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United States33608 Posts
In the aftermath of reports of failed negotiations with Blizzard and an impending lawsuit against MBCGame, KeSPA released an official statement regarding the current situation.
KeSPA announced that they are still committed to reaching an agreement, but stated that the fees being requested by Gretech were unreasonable. In a rare official release about the finances of Korean e-Sports entities, KeSPA claimed that additional fees would be a significant burden on the unprofitable Korean e-Sports industry.
Edit: An alternate translation and discussion can be found here.
Source: KeSPA
Official Statement from KeSPA and the Ten Pro-gaming Teams.
“KeSPA is not a profit seeking entity, and did its best at the negotiations.”
KeSPA is reinvesting all revenue made from the sale of broadcasting rights into the operation of leagues.
While KeSPA is a non-profit entity for the growth and support of e-Sports, we are allowed to participate in some revenue generating activities for the sake of making a secure e-Sports environment and promoting e-Sports in Korea and internationally.
Our main sources of income are the membership fees from the managerial board, Proleague sponsorships, and the sale Proleague broadcasting rights. The entirety of this income is spent on operating the proleague, and other re-investments to create a solid foundation for e-Sports.
Of these, the sale of Proleague broadcasting rights began in 2007 in order to form an industry structure where a larger audience could access e-Sports and Proleague, by setting up a solid foundation for e-Sports and creating opportunities to broadcast through multiple media platforms.
After we began this business in 2007, all of the revenue from broadcasting rights sales and Proleague sponsorships have been spent on the operation of Proleague. The sale of broadcasting rights to IEG in 2007 brought in 1.7 billion won over a three year contract. The broadcasting stations OnGameNet and MBCGame each paid IEG 600 million won to be able to broadcast for that duration, a total of 1.2 billion won. KeSPA then reinvested 250 million won and 500 million won respectively in OnGameNet and MBCGame in annual production costs, a total of 1.5 billion won.
The current operational structure of Proleague makes it difficult to acquire multiple sources of income for stable operation unlike other professional sports, and it is a similar story for most Korean e-Sports competitions.
The new media environment and change in the policy of various portal websites since 2008 have actually reduced income from broadcasting rights. Operating a league on the level of Proleague with multiple teams and players competing is a money losing business, and we are forced to use part of the board membership fees in order to fill these losses. We are reducing our losses with constant attempts to improve our operations.
In this situation, the tournament fees and other costs being brought up during negotiations with Gretech would have a large impact on the operation of Proleague. KeSPA respects the IP rights regarding SC1, and are working to reach a reasonable agreement with Gretech for the sake of the continuation of Starcraft 1 leagues.
It is unfortunate that legal action has been announced amidst the negotiations.
KeSPA and the Pro-game teams have continued to negotiate with Gretech, who are acting as Blizzard’s legal representative.
We reached partial agreement regarding the approval of platforms and the principle agents in contracts during our 8th meeting on the 20th of October, and agreed to re-discuss the issues of broadcasted material copyrights, game categories, and licensing fees at our 9th meeting on the 25th. However, Blizzard’s COO Paul Sams made the unfortunate announcement at Blizzcon the 22nd that “Protecting IP rights are very important. We have tried for years to resolve the issue through fair means, but we now feel that legal action is best recourse.”
KeSPA has continued to try and moderate opinions with Gretech on the copyright of broadcast programs, league licensing fees, and game categories and league negotiations during our meetings on the 25th and 27th, and have agreed to meet again for our 11th meeting next week.
However, after our session on the 27th, the media reported false stories of “Negotiations have broken down for good, legal dispute inevitable.” This was disconcerting news to us, as we were engaging in negotiations with a positive attitude. We think it is unfortunate that our desire to negotiate in earnest has been brought into question.
KeSPA and the Pro-gaming teams are doing their best in negotiations.
