, and let's call it $21k.
We then have international events. A flight from RDU to Berlin is about $1200 roundtrip. Add $500/weekend of hotel, and assuming no entry fee, this gives us $1700 per player per event. Let's assume 5 outside of NA events per player per year. This is $8500 per player per year. Naturally, at this cost one would not send the entire team every time. Assuming the manager goes every time, and on average 2 players are sent, this brings our foreign event cost to $25.5k/year.
Rounding a bit for nice numbers, our total event cost will be around $47k/year...let's round it up to $50k/yr in case of random unexpected stuff.
Our totals so far are $175k/yr on salaries, $13.2/yr on room, and $50k/yr on event costs. That's $238.2k/yr of costs. This could quickly go up if you've got a or some very valuable players on your team that everyone is eager to get...
Oh, and just to be safe/cover insurance and random stuff, let's round up to $250-260k/yr.
How can a team make up these costs? If your team is very good, you can surely have a number of sponsors for various things. How much monetary value their sponsorship brings is not something I know or am qualified to speculate about.
Team branded apparel and other things could certainly be another source of income. Suppose you sold team shirts or whatever in the $30 range. I don't know how much profit you could make, but assume it's really shitty, like $1/shirt just to be really pessimistic. The TL 1k batch shirts sold out pretty much instantly, so you have $1k/batch here if your team becomes very popular. Maybe it's optimistic, but $10k/yr seems within reach if not easily passable given a wide product line. However, this assumes that your team has gained achievements.
Streaming can also be a source of income. Suppose that in the contract, it is stated that for the duration of a player's contract to a team, stream income will go to the team. Destiny makes a monthly rate that is equivalent to about $42k/yr from streaming last I checked. Youtube is also a possible source of income. I don't know how much Youtube can generate for comparable numbers though. Let's just be pessimistic and guess half that amount, so $63k/yr total, assuming the combined team can match Destiny.
I'm not a fan of having professional players coach much, but let's say you set a ridiculously high rate, and if some crazy guy wants to pay for it, then so be it, but I doubt you'd get more than a couple k per year, so not much really.
In conclusion, a quick cursory glance at a grad school style setup for a progaming team leaves quite a bit of money left unprovided for... so we're not even at break even. But, I didn't really bother coming up with creative forms of income here, and what I mentioned already probably covers 40% of the cost if not more (once the team becomes established). And while creative forms of income can be very creative, I wonder how feasible the remaining 60% is to cover given the current state of the sc2 team scene if you're not already one of the established salary-giving teams (and I don't know which ones do and don't).
Maybe someone who is actually familiar with the economics of a team can provide actual insight to replace my pure speculation.
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Yeah. Actually did the math myself. I am not aware of marketing costs, but sponsors really need to think they are getting a lot out of it. I know some teams take a % of winnings. But still even with that...
In any case, it seems a bit reliant on charity right now.
+ Show Spoiler +I'm obviously killing esports
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I thought at first when reading the title that you were trying to estimate how much it would cost you to sponsor WeMadeFox / Oz / MBC 
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Haha. This may bite me in the ass, but if I ever end up making 500k+/yr I will sponsor a progaming team.
Like that's gonna happen.
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IMO at least with BW teams the sponsors aren't necessarily looking for profitability when sponsoring teams/players are they? I would imagine they look at as something like relatively cheap advertising pointed towards a young audience.
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That could explain why korean teams are poor, since they don't have big name sponsors. i.e fOu pre-FXO buyout. I guess this gives us a general idea what the korean teams have to do. Well it'll probably cost more since they have quite a few more players like oGs.
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^ Good point. Who the heck IS floating all that money.
Chaebols do have it but...
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For a lesser known team, salaries could even be nonexistent because players would be happy with free room and a group of people to practice starcraft with.
If you begin to think about how much money it takes to host a NBA or NFL team its way more ridiculous and they make it out somehow...esports is wanting to head in that direction.
