Back in 2016, we talked about our vision for the future of esports (and how we plan to get there). Our end goal is to create a strong and stable system that’s profitable for pro players and provides entertainment for fans in the long-term — and today we’ll be taking some major steps forward in North America that helps us achieve that.
Three Major Areas of Focus
These changes focus around three major areas:
- Changing the structure of the league to encourage long-term investments
- Giving pros a larger voice and better protections
In this post, we want to lay out some of the reasons we think these upcoming changes are a great step for pro players and for fans in North America. For more details on why, how, and when this is going to roll out, read on.
Changing League Structure
We believe that stability for teams and for pros will help create a league that rewards the highest level of play and is ultimately more entertaining for fans. To get there, we’re going to make some central changes. Starting in 2018, teams that participate in the NA LCS will be there as permanent partners of the league. Teams will be selected from an application process (more details on that below) meaning they won’t face relegation or have to fight for the right to compete as a new org via a promotion tournament. We see this as a positive step forward for the league for multiple reasons, but mainly because teams will no longer have to juggle uncertainty while planning for their future.
With today’s uncertainty of relegation, making long term bets in the NA LCS is extremely risky. Making large investments — like a long-term sponsorship with a team, or building an expensive training facility to better support players — are often hampered by this risk. Removing relegation makes things less uncertain, unlocks long term investments and hopefully makes the league more competitive from the inside out. Here’s a deeper dive into how this will work:
Committed, professional ownership groups
We’ll be partnering with organizations who have the welfare and support of pro players on their teams as one of their top priorities. Part of our evaluation process will be examining how teams will support their pros, not only in coaching and training, but in career opportunities or higher education once their playing career has ended. We believe that the best results happen when pros work with teams that they’re motivated and proud to support throughout their careers
Competitive landscape, even without relegation
Taking away the threat of relegation may feel like it lowers the stakes for teams competing in the league. Although it makes the NA LCS a less risky prospect for a team, we want to make sure they are still motivated to do their best year-in and year-out. To achieve this, we’ll be creating financial incentives for each place in the league — the better you do, the bigger the rewards. We are also implementing a policy in which teams can lose their right to compete in the league if they finish in 9th or 10th place 5 times over an 8-split span.
Rebooted Challenger Series
At its core, Challenger was built towards two goals: helping to develop talent for NA LCS, and enabling strong ownership groups to replace weaker ones at the highest level of play. Although the second goal is no longer a focus, we believe we can do better at meeting the first goal — developing future stars of the NA LCS. We’ll be rebooting Challenger as an Academy League, where each NA LCS organization will field a team of developmental players. This will hopefully meet multiple needs for NA LCS teams: deeper rosters to experiment with younger talent, enough spots in the league for all LCS teams to be represented, and more games played to speed the development of their Academy players.
How do teams join the franchise?
Here is the process in how team’s will join the NA LCS:
Phase 1
Application Submission
Phase 2
Application Review
Phase 3
Partner Announcement
Developing a strong league depends on finding aligned partners who are motivated to help evolve the sport and create teams that pro players are proud to represent. During Phase One, we’ll be partnering with expert third parties, asking teams to give us some details about their plans for their NA LCS team and organization. Here are a few representative questions we’ll be using as part of the selection process.
Brand Plan
- How does the team plan to engage with and acquire fans?
- What’s their strategy for providing value to fans through merchandise, content and other opportunities?
- Why should fans support them?
Owners
- Who will be working with pro players?
- How much does the team know about league and esports?
- What are the goals of the ownership group in buying into the league?
Business Plan
- How do they plan to fund the org over the next few years?
- What’s their strategy for sponsorships — in particular, bringing in new sponsors to the league?
- How do they plan to compensate pro players that work for them?
Team Strategy
- How do they intend to develop talent in their organization?
- What facilities are they planning for pros?
- How will they stay competitive, including plans for coaching and support staff?
- How will they work with pros transitioning out of full-time player careers?
Sharing League Revenue
In a healthy, long-term league, money generated by the ecosystem should be shared by the people who contribute to it. We also believe that the league is healthiest when teams, players, and Riot are all motivated to create a thriving, entertaining league that’s popular with fans. Entering into partnership allows us to create opportunities for teams and pros to share in the upside of the league. To achieve that, we will be sharing league-based revenues (like the media deal announced last year and team-branded digital goods). In the same vein, teams will be required to share a portion of their league-driven revenues as well (including things like sponsorships and merch sales). This aligns the interests of all parties (while still granting considerable opportunity for motivated owners and superstar players to earn outsized revenues), creating a strong and competitive ecosystem.
