In part 1 of how do esports orgs make money I discussed how tournament organizers make money in esports. In part 2, I’ll discuss some options and ways that teams make money in esports. This list isn’t exhaustive and is likely to change but there are some parallels between each vertical. I’m not going to include crowd funding, reverse takeovers or raises in this. This will be more traditional. So the way teams make money are:
Sponsorships & Advertising
Yes, you guessed it. Sponsorships are the lifeblood of most esports organizations and this includes teams as well!. It’s estimated that roughly 40-45% of revenues come from sponsorships at the moment. Esports relies VERY HEAVILY on this type of revenue.
Advertisements for teams can be a player callout during the post match interview (them drinking a redbull or holding a can for example). Another way is the jerseys themselves where they sell.
The majority of teams start with sponsors and making money from prize pools.
Endemic vs Non Endemic Sponsorships
Endemic and non endemic sponsors are also important to talk about. Endemic esports sponsors are those who are tied to the esports ecosystem. They’re your headset makers, mice makers, monitor makers and keyboard makers that are seen at every event. They make items specifically targeted to gamers. Non-endemics can be seen as businesses that benefit from marketing in esports but do not necessarily participate in the ecosystem. For example, a non endemic can turn endemic depending on their marketing efforts.
Prize Pools from tournaments
Another common way on how esports orgs make money are the prize pools themselves from tournament organizers. Teams will place in money and eventually get paid out and then pay the players. Some organizations take a prize pool cut but some do not at all. It entirely depends on the game and what the standard is for that particular sector in esports. For example, in Dota 2, it’s not common at all for team organizations to take any of the prize pool after a win. It’s favored very heavily towards players in NA/EU. It may be different in other regions like South America.
Stream teams
Have some old players who want to retire from competitive play or have an extremely popular streamer who is unsigned? Make sure you make a stream team to capture viewer minute bonuses on your contract. For example, your sponsor wants you to hit XYZ hours per month for ABC $$. You can either A) tell your actual team to do it or you can get your stream team to help out instead. Another way is Twitch can give bonus money in your contract depending on if you hit milestones. This is one way to do that instead of telling your competitive players to do scrims then do streaming at night. That’d be one unhappy team!
Appearance fees
You’re a super popular team and some tournament organizer somewhere in the world wants you to come play in a tournament. You know you’re going to smoke all the competition so what’s a good way to get some extra money out of it? Charge an appearance fee of course! This depends on the popularity of the brand, the team and a ton of other factors but this is a way to make some extra coin and maybe get a vacation out of it depending on your team.
Merchandise
Sell the freshest gear to the illest dudes and market the shit out of your team /s. A popular trend is to create your own clothing line. Most organizations partner with a logistics and clothing company in order to appear like they have their own clothing. It’s mainly all the same provider behind the scenes usually or there’s a few that provide most of the teams together.
Horizontal integration
Tired of killing the competition and looking for the next step? Go integrate horizontally by becoming a tournament organizer or production company or whatever you want that makes money in esports.
Transfer Fees
Perhaps you’re a team with two in game leaders and need to make a trade or just look to sign someone new. Instead of dropping them outright, check to see if you can sell their contract or make a trade (that is if you have a contract in place with a lawyer). This obviously has to adhere to employment standards etc and if you’re in a league to adhere with the publisher rules too. So double check what’s going on!
So there you have it! A quick guide on how esports teams make money. This is by no means exhaustive but can give you an idea. As always, feel free to leave a comment below or contact me on this form if you need help navigating the esports industry.