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On February 11 2017 23:37 JimmiC wrote:
great post about he economics of esports. None of it remotely explains why riot would want to go to franchising system or how blackballing investment would make them want to more? Why would they want to give increased power to people who are already trying to push them around?
This is not Hockey, football or basketball no one owned those sports. RIOT owns league, you have to work with them not try to push them into things by being dinks. It is very junior high and it is not a well thought out strategy.
This strategy they're allegedly pursuing doesn't have to convince Riot to change the system. It would just be a bet that, sooner or later, they will do so, and so all they need to do is hold on to their LCS spot up until that point in time, and if the strategy successfully deters new rich owners from buying their way in by loading up on talent (as opposed to doing so by buying up a whole team and LCS spot), then it would be a success.
I say allegedly because, for starters, this is NOT what happened with Echo Fox at all. Rick Fox DID buy a whole team to get in, LCS spot included, from Gravity Gaming in late 2015. So if they WANT new owners to make it into LCS by buying up current teams and their LCS spots, and do not want them to do so by loading up on talent and getting promoted via challenger, then this punishment of EF for their alleged transgression would be all kinds of hilarious.
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GrandInquisitor
New York City13113 Posts
On February 12 2017 02:28 chipmonklord17 wrote:Show nested quote +On February 11 2017 23:37 JimmiC wrote:
great post about he economics of esports. None of it remotely explains why riot would want to go to franchising system or how blackballing investment would make them want to more? Why would they want to give increased power to people who are already trying to push them around?
This is not Hockey, football or basketball no one owned those sports. RIOT owns league, you have to work with them not try to push them into things by being dinks. It is very junior high and it is not a well thought out strategy. Yes and no. At the end of the day Riot can tell you to go fuck yourself, but if you think an LCS without C9/TSM/CLG/TL would be remotely as popular as it is today you're kidding yourself. Riot owns the league but the teams ARE the league. And those teams make far more money in CS:GO (where Valve has given far more opportunities for teams to make money) and the teams no longer need LoL. Regi made his empire now, he doesn't need Riot to make money, but Riot sure as hell needs TSM for people to care
You 100% have it exactly backwards. And the proof is that the teams already tried to do this and failed. They said to Riot, "Franchise or we'll leave LCS", Riot called them on that bluff, and the teams went back to LCS, not franchised.
TSM is nothing without League. Their biggest non-League superstar is probably Leffen, one of the absolute gods of the game, top 3 in the world. He has 65k followers on Twitch. Dyrus, their retired top laner who was pretty bad in a region of bad top laners, has 20x that number. CLG's CS:GO players have 1/10 of Leffen's followers.
LCS is the only game that gives them the steady fan/income base off of which they can build into other brands.
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On February 12 2017 04:21 GrandInquisitor wrote:Show nested quote +On February 12 2017 02:28 chipmonklord17 wrote:On February 11 2017 23:37 JimmiC wrote:
great post about he economics of esports. None of it remotely explains why riot would want to go to franchising system or how blackballing investment would make them want to more? Why would they want to give increased power to people who are already trying to push them around?
This is not Hockey, football or basketball no one owned those sports. RIOT owns league, you have to work with them not try to push them into things by being dinks. It is very junior high and it is not a well thought out strategy. Yes and no. At the end of the day Riot can tell you to go fuck yourself, but if you think an LCS without C9/TSM/CLG/TL would be remotely as popular as it is today you're kidding yourself. Riot owns the league but the teams ARE the league. And those teams make far more money in CS:GO (where Valve has given far more opportunities for teams to make money) and the teams no longer need LoL. Regi made his empire now, he doesn't need Riot to make money, but Riot sure as hell needs TSM for people to care You 100% have it exactly backwards. And the proof is that the teams already tried to do this and failed. They said to Riot, "Franchise or we'll leave LCS", Riot called them on that bluff, and the teams went back to LCS, not franchised. TSM is nothing without League. Their biggest non-League superstar is probably Leffen, one of the absolute gods of the game, top 3 in the world. He has 65k followers on Twitch. Dyrus, their retired top laner who was pretty bad in a region of bad top laners, has 20x that number. CLG's CS:GO players have 1/10 of Leffen's followers. LCS is the only game that gives them the steady fan/income base off of which they can build into other brands.
Steady fan base, I can buy. But steady income to branch off into other eSports? That would directly contradict this letter from Reginald to Marc Merrill:
On August 23 2016 Reginald wrote:
(...) there's a belief at Riot that team owners make a lot of money off LCS and invest it into other eSports, but that is far from the truth. (...) other LCS team organizations invested into CS:GO early and made more money for players in one year from CS:GO stickers than Riot paid them in three years of stipends and icon sales combined and that game is only a fraction of the size of LoL.
(...)
It used to be true that we made money from LoL eSports, but that was before LCS and the economic situation is getting progressively worse.
Most LCS teams lose money because stipends are stagnant, sponsorships for LCS team operations are shrinking and the cost of player salaries, content production, support staff and housing costs are spiraling up."
The letter is six months old, so not super recent but I get the impression that the situation hasn't changed much since then.
