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Income in eSports; CLG Hire New Director of Business Development

November 10, 2016 - Esports, News

With the ingame performance concerns and scene-specific drama foremost in the fans’ minds, everyone sometimes forgets that eSports organizations are not there to only entertain the fans with great matches. Teams are business first and the first goal of a business should be to turn a profit. Sadly, with the recent influx of venture capital and sports team money, the purely eSports organizations are starting to have a hard time staying afloat, profit being a dream.

In order to make money, you have to spend money. That is an old adage from the treasure trove of business-related perls of wisdom, found all over the Internet. Counter Logic Gaming has just hired John Spiher, an unknown in the eSports scene, to head its Business Development efforts. What should be this guy’s job?

Well, to answer that, we first have to figure out how eSports organizations make money. While there are prize payouts from tournament winnings and Riot-sponsored stipends for players in the LCS, as well as merch, these are nowhere close to the biggest parts of teams’ income pies. No, that honor belongs to sponsorships.

Probably the only eSports orgs immune to sponsorship woes are the Korean teams, like SK Telecom T1 and Samsung Galaxy, because they are owned by a company, which does not dabble in eSports as its “product”. In these cases, the team is funded from the company’s marketing budget entirely, it is not expected to make money for the owner in the strictest sense. Instead, the brand’s exposure from the team playing League of Legends at the World Championship Final is expected to make up for the costs of running the team. Does it work, however? Well, if you had to live in Korea and had to use telecommunication services, which company would you prefer, some you don’t know or SK Telecom? Of course you would use SK Telecom.

It is different in most NA and EU organizations. There, eSports teams are their own companies. The only “service” they provide is playing in eSports events. They don’t have a parent company to right their expenses off. Then, they need to use the exposure they can generate to get sponsorship deals with other companies. Obviously, gaming gear manufacturers, like Logitech, Razer, or Steelseries are the first stop, but definitely not the last. Team SoloMid, for example, somehow managed to get a sponsorship from GEICO, an insurance company. With 70% or even more of the organisations’ income coming from sponsorships, they should have a professional, who can do that full-time and well.

We will have to see how CLG’s brand new Director of Business Development does, however, John Spiher used to work for DXRacer, a gaming chair company, where he had to deal with product development, oversee trade show activations, and work with various partners and content creators, while also being a program director for the Gamers Outreach Foundation, according to the official statement from CLG. We will see how he does. Meanwhile, good luck.