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On August 30 2011 15:48 endy wrote:I thought at first when reading the title that you were trying to estimate how much it would cost you to sponsor WeMadeFox / Oz / MBC
Good idea lemme call Oz rq and buy them out and rename them to LiquidFans. Can't cost much more than $1 mil/year.
if only...
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IF we had that capital we could buy Oz and name them TeamLiquid Oz.
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On August 30 2011 15:53 Froadac wrote:
IF we had that capital we could buy Oz and name them TeamLiquid Oz.
We're not in Kansas anymore are we?
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The whole situation sorta seems like GO (pre-CJ sponsorship) where the team was barely able to scrap by, and the team had to take % of winnings in order to feed/keep the team alive. Then have players leave to other teams because they'll offer bigger paychecks. (Which could explain koreans joining with foreign teams/sponsors).
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I'm not sure if they even have a paycheck beyond room and board... (SC2) In terms of BW, I know that it's more established but you have to wonder where the capital funds come from.
And we sure the hell ain't in Kansas.
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On August 30 2011 15:49 SnowFantasy wrote:
IMO at least with BW teams the sponsors aren't necessarily looking for profitability when sponsoring teams/players are they? I would imagine they look at as something like relatively cheap advertising pointed towards a young audience.
I'm assuming sponsors are paying directly in a sense for advertising, as opposed to direct "sponsorship" of the team. Of course in the end what matters is not so much the intention (well it matters, but not really) but rather the $.
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I think you forgot to include initial investment in what they're playing on. Assuming each player pays for their own mouse/keyboard and headphones/set/buds, A computer capable of streaming + a decently sized monitor is going to cost 800-1k each. Assuming you want the 2 players going on foreign events to be able to practice in the hotel room, you'll need another 1-1.5k per laptop(you need 1080p screens, and depending on the player, need to run different settings to give familiarity.)
Add in copies of starcraft for various servers and this adds another 10k. Add in utilities and such and your total probably breaks a quarter million.....
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On August 30 2011 15:57 Amui wrote:
I think you forgot to include initial investment in what they're playing on. Assuming each player pays for their own mouse/keyboard and headphones/set/buds, A computer capable of streaming + a decently sized monitor is going to cost 800-1k each. Assuming you want the 2 players going on foreign events to be able to practice in the hotel room, you'll need another 1-1.5k per laptop(you need 1080p screens, and depending on the player, need to run different settings to give familiarity.)
Add in copies of starcraft for various servers and this adds another 10k. Add in utilities and such and your total probably breaks a quarter million.....
Was looking more at "fluid" costs as opposed to fixed costs, though your point on laptops and peripherals is important. Overall, if we assume $10k, that's a decent chunk of money but still relatively one time, as computer cycles can last a few years, at which point you will probably have reviewed and probably changed your expenditure pattern a few times.
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And insurance... Forgot about homeowners insurance. (unless you are just factoring that in )
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On August 30 2011 15:59 Froadac wrote:And insurance... Forgot about homeowners insurance. (unless you are just factoring that in )
Oh. How much is that anyways for renting something like a 4bedroom house? I mean the annual rent is just $13.2k... how much more could the insurance be for that ><. Tbh half the places I have rented haven't even required me to get my own insurance for it, though I guess you'd want insurance for your valuables there. Ugh, let's just round up to $250k to cover random stuff like that.
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I think corporations might have figured out that it is cheaper to sponsor a league like GSL, then it is for a team. Since it accomplishes the same thing (advertising) for a lesser cost? But I guess if you sponsor a successful team it would be better since you'd get more advertising. But that is sort of a double-edged sword.
Does that the reason why sony/coca cola/pepsi sponsor the GSL instead of teams?
But i guess its the total opposite in the west.
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On August 30 2011 16:03 Gao Xi wrote:
I think corporations might have figured out that it is cheaper to sponsor a league like GSL, then it is for a team. Since it accomplishes the same thing (advertising) for a lesser cost? But I guess if you sponsor a successful team it would be better since you'd get more advertising. But that is sort of a double-edged sword.
Does that the reason why sony/coca cola/pepsi sponsor the GSL instead of teams?
