edit: I put this at the end of the article but people seemed to skim: I understand this article does not take into account how much companies actually spend on teams. However, it has always seemed like the really huge sponsors are less likely to go under and are able to provide financial stability that smaller sponsors are not.
Numbers were pulled from Yahoo! Finance (which pulls from Capital IQ) and the company's statements, except Red Bull revenue which was pulled from the Wikipedia Article.
I also apologize for claiming EG-TL would definitely drop out. It just seems like the most likely scenario to me, but I realize decisions have not yet been reached.
There are a couple other issues that haven't been touched upon: financial barriers aren't the only ones to entry; LG-IM may not want to join.
/Edit
Who’s next?
With EG-TL all but certainly leaving Proleague, the venerated KeSPA-run league is once again down to seven teams. This has left the entire community wondering what will happen next. The most obvious candidates to replace EG-TL come from the other major Korean eSports organization: ESF. Proleague, however, is notoriously expensive—it’s questionable whether the teams of ESF can afford entering and competing.
The following analysis is meant to help clarify, for those of us without inside information, whether it seems even feasible for ESF teams to join the SPL based on the companies that sponsor them.
Revenue in millions of USD. Samsung Electronics left out because they make the graph look absurd.
LG-IM
LG-IM is the most successful non-KeSPA team in the world. They are an instant contender in any league they enter. They are the most recent champions of the extremely prestigious GSTL. On top of that, they are home to some of the most successful individual players in the world. Their lineup speaks for itself: MVP, First, KangHo represent some of the finest SC2 talent in Korea. They unquestionably have the potential to be competitive, even in a league as rigorous and demanding as SPL. But can they compete financially?
Yes.
LG Electronics represents one of the largest companies in all of Korea. Their revenue is a mind-numbing $48 billion, which makes them one of the largest sponsors in Proleague, behind only Samsung Electronics. If LG is willing to commit to being a competitive force in all leagues, it should be a financial breeze for them.
What is more important than simple raw revenue, however, is what they spend on marketing. Unfortunately, they combine their selling and marketing expenses which inflates the number, but the amount, which totals over $6 billion, is still staggering. To put that into perspective, SK Telecom only spends $358 million on advertising. For a company the size of LG electronics, the amount they spend on their SC2 team is a blip—they will still want ROI and they will still demand to see results, but they can afford to take the risk of spending more on their team.
More impressively, LG-IM’s big name sponsors do not stop there: Nvidia, Coca-Cola, and SteelSeries are also sources of cash for the ESF giant. If there is a team that is both ready to compete and has the financial resources to make it happen, it is LG-IM.
StarTale
LG-IM may be the big kid on the block, but they are by no means the only well-financed team. StarTale, founded by Brood War legends July and Rainbow, is another historically successful team who may journey to PL in search of new hunting ground. Sponsored by Red Bull, they are also perceived by the community to have a big-company backing that could allow them to muscle their way in.
The problem for LG-IM is twofold. First, Red Bull is not as large as most of the companies involved with Proleague. Second, it is unclear whether Red Bull is up for the commitment that comes with sponsoring the entire Proleague experience.
At first glance, Red Bull’s size is not necessarily a problem. Although Red Bull’s revenue of $5.6 billion would make it one of the smallest primary Proleague sponsors, the two smallest teams in the current league are currently duking it out in the final. However, as time wears on (assuming SC2 remains a spectator sport), the budgets will undoubtedly catch up to the teams.
The last five Proleagues in Brood War were dominated by teams backed by huge companies
However, this problem may be avoided in SC2 since KeSPA has less control over player movements and players in general. Having an active, decent paying foreign scene greatly mitigates their level of control. I am not sure how this will affect the league, but it may certainly change some dynamics.
The second concern is that Red Bull may not be able to commit to their SC2 team. The answer here is that Red Bull has shown willingness to explore: they have sponsored StarTale, they have hosted Battle Grounds, and they constantly show up around the scene. All that is left is for them to take the plunge.
StarTale, thus stands a decent chance of getting involved with ProLeague. Their level of sponsorship is high; Red Bull’s commitment is not iron-clad, but it certainly would not be surprising to see them get more involved.
Acer Acer is huge. They bring in over $16 billion a year, which puts them in the same size range as KT Rolster and SK Telecom T1—two teams that have been extremely competitive historically. While exactly how much of that revenue is put to work in marketing, it is safe to assume their marketing department has a large budget.
There’s just one problem: Acer is doing terribly financially.
For all of their revenue, they just can’t seem to turn a profit. Last year, they lost almost $3 billion, which is actually more than twice as good as their $6.6 billion lost from two years ago. When a company is bleeding money, they usually do not look to invest more money into a venture—not matter how small it is compared to their overall size. While they might not look to actively cut their team, it would be odd to ramp up investment in their (relatively) trying time. On the other hand, they were losing money when they began the SC2 team at all, so it is possible they can still ramp up their investment.
