Why your favorite esports team is owned by a basketball player


If you follow esports, you’ve probably noticed
a lot of new teams popping up with ties to flashy names like Shaq, Magic Johnson, Steve
Aoki, the 76ers, and–of course–the nebulous but omnipresent “consortium of investors.” Outsider investment in esports has been commonplace
in other regions for years–Samsung, LGD and Korean Telecom, to name a few. But in North America and Europe, esports were
always viewed as being extremely niche by anyone who wasn’t already a gamer–until
recently. In the past year and a half, we’ve seen
an explosion of money streaming into esports from mainstream pockets in the West. But why? The answer, of course, sits at the top of
a mountain of cash. There’s big money to be made in esports:
according to SuperData Research, the global esports market is expected to grow to $1.2
billion by 2019. That’s because over 200 million viewers
around the world tune into esports events every year, and most of them are 18 to 35-year-olds–so-called
“Millennials.” Advertisers really want to reach Millennials
because they’re just starting to earn money and make their own purchasing decisions. In the US alone, Millennials spent over $200
billion in 2016. Their purchasing habits aren’t set yet,
so brands want to get their attention early and secure loyal customers for years to come. As they get older and make more money, brands
hope that they’ll return and make bigger purchases. The big challenge for brands is that this
age group is especially hard to reach through traditional advertising channels, like TV
and print. Many of them have “cut the cord” and abandoned
cable, choosing instead to go online. This has forced advertisers to look for alternate
channels to reach them, and esports is a promising option. The outside investors buying up esports teams
are hoping to get a piece of the pie that brands will eventually come to pay. How much could that potentially be, if esports
blows up? Well, taking a long view of things, the Los
Angeles Lakers made over $300 million in revenue last year, a huge chunk of which came from
sponsorship and advertising deals. So there’s plenty of money to be made, but
for bright-eyed new investors, striking gold in professional gaming is no easy task. Without knowing much about the games, most
of these new owners rely heavily on esports “experts” to run the show for them. Immortals is run by 22-year old gamer Noah
Whinston, PSG Esports is led by ex-pro Bora “YellOwStaR” Kim, and Team Liquid, which sold
the majority of its shares last year to an investment group, is still managed by long-time
CEO Steve “LiQuiD112” Arhancet. But this doesn’t always work out for them. NRG Esports, notably backed by Shaq, A-Rod,
and the co-owners of the Sacramento Kings, saw their League of Legends team fail to re-qualify
for the LCS in their second split, after going through two general managers and multiple
coaching staff. They have since disbanded their League team. Despite their inexperience in individual team
management, these new owners do have an edge when it comes to running their organizations
as businesses. Usually, they come in with much more corporate
experience than the average pro player-turned-team owner. They know how to build their organization’s
brand and sell sponsorships, merchandise, and media rights, and they already have the
connections in place to make it happen. These newcomers’ biggest advantage of all,
though, is the sheer depth of their wallets. In an interview with L’Equipe, Unicorns
of Love manager Khagneur said, “There is a big problem right now: player salaries are
skyrocketing. Other teams offer double what we pay our players,
who are already earning reasonable salaries. Our budget is balanced, while our players
are paid well. So any team that comes and proposes double
must be losing money.” While most player-turned-owner teams have
to budget their month-to-month spending based on fickle sponsorship deals, many investor-backed
teams have access to additional capital to supplement sponsorship income. They can afford to lose money in the short-term,
if it means recruiting the best players and performing at the top. While some argue that this influx of new money
is good for players’ careers and the growth of esports in general, others contend that
money shouldn’t win championships, and that it’s not fair for OG owners to be squeezed
out for lack of cash. For better or for worse, outsider investment
in esports teams is making headlines and pushing professional gaming into the mainstream. It’s hard for NBA fans to turn their noses
up at esports when their idols have such strong expectations for the industry. And when they do look, it’s impossible to
acknowledge the multi-million dollar prize pools and venue-packing crowds and still refuse
to believe that esports is a movement. For now, the future of new money in esports
is still uncertain. If the returns are good for investors and
their sponsors, they will invest more into their teams and the scene, setting new standards
for player support and propelling esports far more quickly into the limelight. If, however, they decide that gaming isn’t
worth their time and back out, the industry will continue in the way it always has, driven
forward slowly but surely by the people who are most passionate about it. Time will tell what happens. In the meantime, tell your dad that A-Rod
put money in a CS:GO team.