But i guess its the total opposite in the west.
Yea, that could be part of the reasoning.
Part of the income problem I think lies in the broadcasting rights. There is no such thing really as charging for the broadcasting rights to a team, which I think happens indirectly in the NBA, in that teams get some share from the league of the general broadcasting rights package that is bought by some cable company. Then there is also the arena, which has sold tickets. Neither of these two really translate over to SC2.
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Yeah it's never profitable.. just exposure towards a certain market. Which is why it's kinda weird for so many to pull out now, if the TV figures are still good, which they apparently are, the exposure hasn't changed for them. The smaller teams miss the play-off exposure maybe but they are playing in Proleague constantly the rest of the time, not to mention individual players representing teams in OSL/MSL. It's kinda wrong with them to be pulling out and messing with many players livelihoods.
Sponsors should be under long-term contracts and re-negotiate a lot earlier if they don't intend to keep the teams running, if KeSPA knew a season in advance it could actually be planned for a lot better.
Ontopic, for SC2 this could be an issue in the future too. There's no governing body like KeSPA so a sponsor pulling out unexpectedly could be even worse for those players with no drafting or anything in place for free agents. I suppose any skilled enough player will always find some team to take them on even if it's for severely reduced or no salary, but that's hardly good. BW was always the example to point to of eSports running correctly long-term, if it's no longer the case what does it show to potential future sponsors? Unfortunately, if Blizzard had made an agreement with KeSPA in the first place then both might be running alongside each other right now in a system that strengthened both game's proscenes... now it's potentially harmed both.
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Renter's insurance is probably only like 300-500/yr.
I overestimated.
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7 people getting paid 25k/yr? I'd like to be on your team.
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On August 30 2011 16:14 frequency wrote:
7 people getting paid 25k/yr? I'd like to be on your team.
So I'm not crazy to think that's a high number for SC2, despite it being a relatively low number given the opportunity cost/risk!
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On August 30 2011 16:14 frequency wrote:
7 people getting paid 25k/yr? I'd like to be on your team.
really? i thought that was rather low...
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And then you just have to ask yourself where EG gets their money from.
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On August 30 2011 16:38 AnxiousHippo wrote:
And then you just have to ask yourself where EG gets their money from.
Sponsors, they are continually marketing themselves and working with their sponsors.
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I think lots of teams have their players pay a cut to them if they win (like 10% or less), with a GSL each month more or less and a few team leagues running in between (teams probably take most of the money from these) if you had a team like SlayerS you would end up with from one GSL run (this current once since only 1 player is left)
Ganzi is 1st place code A
Taeja Ro8 code A
Yugioh Ro16 Code A
Boxer Ro32 () Code A
Ryung Ro8+ Code S
MMA Ro16 Code S
Coca Ro32 Code S
Alicia Ro32 Code S
If you took 10% of their winnings you would end up with at least (could go up or down dramatically depending on Ryung) 8,270,000 won, which is about $7,773 per month or about $93k a year. This is how most of the Korean teams run IIRC and how many like IM were able to stay afloat without ANY sponsors. Obviously I don't have the EXACT numbers and this is speculation, but it seems to work that way, The unfortunate aspect is that you NEED to have tip top caliber players to make that money off that model which is probably why teams like fOu were running into dire straights.
Just something to consider as part of your model.
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Glad someone is start to take a serious look at the financial side of eSports. Here's some refined numbers:
Player salary: Vast majority of teams pay token salaries, if at all, to their players. This is doubly true for Korea. Your IdrAs and HuKs can be counted in two hands, worldwide, that actually makes wages acceptable in any other industry.
Travel and team cut: The industry standard is 30% (Korea is a mystery to me, especially considering Puma was not contracted when he won NASL's $50k). This number is not intended as significant source of revenue, but more as a way to keep travel budget in check.
Thus, compared with what your expectations of a "proper way" to run teams, vast majority runs on a budget a magnitude lower than your expense numbers. From what I can tell, though, your revenue numbers are much closer to the mark, even if still on the high side.
disclaimer: I do not run a team. My numbers are unsourced and unsubstantiated. However, i have had a reputation for good guessimation of numbers (or at least I think I do).