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GrandInquisitor
New York City13113 Posts
Yeah, I mean, I'm shocked that Reginald would write a letter saying that TSM needs more money from Riot. SHOCKED I tell you.
No one forces TSM to pay top dollar for Doublelift/Bjergsen, to pay for support staff and content producers, etc. But they choose to do so because a strong League team has such an enormous unquantifiable benefit for your brand that it'd be idiotic not to monetize it.
TSM is losing money on LCS the same way Riot is losing money on LCS. Strictly on its own, the stipend obviously does not cover their player salaries and support staff, and it should not.
At the end of the day, if you believe Reginald when he says he loses money on his LCS team, then you must assume that he's also just a total idiot and not a businessman. The LCS stipend covers minimum wages for the players, and everything above that teams choose to invest into their teams, because they know League is where the fans and the money are.
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On February 12 2017 04:53 GrandInquisitor wrote:
Yeah, I mean, I'm shocked that Reginald would write a letter saying that TSM needs more money from Riot. SHOCKED I tell you.
Regi saying TSM makes no money directly from LCS may be predictable, but that doesn't make it untrue. Unless you claim that Regi is straight-up lying about this.
On February 12 2017 04:53 GrandInquisitor wrote:
No one forces TSM to pay top dollar for Doublelift/Bjergsen
Since when is a tiny fraction of what a streamer makes top dollar?
So, analogy time. The business model of sports in general is that sports teams attract fans, oftentimes very heavily invested fans, and then unrelated brands sponsor those sports teams which serves as advertising for them. Then the actual broadcasts of games are also served with ads and require a subscription to view, so that the broadcast makes for an additional source of revenue, and each team collects some part of it.
LoL eSports does not work that way. The broadcast is free to watch because Riot wants people to watch it, not to make money from the broadcast. And then sponsors are heavily limited in how visible they are as sponsors of a given team, according to Regi's letter, because again, Riot wants LoL eSports to be advertising for its own product first and foremost. With the broadcast making no money for LoL teams, and sponsorship income being limited by Riot's strict regulations for it, I believe Regi when he says that most teams lose money in LoL eSports, IF you don't factor in accounting intangibles such as the brand value that they gain.
Naturally, that's a big if. I'm pretty sure TSM and C9 make money overall as organizations, considering that they keep growing, and that LCS is a cornerstone of their operation. However, I get the impression that the business model is fairly convoluted- they get most of their fans in LoL eSports, gaining brand value, and then cash in on that brand value via other eSports, where they have more diversified revenue streams. If I'm right about this, then it's a wonky but workable relationship between LoL team owners and Riot. I do believe LoL eSports could have substiantially higher revenue if only Riot wasn't so restrictive about alternative revenue streams- top streamer incomes being vastly greater than elite player incomes seems to support this- but at the end of the day, I agree that it's Riot's call to make and if they'd rather not do it, then that's that.
On February 12 2017 04:21 GrandInquisitor wrote:
LCS is the only game that gives them the steady fan/income base off of which they can build into other brands.
I only meant to argue the point that LoL teams make money off of LoL and invest it into other eSports- what I've read leads me to think that, nowadays, the fans are in LCS, but the money is elsewhere, at least as far as team owners are concerned.
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GrandInquisitor
New York City13113 Posts
On February 12 2017 05:34 Zato-1 wrote:Show nested quote +On February 12 2017 04:53 GrandInquisitor wrote:
Yeah, I mean, I'm shocked that Reginald would write a letter saying that TSM needs more money from Riot. SHOCKED I tell you. Regi saying TSM makes no money directly from LCS may be predictable, but that doesn't make it untrue. Unless you claim that Regi is straight-up lying about this. Show nested quote +On February 12 2017 04:53 GrandInquisitor wrote:
No one forces TSM to pay top dollar for Doublelift/Bjergsen Since when is a tiny fraction of what a streamer makes top dollar? So, analogy time. The business model of sports in general is that sports teams attract fans, oftentimes very heavily invested fans, and then unrelated brands sponsor those sports teams which serves as advertising for them. Then the actual broadcasts of games are also served with ads and require a subscription to view, so that the broadcast makes for an additional source of revenue, and each team collects some part of it. LoL eSports does not work that way. The broadcast is free to watch because Riot wants people to watch it, not to make money from the broadcast. And then sponsors are heavily limited in how visible they are as sponsors of a given team, according to Regi's letter, because again, Riot wants LoL eSports to be advertising for its own product first and foremost. With the broadcast making no money for LoL teams, and sponsorship income being limited by Riot's strict regulations for it, I believe Regi when he says that most teams lose money in LoL eSports, IF you don't factor in accounting intangibles such as the brand value that they gain. Naturally, that's a big if. I'm pretty sure TSM and C9 make money overall as organizations, considering that they keep growing, and that LCS is a cornerstone of their operation. However, I get the impression that the business model is fairly convoluted- they get most of their fans in LoL eSports, gaining brand value, and then cash in on that brand value via other eSports, where they have more diversified revenue streams. If I'm right about this, then it's a wonky but workable relationship between LoL team owners and Riot. I do believe LoL eSports could have substiantially higher revenue if only Riot wasn't so restrictive about alternative revenue streams- top streamer incomes being vastly greater than elite player incomes seems to support this- but at the end of the day, I agree that it's Riot's call to make and if they'd rather not do it, then that's that. Show nested quote +On February 12 2017 04:21 GrandInquisitor wrote:
LCS is the only game that gives them the steady fan/income base off of which they can build into other brands. I only meant to argue the point that LoL teams make money off of LoL and invest it into other eSports- what I've read leads me to think that, nowadays, the fans are in LCS, but the money is elsewhere, at least as far as team owners are concerned.
