Everyone in the North American League of Legends Championship Series – a popular e-sports league – wants a players union.
Except the players.
That frustrates the desire of the league’s stakeholders to turn the fast-growing video-game competition into a money-spinning sports enterprise in the mold of the National Basketball Association, National Football League or Major League Baseball.
“League of Legends,” an online battle game, is one of the most popular e-sports titles in the world, drawing 14.7 million online viewers during its World Championship finals in December.
Businesses and investors in the nascent e-sports industry are seeking to establish the essential building blocks of a professional league, such as salary caps and a player draft. A union is viewed by various interests as a crucial piece of the puzzle.
That’s why league owner Riot Games Inc. of Santa Monica, which develops and publishes “League of Legends,” launched and funded the players association last month – unprompted by e-sports players.
The company also announced plans to share 35 percent of league revenue with players who take part in competitions, generated from proceeds such as media rights, sponsorships and merchandise sales, and to establish a minimum annual salary of $75,000.
NBA players split an estimated $8 billion in annual revenue with team owners. Their counterparts in the NFL, which had about $14 billion in revenue last season, take cuts ranging from 40 percent for local revenue – mainly ticket sales – to 55 percent of media deals.
Some top e-sports players, many of whom hail from South Korea, earn as much as six figures a year, but player contracts vary greatly.
There are 10 teams – each with dozen or so players – in the L.A. area that compete in the North American League of Legends Championship Series, including the Immortals, Team SoloMid and Cloud9. Riot also said this month that it wants to have 10 permanent squads playing in the league. Franchises would have to pay a fee of $10 million to join, so whether all of the local teams will remain is unclear.
But e-sports players remain apathetic to unionization, even though a representative association could be a sure-fire way to secure Riot’s generous offers and bargain for more money in the future, said Noah Whinston, chief executive of Brentwood-based Immortals.
“The evidence is that the players aren’t willing to do this on their own,” Whinston said. “Most are so overly focused on their day-to-day concerns they are really not engaged in a long-term business structure in a way players in the NBA or NFL are.”
Much of that disengagement comes down to ignorance, said Ryan Morrison, a partner at New York law firm Morrison & Lee, who said his firm serves as the sole representative for about 200 individual e-sports pros.
Morrison said it would be better for the players to organize themselves on a grassroots level, though his efforts to kickstart that type of endeavor have been fruitless.
Riot’s move to create a players association was savvy given the slow pace of player organization, but potentially problematic, said Zack Sugarman, senior vice president of properties for Santa Monica-based Wasserman, which consults with brands on potential e-sports sponsorships.
“You could be in a situation where you are using your employer’s lawyers to represent you in discussions, grievances and negotiations against your employer,” Sugarman said.
Riot insists it will steer clear of such conflicts, though the company has stated that when the association begins offering services later this year, it will provide access to resources such as skills training, financial planning and legal help to players.
“We are committed to funding the core operations of the organization up until players decide they want to self-organize and form a union,” said Riot’s Chris Hopper, senior manager of e-sports.
The e-sports industry is highly attractive to advertisers eyeing its 385 million annual viewers as potential customers. The market is projected to generate $696 million in overall revenue this year, with sponsors contributing $517 million of that total, according to San Francisco research firm NewZoo.
But competitions are spread across a confusing web of video-game franchises, including Valve Corp.’s “Counter-Strike” and “Dota”; Activision Blizzard Inc.’s “Overwatch,” “Hearthstone,” “World of Warcraft” and “Call of Duty”; and Riot’s “League of Legends.”
Corporate sponsors, including Coca-Cola Co. and Amazon.com’s video-game streaming platform Twitch, want a more consistent and higher-quality advertising opportunity from the sport, said industry professionals.
“When brands spend massive amounts of money they know what they are going to get in the NBA,” said Sugarman. “E-sports has historically lacked structure.”
That’s one area where a players association could play a key role.
Unionization could help establish branding consistency across the league. For example, an advertiser would likely have a better chance of negotiating a deal to get its logo on team jerseys and establish a code of conduct – providing some extra assurance for the affiliated brand – with a union providing a single voice for the players.
Leaguewide sponsorships are difficult to negotiate without a union, Sugarman said.
“There is not that singular entity that they can negotiate with, like they are used to with traditional sports,” he said. “They have to go in and negotiate with seven or eight individual teams.”
The level of business sophistication among e-sports players is low, Sugarman said, and that owes mostly to their relative youth.
“You peak around 21 in e-sports,” he said. “By the time you are 25, you might retire. The leaders in the space, they are kids.”
Candidates to lead Riot’s players association were submitted to players for a vote. Players last month chose Hal Biagas, founder and president of New York’s Sideline Sports Management and a former assistant general counsel at the National Basketball Players Association, as the first head of the “League of Legends” players association. Biagas did not respond to a request for comment.
The Business Journal reached out to more than a dozen professional e-sports players for comment on the players association, but only one responded – Alex Chu of Granada Hills-based e-sports team Phoenix1. Chu referred the interview request to team management, which was subsequently declined.
Attorney Morrison said many players are squeamish about the most basic forms of self-advocacy.
“In ‘League of Legends,’ I have so many players coming to me saying, I don’t want to use a lawyer because it’s rude,” he said. “If that’s the mentality … how on Earth are these kids going to negotiate a (collective-bargaining agreement)?”
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