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On August 30 2011 16:59 Primadog wrote:
Glad someone is start to take a serious look at the financial side of eSports. Here's some refined numbers:
Player salary: Vast majority of teams pay token salaries, if at all, to their players. This is doubly true for Korea. Your IdrAs and HuKs can be counted in two hands, worldwide, that actually makes wages acceptable in any other industry.
Travel and team cut: The industry standard is 30% (Korea is a mystery to me, especially considering Puma was not contracted when he won NASL's $50k). This number is not intended as significant source of revenue, but more as a way to keep travel budget in check.
Thus, compared with what your expectations of a "proper way" to run teams, vast majority runs on a budget a magnitude lower than your expense numbers. From what I can tell, though, your revenue numbers are much closer to the mark, even if still on the high side.
disclaimer: I do not run a team. My numbers are unsourced and unsubstantiated. However, i have had a reputation for good guessimation of numbers (or at least I think I do).
To be more precise, my definition of "proper way" is not so much how things "should" be done but rather how much things would cost if progamers were paid as least as well as grad students are, and grad students aren't paid much at all.
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I agree with you about the grad student pay and believe this is the reason why contracts are not public -- they're simply sad and not worth of note. When you can't even beat a grad student stipend, no one will take you seriously.
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On August 30 2011 16:08 EtherealDeath wrote:Show nested quote +On August 30 2011 16:03 Gao Xi wrote:
I think corporations might have figured out that it is cheaper to sponsor a league like GSL, then it is for a team. Since it accomplishes the same thing (advertising) for a lesser cost? But I guess if you sponsor a successful team it would be better since you'd get more advertising. But that is sort of a double-edged sword.
Does that the reason why sony/coca cola/pepsi sponsor the GSL instead of teams?
But i guess its the total opposite in the west.
Yea, that could be part of the reasoning. Part of the income problem I think lies in the broadcasting rights. There is no such thing really as charging for the broadcasting rights to a team, which I think happens indirectly in the NBA, in that teams get some share from the league of the general broadcasting rights package that is bought by some cable company. Then there is also the arena, which has sold tickets. Neither of these two really translate over to SC2.
I wonder if with the Proleague if the teams get broadcasting monies. In the big 4 sport leagues here in the US teams survive off of the media money sharing.
I think that broadcasting rights could end up happening but we would need one big team league like the proleague in Korea...otherwise it would not be feasible. I'm really tired so hopefully this made sense.
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On August 30 2011 16:19 EtherealDeath wrote:Show nested quote +On August 30 2011 16:14 frequency wrote:
7 people getting paid 25k/yr? I'd like to be on your team. So I'm not crazy to think that's a high number for SC2, despite it being a relatively low number given the opportunity cost/risk!
I think 25k is quite alot. I think only the top foreign pro players at the top of their teams and on the best teams or with individual sponsors (mouz, fnatic, eg, ttesports) will get anywhere near that much. But players such as idra/puma probably get a bit more than that and huk, Grubby would get considerably more. And the lesser players on those teams such as incontrol or LZ are probably in the lower bracket described below and are more like likely to get most of their earnings from coaching and doing appearances for their sponsors.
I think what actually happens is that most "pro" teams that aren't that wealthy but are still quite strong, ie liquid, mtw, dignitas, complexity, probably will pay their players anywhere from 5-15k as a base salary, but then will give them plenty of travel opportunitys and let them keep their winnings. If a player does extraordinarily well like huk they might get another offer before their contract is over.
What I am really curious about is FXO as they seem to have the most pro/fulltime players and the most housing with 2 locations, so unlike other foreigner teams they actually can pay for living expenses for their players and I am curious if that affects their salarys compared to other teams.
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When I win Lotto I will create a pro team
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On August 30 2011 17:59 Bartiemus wrote:
When I win Lotto I will create a pro team
haha would be fun to set up a starcraft-player based world-wide lotto syndicate with the aim to make a team.
