“In traditional sports, they’ll sign a player for three or four years, saying this is a great rookie, we’re going to build him up. That doesn’t exist in any way in the relegation system. It’s too risky,” said Jace Hall, the chief executive officer of Echo Fox, which currently competes in Riot’s League Championship Series (LCS). “The franchise model is a healthier scenario.”
Another team, Immortals, has begun building a new facility in Culver City, a neighborhood in L.A. near Riot’s headquarters. "Now that we have more of an anticipated timeline that the model will change we’re comfortable making those moves," said Noah Whinston, the team’s CEO.
Riot’s League of Legends has been one of the biggest esports titles since shortly after its 2009 release. Riot tried to impose some order in 2012 by announcing that it would run leagues in North America and Europe, both called the League of Legends Championship Series, or LCS. In 2015, its largest event drew 36 million unique viewers online.
Compared to other esports ventures, LCS is a model of organization and still everyone involved has long acknowledged it needed an overhaul. Calls for more structure grew in late 2015, as investors from professional sports began buying teams.
Rozelle and Jarred Kennedy, Riot’s co-directors of esports, have been meeting with executives at many of the major sports leagues, including the NBA and MLB. They’re launching a development league, called the Academy League, which they modeled after the NBA’s D-League. They’re also helping fund a players association, similar to NBPA or MLBPA, which they hope will eventually stand on its own. An independent players union is a legal necessity for structure like a salary cap, which Riot says it may consider in the future.
For now, there’s no draft or salary cap, both tactics that leagues use to try to help the worst teams improve. And in Riot’s league, the rich get richer: Teams that perform better will receive a larger share of revenue, which will come largely from the $300 million streaming deal it signed with MLB’s BAMTech last year. Teams that finish ninth or tenth in five of eight consecutive seasons could lose their right to compete.
Most esports teams play in multiple leagues at once, and will have to consider whether the capital needed to join LCS permanently is the best use of their resources. That’s complicated by the fact that no one understands the full lifecycle of an esports title. League of Legends may well stay relevant for a much shorter period of time than, say, the sport of basketball.
"From my perspective, an ideal franchise model is one in which we don’t just become a permanent partner of League of Legends, but we become a permanent partner of Riot itself," said Whinston of Immortals.
Riot says that this is not on the table for now, but the company is ensuring teams that it’s in this for the long run. "This is more like a venture round than an IPO," Kennedy said. "We’re not exiting."
This article was provided by Bloomberg News.