I agree with most of what you're saying but the Riot connection is a little tenuous to me.
I do believe LoL eSports could have substiantially higher revenue if only Riot wasn't so restrictive about alternative revenue streams- top streamer incomes being vastly greater than elite player incomes seems to support this
Is there a salary cap or a salary floor or something in LCS that I'm not aware of? Sponsorship restrictions? What are the sponsorship restrictions you refer to, aside from no elo-boosting/gambling/etc. sponsorships?
Remember that compared to say, the NFL, Riot is more aggressive in some ways and less in others. It's more aggressive vis-a-vis the teams because it can afford to operate LCS at a loss (and thus have less profit-sharing). It is less aggressive because it takes a totally hands-off approach towards, say merchandising. If the New England Patriots sell toilet paper you better believe Goodell is getting a share. I'm not aware of Riot demanding a share of profits from the TSM merch store.
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On February 12 2017 09:00 GrandInquisitor wrote:Show nested quote +On February 12 2017 05:34 Zato-1 wrote:On February 12 2017 04:53 GrandInquisitor wrote:
Yeah, I mean, I'm shocked that Reginald would write a letter saying that TSM needs more money from Riot. SHOCKED I tell you. Regi saying TSM makes no money directly from LCS may be predictable, but that doesn't make it untrue. Unless you claim that Regi is straight-up lying about this. On February 12 2017 04:53 GrandInquisitor wrote:
No one forces TSM to pay top dollar for Doublelift/Bjergsen Since when is a tiny fraction of what a streamer makes top dollar? So, analogy time. The business model of sports in general is that sports teams attract fans, oftentimes very heavily invested fans, and then unrelated brands sponsor those sports teams which serves as advertising for them. Then the actual broadcasts of games are also served with ads and require a subscription to view, so that the broadcast makes for an additional source of revenue, and each team collects some part of it. LoL eSports does not work that way. The broadcast is free to watch because Riot wants people to watch it, not to make money from the broadcast. And then sponsors are heavily limited in how visible they are as sponsors of a given team, according to Regi's letter, because again, Riot wants LoL eSports to be advertising for its own product first and foremost. With the broadcast making no money for LoL teams, and sponsorship income being limited by Riot's strict regulations for it, I believe Regi when he says that most teams lose money in LoL eSports, IF you don't factor in accounting intangibles such as the brand value that they gain. Naturally, that's a big if. I'm pretty sure TSM and C9 make money overall as organizations, considering that they keep growing, and that LCS is a cornerstone of their operation. However, I get the impression that the business model is fairly convoluted- they get most of their fans in LoL eSports, gaining brand value, and then cash in on that brand value via other eSports, where they have more diversified revenue streams. If I'm right about this, then it's a wonky but workable relationship between LoL team owners and Riot. I do believe LoL eSports could have substiantially higher revenue if only Riot wasn't so restrictive about alternative revenue streams- top streamer incomes being vastly greater than elite player incomes seems to support this- but at the end of the day, I agree that it's Riot's call to make and if they'd rather not do it, then that's that. On February 12 2017 04:21 GrandInquisitor wrote:
LCS is the only game that gives them the steady fan/income base off of which they can build into other brands. I only meant to argue the point that LoL teams make money off of LoL and invest it into other eSports- what I've read leads me to think that, nowadays, the fans are in LCS, but the money is elsewhere, at least as far as team owners are concerned. I agree with most of what you're saying but the Riot connection is a little tenuous to me. Show nested quote + I do believe LoL eSports could have substiantially higher revenue if only Riot wasn't so restrictive about alternative revenue streams- top streamer incomes being vastly greater than elite player incomes seems to support this Is there a salary cap or a salary floor or something in LCS that I'm not aware of? Sponsorship restrictions? What are the sponsorship restrictions you refer to, aside from no elo-boosting/gambling/etc. sponsorships? Remember that compared to say, the NFL, Riot is more aggressive in some ways and less in others. It's more aggressive vis-a-vis the teams because it can afford to operate LCS at a loss (and thus have less profit-sharing). It is less aggressive because it takes a totally hands-off approach towards, say merchandising. If the New England Patriots sell toilet paper you better believe Goodell is getting a share. I'm not aware of Riot demanding a share of profits from the TSM merch store.
Sorry I didn't finish the post, hotel internet was dreck.
NFL only gets a share of individual team merch(minus the Cowboys, I think?) because of their revenue sharing, because they are franchised, because the teams own the league. So no shit Riot isn't trying to get a part of TSM's store money from League team merch.
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EPT