We have been earnest in our negotiations with Gretech, suggesting many revised offers and making many concessions so that the leagues can continue stably. Even though intellectual property experts have advised us that it is excessive to request joint ownership of broadcast materials created through the expertise of TV stations and the performance of players in addition to charging a licensing fee for a tournament, we have accepted a limited form of joint ownership for the sake of promoting e-Sports and to improve negotiations.
However, we cannot approve of the licensing fees as they are being suggested now, as they do not at all take into consideration the income structure and operational situation of current Starcraft 1 leagues. As Gretech revealed on the 16th, their conditions are 100 million won per tournament. Considering there is one season of Proleague, and six individual leagues a year, the total fee comes out to 700 million won.
Considering that the present Korean Starcraft 1 e-Sports market has not reached the stage of creating profits, it needs continued investment for further growth.
The net losses for three seasons of Proleague are approximately 670 million won, and we are filling the gap with the income from broadcasting rights and board membership fees. The individual leagues are being run at the level where they are barely avoiding a loss. Even in this situation, we have said many times we are willing to pay licensing fees as long as it is a reasonable amount.
As of now, the Korean Starcraft 1 market still needs reinvestment of income from sponsorships and other sources in order to create a more stable environment.
KeSPA and the Pro-gaming teams hope to clarify the ownership situation in e-Sports and create clear standards through these negotiations, so game creators and tournament operators can form effective partnerships in the future. We will continue to participate in negotiations and try to bring about a positive result.
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ALLEYCAT BLUES50979 Posts
This is a much better translation than the one from the other thread.
Thanks for the translation Waxangel.
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Thanks for the more detailed translation. It makes it sound a whole lot better.
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kespa posts their financial losses, the thread feels the empty void created by hordes of blizzard fanboys suddenly being informed.
edit: great translation thanks for posting this up 
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Great translation, thanks!
This definitely makes me feel more sympathetic towards Kespa, but then again, it was a report released by them. Both Blizzard and Kespa are releasing news that put them in the good light, so I'm not sure who to believe.
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Its great to get some actual facts from one of the companies involved in the dispute, and you can be pretty sure that the financial figures are accurate, and the rest is positively spun truth, you can probably expect a similar release from gretech/blizz soon
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If a company as insignificant (on the big scale) as MLG can manage to make a profit what's holding KeSPA back?
I have a feeling their financial situation is extremely exagerated in this article. Basing your opinion on PR buzz is never a good idea. Both kespa and gretech seem to have very shady motives throughout this whole thing.
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51599 Posts
MLG thrives on advertising from big companies such as Dr. Pepper, Doritos etc. KeSPA doesn't have that.
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On October 28 2010 22:36 Hakker wrote:
If a company as insignificant (on the big scale) as MLG can manage to make a profit what's holding KeSPA back?
I have a feeling their financial situation is extremely exagerated in this article. Basing your opinion on PR buzz is never a good idea. Both kespa and gretech seem to have very shady motives throughout this whole thing.
They said they re-invest all profits in e-sports. That doesn't mean their business in unprofitable imo.
If proleague was not-profitable there would be no proleague. Clearly they are exaggerating.
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France2061 Posts
On October 28 2010 22:36 Hakker wrote:
If a company as insignificant (on the big scale) as MLG can manage to make a profit what's holding KeSPA back?
I have a feeling their financial situation is extremely exagerated in this article. Basing your opinion on PR buzz is never a good idea. Both kespa and gretech seem to have very shady motives throughout this whole thing.
MLG charges entry fees. More importantly, does MLG sponsor teams and pay for team houses, etc.? (legit question, I don't know much about them)
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Well we might expect a response from Gretech/Blizzard. We're obviously not getting the whole picture.
This is just personal opinion: but Kespa really hits my nerves when they insist on calling themselves a "non-profit" organization. We live in a world where even Charity organizers pay themselves salaries... =/
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United States33608 Posts
On October 28 2010 22:46 Furycrab wrote:
Well we might expect a response from Gretech/Blizzard. We're obviously not getting the whole picture.