On the other hand, that ramp-up would be more extreme than other teams. While Acer has a solid core line-up in MMA, Bly, Scarlett, they are too focused on a single race (they need a Protoss to compete and MMA would have to play every match currently) and they do not have enough players to be competitive. They would have to make substantial investments, picking up new players. The other option is to be the EG in a partnership like the Unholy Alliance, which they have experience executing in the GSTL.
Given the questions about how deep Acer is willing to dip into their pockets and the problems with their lineup, I think it’s relatively unlikely that they take the plunge. However, the potential is there simply based on the strength of their backing.
MVP
Why is MVP last here? They are another amazing team with extremely strong results. They have a more developed, robust roster than Acer and just as much success as StarTale and Incredible Miracle—why are they being relegated to the bottom position in this lengthy post?
The answer is that they have, in my opinion, the worst backing financially. According to Liquipedia their main sponsors include Center Point (who I cannot find information about), Hot6ix who has a mere $116 million in revenue and Razer, who brings in even less. To make matters worse, these companies are all over eSports, which spread their already-small purses even thinner.
In the end, MVP, as awesome a team as they are, does not have the fiscal backing to push them into another, more expensive, teamleauge.
Conclusion
I think that LG-IM moving would be natural—they have all the right elements in place to make the switch. Each of the other teams have questions, especially Acer and MVP, but any of them could go over. I did not cover it here, but FXO also has an outside shot of making the transition, but their struggles are largely the same as MVP’s—the sponsor has only so much juice.
There are certainly flaws here—I am confident the community can point them out and argue against me well. I know there will be other points of view and I am eager to hear other ideas about where Proleague will go next.
I think one obvious problem is that I did not take into account the commitment each team has for eSports. LG might have deep pockets but that doesn't mean they're necessarily going to spend what they have. Samsung comes to mind--they easily have the highest revenue but have clearly limited how much they will spend. Still, the size of the company has been a good indicator for financial stability in the past--Samsung, KT, SKT and CJ are all among the most secure teams in the league.
TBH comparing these companies' revenue is pointless. The expenditure here is chump change for all of them, I'm sure they spend many many more times the money in general advertising. The only question here is level of commitment, which this graph doesn't address. Nevertheless the rest of the article is pretty well argued, overall a good read.
The hard part of SPL is the commitment - in order to win, you really needed to buckle down and practice properly in a proper training environment (which EG-TL initially lacked). However, this also means a lot of sacrifice in terms of other competitions (most notably foreign ones). For the star players, this will increase their local fanbase but reduce their possible prize money from foreign tournaments as well as reduce their ability to travel. This doesn't seem to be wise for aging stars like MVP and Nestea.
Just recently Innovation had to forfeit his IEM spot in favor of practicing for SPL finals. That just about sums up a star player's life in SPL: all individual accolades become secondary to the team's success (not necessarily a bad thing).
On July 23 2013 03:58 Emzeeshady wrote: I would love to see a combined SPL/GSTL league
If IM left GSTL then GSTL just wouldn't be the same...
Imagine the hype there would be though if LGIM was taking on KT in the grand finals of SPL :O
If nothing else, I hope that we could have a fun showmatch between the winner of GSTL (LG-IM) and winner of SPL (STX or Woongjin). Play SPL format first, GSTL format second, then ace match if necessary!
On July 23 2013 04:01 calh wrote: TBH comparing these companies' revenue is pointless. The expenditure here is chump change for all of them, I'm sure they spend many many more times the money in general advertising. The only question here is level of commitment, which this graph doesn't address. Nevertheless the rest of the article is pretty well argued, overall a good read.
Yeah, that occurred to me and I agree. Revenue is more a proxy for size than anything else--a really huge company hardly feels the hit at all while a smaller company might at least notice (Samsung is overwhelmingly large vs Red Bull which, you know, has some limit on their budgets).
I work for a much larger company now than I used to (although both are pretty large) and the small company did take more notice of expenses--although that could have been company culture, it's just a better company etc.
Keep in mind that while budgets seem limitless a company pinching pennies might not pursue expenditure even if it's small. It's more a mindset than anything.
edit: I tried to find marketing budgets for every company, but there were so many companies combining expenses in different ways that normalizing became impossible.
I foresee more of a Western sports situation happening. Proleague (with egtl continuing, I don't recall seeing anything about them not participating anymore) would be one championship, GSTL the other, and both champions competing to see who was the best of the best. Most US sports at least have that same 2 league championship method going for them. I don't see any reason not to give that a shot. They can even use the US's Baseball method, where each league can have vastly differing rules (pinch hitters for pitchers vs pitchers batting) and only need to agree to a set of rules for one game a season. I'm surprised it hasn't happened already to be honest.