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If it helps, I'll throw out the fact that they're probably making ~$15-20 profit per t-shirt. I ran a website for competitive Pump it Up players (Korean DDR, basically) for a few years and paid for it by selling tshirts to the user base. It was a crazy simple design, I really wish I remembered what site it was but it ended up being incredibly good quality and they offered lower prices based on how many shirts I ordered at a time. The biggest order I had was for maybe 60 shirts with a black and white design and including shipping I maybe paid $6 each for them. Even with teams like EG selling color shirts, with the volume they're selling they can't be paying more than $7-8 each so there's plenty of profit to be made just from that.
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I thought it was a plan to create Liquid Oz. I'm super disappointed.
Also, i don't think most player gets 25K/year. Less known players get as little as 400 to 500 dollars per month
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On August 30 2011 20:46 legaton wrote:
I thought it was a plan to create Liquid Oz. I'm super disappointed.
Also, i don't think most player gets 25K/year. Less known players get as little as 400 to 500 dollars per month
AFAIK most players don't even get any money at all. It all has to come from their own pocket (i.e. streaming/coaching).
I think many aspiring or lower ranked progamers would already be happy with a free teamhouse, a PC, $500 "pocket money", free food and 90% of whatever they earn in tournaments.
That would basically reduce the costs of 6 players to $36000 in salaries, ~$6000 in food and around the same $6000 for new PCs every year, replacement for broken parts, etc.
You don't really need a manager for such a small team and you can appoint the most reliable player as a coach to take care of most of the basic matters.
Take a house in some suburb for ~$1000 a month and you end up with a total of $60000 a year or with a safety margin, ~$70000.
This doesn't factor in travel, but that is hard to calculate as it depends a lot on where the team is located, where tournaments are, how many players you think are strong enough to compete, etc.
Yes, for a high-end team, you need a lot more money but you also get a lot more and better sponsors. To start a team of talented but newer players, you don't really need that much money.
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On August 31 2011 00:46 Morfildur wrote:Show nested quote +On August 30 2011 20:46 legaton wrote:
I thought it was a plan to create Liquid Oz. I'm super disappointed.
Also, i don't think most player gets 25K/year. Less known players get as little as 400 to 500 dollars per month AFAIK most players don't even get any money at all. It all has to come from their own pocket (i.e. streaming/coaching). I think many aspiring or lower ranked progamers would already be happy with a free teamhouse, a PC, $500 "pocket money", free food and 90% of whatever they earn in tournaments. That would basically reduce the costs of 6 players to $36000 in salaries, ~$6000 in food and around the same $6000 for new PCs every year, replacement for broken parts, etc. You don't really need a manager for such a small team and you can appoint the most reliable player as a coach to take care of most of the basic matters. Take a house in some suburb for ~$1000 a month and you end up with a total of $60000 a year or with a safety margin, ~$70000. This doesn't factor in travel, but that is hard to calculate as it depends a lot on where the team is located, where tournaments are, how many players you think are strong enough to compete, etc. Yes, for a high-end team, you need a lot more money but you also get a lot more and better sponsors. To start a team of talented but newer players, you don't really need that much money.
Hmm so that could feasibly reduce costs to 50% of what I guesstimated using grad student pay levels, so about $120k, rounding down a bit. I wonder how close that is to the actual figures for the most well off/known teams.
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Top 10 players in Europe make somewhere between €8 000 - 15 000 per year from their teams, add streaming income and tournament winnings income on top of that and that's what most of them live off.
Unfortunately no Bahamas beach properties yet 
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On August 31 2011 22:46 dignitasNewmaN wrote:Top 10 players in Europe make somewhere between €8 000 - 15 000 per year from their teams, add streaming income and tournament winnings income on top of that and that's what most of them live off. Unfortunately no Bahamas beach properties yet
That number makes me wonder what a 'potentially life-changing' salary would be (referring to HuK).
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Yeah. EG has a lot of capital, but it's really unknown HOW MUCH. And life changing, as you've said before is incredibly variable.
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EPT