Only a portion of revenues that a team makes is added to the revenue pool. Teams will retain a large portion of any sponsorship they help to sell, just as they keep a piece of all merch sales, before their sharing contribution is calculated. This is where business-savvy teams can start to earn more than other teams in the field, but it still aligns teams to work together to grow league revenues as a whole. Let’s look at the impact of this new economic system:
For Pros
Raised minimum salaries for all NA LCS pro players
Player salaries have risen a lot in the past couple years – and we think that’s a great thing. To make sure we’re keeping a healthy floor across all pros — whether superstar or just starting out — we’ll be increasing the minimum salary in the league to $75k.
Revenue sharing with pros
On top of the minimum salary increase, pro players will have the opportunity to share in the upside of strong league economics. Essentially, player salaries will be guaranteed through their contracts, but the total play population will also be guaranteed to earn at least 35% of league revenues. What this means is that players will earn their full salary throughout the year, and if the players’ share of league revenue is greater than their combined salaries for the year, the difference will be distributed to the players directly. If the share is less than the sum of the salaries, players won’t have any money recalled — all salaries will be 100% guaranteed.For Teams
Revenue sharing with teams
Pro teams will also be entitled to a 32.5% share of league revenues. Half of the pool will be distributed equally to each organization, but the other half will be split into allocations based on regular season finish and contribution to viewership/fan engagement. This will give successful orgs an opportunity to earn more as their team performs better in the League. This money will go towards covering overhead costs for teams (academy team, gaming house, support staff, content creation, etc). We believe this new revenue stream will unlock teams to invest far more into making their organizations more competitive.
Current League Revenue Model
League Revenue Pool
League Stipend
Team Sponsors
Team Merchandise
Team-branded
Digital Products
Digital Products
Player Salaries
Coaching
Team Staff
Gaming House
Future League Revenue Model
League Revenue Pool
Media Rights / Distribution
League Sponsors
Team Sponsors
Team Merchandise
Team-branded
Digital Products
Digital Products
Riot Games
Broadcast Production
Live Events
Team
Coaching / Staff
Gaming House
Pro Players
Player Salary
Bonus Upside Compensation
Giving Pros a Larger Voice and Better Protections
A strong and stable league is one where all parties have an active stake in the future. Revenue sharing and more permanent membership in the LCS is a large step in that direction for teams, but this also means that pros should have a greater voice in how the league is run.
To help kickstart this process, we’re providing pros the resources to set up a Players’ Association. Players will vote on independent reps to be their voice in league decisions and the Association will provide easy access to core resources like skills training, financial planning and legal help.
We’ll be funding the launch of the Association, however the representation that the players vote on and elect is responsible solely to them. The goal is that this Association is an independent voice of the players to work with Riot and the teams. It’s our hope and expectation that as the association grows, the players assume full financial control over the organization — we believe this is the most effective way to give the process a kick start and provide them with an official voice.
The Player’s Association will launch later this year. Kickstarting an association which independently represents pro players is a complex process — legally and organizationally. We’ll share more details later this year, but here’s the basics of how it’ll work:
The Players’ Association Process
Step 1
Vote
A short list of representatives will present to NA LCS Players in June — players vote as a group on who to represent them. Players can also vote to reject all candidates. In this case, we would either provide additional candidates for them to screen or accept representation that they have elected independently.
Step 2
Plan
The newly elected Players’ Association representatives will have July through September to get up to speed organizationally and to meet with players.
Step 3
Represent
Fully launched, the Players’ Association provides centralized representation for players in tri-party negotiations (Riot-Owners-Players); they also provide access to vetted resources (e.g. legal/financial advice) to help players planning out their careers
When is this all happening?
June 1
Application Period Opens
July 28
Application Period Closes
August
Update on Players’ Association
November
Partners Announced
We’re excited to usher in a new competitive future for the NA LCS with strong and motivated partners by our side. We believe that these moves to share league revenue, adapt the structure of the league and give pro players a seat at the table when key decisions are made will build a more sustainable, more competitive and ultimately more exciting League for years to come. Let us know your questions, and we’ll be back with updates throughout this journey as we move closer to 2018.
The collective team behind the scenes at lolesports.