This is just personal opinion: but Kespa really hits my nerves when they insist on calling themselves a "non-profit" organization. We live in a world where even Charity organizers pay themselves salaries... =/
Profit just means any leftover income after operating costs, which INCLUDE salaries.
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On October 28 2010 22:05 Waxangel wrote:
The net losses for three seasons of Proleague are approximately 670 million won, and we are filling the gap with the income from broadcasting rights and board membership fees.
This part sounds a bit strange. 670m won over 3 years is about $200k USD per year. Surely the broadcasting fees and membership fees for an entire year is many times more than this. So does that mean they have a huge surplus to reinvest or was it just worded poorly?
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Thank you, Waxangel, for translating! More financial transparency is a good thing.
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Russian Federation4405 Posts
Thank for translation very much!
And thank to this site for supporting BroodWar so confidently, I hope it never dies as a true eSport game.
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On October 28 2010 22:46 Furycrab wrote:
Well we might expect a response from Gretech/Blizzard. We're obviously not getting the whole picture.
This is just personal opinion: but Kespa really hits my nerves when they insist on calling themselves a "non-profit" organization. We live in a world where even Charity organizers pay themselves salaries... =/
Profit is revenue MINUS expenses.
What this article is saying is that the expenses of maintaining a Proleague already exceed the revenue.
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On October 28 2010 22:48 Waxangel wrote:Show nested quote +On October 28 2010 22:46 Furycrab wrote:
Well we might expect a response from Gretech/Blizzard. We're obviously not getting the whole picture.
This is just personal opinion: but Kespa really hits my nerves when they insist on calling themselves a "non-profit" organization. We live in a world where even Charity organizers pay themselves salaries... =/ Profit just means any leftover income after operating costs, which INCLUDE salaries.
Exactly my problem. =/ They could be paying executives dozens of times what the entry fee and likely tons of times the average salary of the players. So when they tell me that they can't afford the fees or worst... That they would need to take the money out of the teams or the players. =/
Once AGAIN personal opinion.
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On October 28 2010 22:57 Mortality wrote:Show nested quote +On October 28 2010 22:46 Furycrab wrote:
Well we might expect a response from Gretech/Blizzard. We're obviously not getting the whole picture.
This is just personal opinion: but Kespa really hits my nerves when they insist on calling themselves a "non-profit" organization. We live in a world where even Charity organizers pay themselves salaries... =/ Profit is revenue MINUS expenses. What this article is saying is that the expenses of maintaining a Proleague already exceed the revenue.
But then they mention broadcasting fees and board membership fees as if they were not included.
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I'm guessing blizzard/gretech also didn't know about the insolvency of the korean e-sports league =/.
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On October 28 2010 23:01 Furycrab wrote:Show nested quote +On October 28 2010 22:48 Waxangel wrote:On October 28 2010 22:46 Furycrab wrote:
Well we might expect a response from Gretech/Blizzard. We're obviously not getting the whole picture.
This is just personal opinion: but Kespa really hits my nerves when they insist on calling themselves a "non-profit" organization. We live in a world where even Charity organizers pay themselves salaries... =/ Profit just means any leftover income after operating costs, which INCLUDE salaries. Exactly my problem. =/ They could be paying executives dozens of times what the entry fee and likely tons of times the average salary of the players. So when they tell me that they can't afford the fees or worst... That they would need to take the money out of the teams or the players. =/ Once AGAIN personal opinion.
Not much can be said if you insist that outside of listed facts, everything other particles of their body is working to deceive you/fans.. Suffice to me that i am getting quality entertainment for free (instead of getting charged for VoD/stream), so i dont dwell on and speculate the little details that i wont know 
Anyhow if Blizz win this i ll just go back to JRPG and give RTS/e-Sport a rest.. Since (imo) if that happens, e-Sport is lost 
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EPT
