Riot recently announced that the NA LCS is officially franchising next year. This means that teams participating in NA LCS 2018 will be permanent partners of the league--they’ll never face relegation or have to fight new teams to defend their spot.
The change in structure brings major PERKZ for these permanent partners: revenue sharing.
Both Riot and the teams will contribute their share of league-driven revenue to a pool. For Riot, this includes money from media deals like the $50MM/year BAMTech deal signed last year, league sponsorships, and also esports-related digital goods. For teams, this includes team sponsorship deals and merchandise sales.
However, there’s a caveat to how the teams’ 32.5% is split up. Half of that is distributed equally to each team. The other half will be split into allocations based on each team’s regular season finish and contribution to viewership/fan engagement.
Let's put some real dollar amounts on this for the sake of an example.
Say League rev next year is $40MM:
For Players: $14MM
With around 70 players, that’s ~200k average per player. This number could be higher as 35% is just a guaranteed minimum.
For Riot: $13MM
Invested into streams & events.
For Teams: $6.5MM equally distributed
Divided equally between all 10 teams, so $650k a team.
For Teams: additional $6.5MM allocated based on regular season finish & contribution to viewership
Let's assume the allocation split is 40% ($2.6MM) for regular season finish & 60% ($3.9MM) for contribution to viewership. Note: this is purely a conjecture. Riot has historically been reluctant in putting too much emphasis on prize pool.
Let's also assume teams place the same both splits.
In this model, TSM will earn almost double what EnVy earns: $1.87MM vs $984k. Immortals will earn more than Dignitas despite lower placement because they get more viewers.
The main takeaway here is that winning is no longer teams' sole objective.
If teams want to take full advantage of the rev-share system, they also have to invest in building their fan base. This is great for fans as we’ll likely see more content and engagement from our favorite players, but this does raise potential issues regarding the competitiveness of the league. Historically however, winning has always been a key ingredient of a popular team.
Overall, it’s safe to say--should they be selected--that C9 and TSM will be big winners in this new structure. For other teams, they’ll need to pick up some slack in both performance and fan outreach.