How Hard Is It To Make Profit in the LCS

With the recent news morale is at an all-time low for the fans of LCS. There have been rumblings over the years of a bubble within the league, and it being ready to burst at any moment. CLG and TSM, two of the most legendary organisations in the scene are seemingly the canaries in the mine. With the obvious FTX deal crushing the pockets of TSM, what was it that killed CLG? We know that it isn’t due to a lack of funds because their owners are still bringing in billions each year through the sports teams they own. It can’t be due to their lack of winning as other ORGs finish even lower than them yet continue to operate. Many will cite that it’s down to players being overpaid, but TL who are known for splashing the cash spend far more than CLG and are still around. There is also the possibility the CLG brand has died which led to the owners dropping them as a team. Last year CLG vlogs would struggle to get over 4000 views, and even more recently their Tweets would get little to no interaction. For such a famous gaming brand with nearly 400,000 followers, this is very odd.

[CLG Twitter is now rebranded as NRG League]

Though, they aren’t the only ones who are struggling with views on their LCS content. Very likely the answer will be different for each team, but more importantly, is it possible for everyone to be making a profit?

To get right into it, we should start by talking about player salaries. Thousands of comments from the LoL community over the years have been discussing exactly this. Hal Biagas the head of the NA LCS Player Association claimed in 2021 the average salary was $410,000. Remember, this is not the median. So, it’s very likely there are many bigger names getting over $1 million a year and then there are smaller names getting $200,000. Even TSM paid out $6 million to SwordArT for a two-year contract.

Well how can these teams afford to pay out these huge contracts? For anyone who is a fan of sports like soccer, they know gate receipts are the second biggest income stream with broadcasting deals being 1st, and commercial being third. Now, not to be captain obvious here but LCS teams aren’t capable of making money through two of these avenues. They broadcast free on Twitch and YouTube with no one seemingly willing to buy the exclusive rights to the league. It is a shame because in 2016 they had a deal for $300 million over 6 years from BAMTech until that company was bought out and the deal died. Considering Twitch paid Blizzard $90 million for exclusive rights on OWL, it is interesting that they’ve never made an exclusive deal with Riot. Even more so when you look at the LPL signing a $310 million media rights deal with Huya. Why isn’t the LCS being signed for exclusive broadcasting?

There are no ‘home grounds’ like in traditional sports. For those out of the loop, soccer stadiums around the world sell 50,000 tickets on a weekly basis at $40 a ticket. Over a full season some of these teams can make up to $30 million, even the least supported clubs in the top divisions will make $6 million a year. There are no logistical reasons eSports teams could ever do this and the likelihood of selling out arenas on a weekly basis for people to watch League of Legends live doesn’t seem plausible nor wanted.

There is one absolute, and that is because of franchising Riot can pay out $1.5-3 million to each team. So, let’s take the smallest amount of that, $1.5. You could realistically sign 5 players for $200,000, which is more than double the league minimum, and have half a million left to sort out the rest of your team. This does mean you can run a budget team and before anyone points out that they will never win because of this, then how can you explain Team Liquid’s results recently while being one of the most expensive rosters? 100T likely being the most expensive this split, finishing 5th/6th alongside CLG, one of the cheapest. If simply spending more money meant success, the LCS would have been a world champion by now, or hell, escaped groups more than once in the last four years.

Let’s just say you don’t want to run that budget team, you want to be a TL or 100T, how can you emulate them? These teams aren’t just known for spending big on players but their spending big on infrastructure, too. Both have huge gaming facilities in which the 100 Thieves Cash App Compound cost $35 million. The Team Liquid Alienware Training Facility may have cost a similar amount but do note their full names, sponsors included. They have made these compounds not just for their League teams, or their eSports teams in general, but their entire brand. Signing content creators and marketing them is also a new business model and these facilities are built to service those to make their content in. Though, this can still be questioned as it wouldn’t be shocking to know they aren’t making back that $35 million and we also aren’t aware of how much of the money the sponsors paid for this investment. Considering the recent layoffs and stocks of FaZe, it is also possible that talent agencies can become a money sink if you overpay. Team Liquid has always been one of the better teams when it comes to finding a wide range of investors and sponsorships. They also are the number 1 eSports team when it comes to prize money after being successful across different games. To put it simply, they come across as a well ran business.

100 Thieves are similar in many ways but with one big difference. They actually manage to make money the traditional sports way by selling merch. Their clothing lines are genuinely good and unlike many other eSports clothes, you won’t be embarrassed wearing these in public. Another thing they excel with is their content creation. While most other League teams are struggling for views, 100T are still getting good views when they do post. They keep up with current trends and put charismatic people in their videos, in the past this would involve the owner Nadeshot appearing in the LoL vlogs himself. Now, this is something TL also has with Steve. Both orgs are fronted by these very likeable and charismatic personalities, this can’t be overlooked as a very important part of their entire brand. If we were to compare them with CLG and TSM who have the opposite. Reginald has been in the news enough the last 12 months for everyone to know the public opinion of him, and he has always been TSM’s face. CLG’s face is, well, who? We all know in the past it was Hotshotgg back when they were still a popular brand. Considering these teams can’t have an innate fanbase with their geolocation, the next best bet is to centre them around not necessarily a person, but a brand. Though, maybe this has the risk of turning into a TSM Reginald situation.

I always look back at the past in which these teams would all live in a house together, it was very grassroots. All these teams were held up by venture capital with investors having no actual idea if the future of eSports would net them a huge profit. I ask myself, would a team paying all their players $100-200k and living in a gaming house as they used to have them be less successful than their competition?

With all of this in mind, do you think that you could run a successful LCS team without being in the red? Many teams have managed to spend big and still sustain their spots in the North American league. A few have been in and out before we could even get to know them, but these are the first two big orgs that have won championships to leave. This could be the beginning of the end for the LCS, just a blip, or possibly even meaningless in the future. After all, traditional sports in the past have seen titans fall and dissolve into history but others rose to replace them, and the sport marched on.