The problem with that analysis is that kespa teams are owned by the sponsors, so the commitment is high. The distance between LG and IM is bigger, we are not even sure how much money they dump on IMs pockets
I must say the OP seem to be a lot of "theory crafting" regarding the economic situation.
I dont want to go into details of any of the mentioned teams. But I dont see any sources that actually shows the economical situation for the teams mentioned.
Sure they are sponsored by rich companies. However there is no sources of how much they are actually provided and therefore claiming that "those teams can afford this and that" is not reliable what so ever.
With Proleague going LoL, LGIM having 2 high performing lol teams and the gstl champs ( imagine if IM leave gstl ) it's obviously the easiest pick for kespa to go that route ( if IM are interested ).
Considering Nestea has been one of ESF's strongest player figures it would be highly unlikely for LG-IM to switch from GSTL to PL. I do agree that I would love to see LG-IM vs whoever wins PL... But it's not going to happen in PL.
I wouldn't bother with SPL as long as there is GSTL, but that is my international point of view. Since LG is from south korea they might be more interested in SPL as it probably means more over there. Anyway with Nsh disbanding there is space in GSTL *waves over to EG/TL*.
I personally would be interested if the two winners of SPL and GSTL face each other, but I doubt this will happen as it would probably affect the popularity of the losing teamleague. And I think Wongjin Stars or LG IM could both win this showdown.
edit: Wongjin Stars could of course fill 2 spots in SPL. A team and B team.
On July 23 2013 04:01 calh wrote: TBH comparing these companies' revenue is pointless. The expenditure here is chump change for all of them, I'm sure they spend many many more times the money in general advertising. The only question here is level of commitment, which this graph doesn't address. Nevertheless the rest of the article is pretty well argued, overall a good read.
Yeah, that occurred to me and I agree. Revenue is more a proxy for size than anything else--a really huge company hardly feels the hit at all while a smaller company might at least notice (Samsung is overwhelmingly large vs Red Bull which, you know, has some limit on their budgets).
I work for a much larger company now than I used to (although both are pretty large) and the small company did take more notice of expenses--although that could have been company culture, it's just a better company etc.
Keep in mind that while budgets seem limitless a company pinching pennies might not pursue expenditure even if it's small. It's more a mindset than anything.
Very much agreed in principle, but I maintain that in this case the amount expended is of secondary importance, compared to the size of all these firms. Take Red Bull for example: as one of the smallest, they have enough to sponsor an F1 team, and who know what else in sports. I work for a company several times smaller than Red Bull and they sponsor a major European football team, admittedly not totally because they are looking for ROI.
Now the SPL expenditure is indeed on top of other marketing expenses and so as prone to cuts as anything else, but I think the numbers check out in such a way that the impact of company size is far below other factors like tradition, targeted audience vs marketing audience, public image and personal connections (never ever underestimate this one ).
On July 23 2013 04:02 Caladbolg wrote: This doesn't seem to be wise for aging stars like MVP and Nestea.
Is Mvp really considered an aging star? Sure, he's been around the StarCraft II scene for years, but c'mon... he's only 22. That's one year older then Flash and younger than a huge number of other professional gamers.
The problem is it doesn't matter how big LG is, since all that matters is how much money they give to IM. To be honest, I don't think it's that much, but I'm just guessing. I remember the IM coach was doing a facebook campaign to get people to message LG to tell them how much they like them sponsoring IM because he said they were considering not renewing the sponsorship.
On July 23 2013 04:08 Glorfindel! wrote: I must say the OP seem to be a lot of "theory crafting" regarding the economic situation.
I dont want to go into details of any of the mentioned teams. But I dont see any sources that actually shows the economical situation for the teams mentioned.
Sure they are sponsored by rich companies. However there is no sources of how much they are actually provided and therefore claiming that "those teams can afford this and that" is not reliable what so ever.
Inside sources on allocation would obviously be helpful but I'm not an eSports insider so I don't have them.
I don't know whether I've addressed that in the OP (I'm wrote this at work while waiting for turnaround on the report), but the point you bring up is good and definitely a viable counter-argument.
My general claim is that a richer company probably can afford to budget more for their SC2 team. I think this is generally true--when a company as large as CJ, Samsung etc. has picked a team up they usually don't go under and usually don't have the same obvious money struggles as teams sponsored by smaller companies. While there is probably not much of a difference between 15 and 25 billion in company budgeting, a company like Razer, that has so many sponsorships going and brings in a relatively small amount of money is unlikely to be able to give any one of its teams such heavy support.
A:They are sponsored by LG, a large Korean company B:They have a LoL team, I don't see any team joining Kespa without a LoL team seeing as it is the premiere Kespa esports.
Also if im not mistaken in the past the BW team of STX had better conditions and more money then the Khan team. SKT1 and KT were always the teams with money in BW, not Samsung Khan despite being the biggest company by a large margin.
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