100 comments

  1. Hopefully the generation being targeted by this stuff is informed enough to know that the companies pushing advertising the hardest are often making up for their products being sparkly crap. Looking at you Razer. Do your product research using independent reviewers, product comparisons and recommendations from knowledgeable friends (aka, people you are confident don't have a vested interest in selling you a specific brands product).

  2. Um what investor backed teams are pushing out player-owned teams? Dignitas may make playoffs but barely and as you said NRG got relegated and guess whose at the top TSM. Players should make more $ the fact that streamers can make more than them is outrageous

  3. Its funny to see only the LOL's champions while the top 36 earners come from Dota 2 (like SumaiL, Iceiceice, Universe, Mushi,….)

  4. lmao whats with all the fucking dots in eastern china, nobody lives there! And you got ones in the sahara desert haha. Just kinda colored each country wherever and threw on some darts?

  5. If you're gonna talk about large income in sports, don't talk about american sports. Football (Soccer) Clubs are earning a large chunk of money for decades.
    If you'd wanna compare with LA Lakers' earning to a football club, Lakers don't even come close. Their revenue was $300 million, Manchester United generated revenue of $642 million in 2016. Barcelona generated $660 million while Real Madrid's revenue in 2016 was $670 million.
    So yea, look outside of the box (america) next time.

  6. I think there must be a salary cap on esports, just like in the NBA. It would be just ridiculous if NBA would be without salary caps. Then the most wealthy team would buy all best players and dominate the league, but that isn't a good strategy in any team sport. The bigger esports get, the more regulations like this must be and will be implemented i think. Thoughts, everyone?

  7. While the example is understandable, I find it hilarious that the figurative comparison of money buying the best players against a team with smaller income is done as Immortals versus Unicorns of Love, when UoL has proven to be a pretty good team in Europe and Immortals are, at best, an ok team in North America.

  8. great channel guys! love the educational aspect of it. i shared the video on my groups league page. oh and just sub'd! keep it up!

  9. The way these teams are managing money is remenicent of the monopoly Standard Oil (John Rockefeller) had over competing oil companies in the late 1800's

  10. I don't think these big guys like shaq n stuff understand that you can't just buy the "best" players and win in league like you can in other sports lol. League has so much to do with chemistry while other sports you can just toss individual good players together and win

  11. really well made animation, great narration and intelligible information. These qualities are present in this channel and i love it! Please make more of these and maybe delve into other games like csgo/overwatch as well!

  12. so now basically anybody younger than a baby boomer is a millennial? I'm just going to start calling anybody who didn't die before the year 2000 a millennial.

  13. 31K subs? should be at least 310K, you guys put out some kick ass videos and did I mention the production quality? Top notch for sure!

  14. Sports are pay to win. The team with the most capital can put together the most reasonable team. It is very evident i sports, and esports will do the same over the course of the next 5-10 years.

  15. Fnatic, Dignitas, Virtus pro, c9, CLG, EG and so on are teams that have started of gamers, and still is going strong.

  16. esports will be famous if LOL is not on the scene. these investors are better invvesting in DOTA.

  17. "If" esports blows up?
    Esports is the only "sport" that will double its profit by 2020.
    Its absolutely blowing up

  18. It's called capitalism. Get over it. The mom and pops shop owned teams of yesterday are small potatoes and outdated. In order to advance the sport, the meta, the scale of video game competition, money must be poured into it. So that it reaches the poor kids in South Africa, Compton, Mexico City, Afgahnistan, etc. and they too dream of achieving greatness and earning a lott of money. Everyone is happy with money. Companies get their fat check and competitors get their fat check. If you don't like this system, go live in North Korea

  19. As a South African millennial I feel offended that you didn't include a dot on our country at 0:57 when discussing viewership. Assuming we don't, or haven't watched E-Sports. Its blatant discrimination. I expect an official apology or rectification of this issue.

    Jokes aside 😛 Awesome video and keep up the great work

  20. fast forward to october 2017 and majority of the na lcs teams are owned or sponsored by basketball players or teams

  21. I've always had a problem with investors from brands like the NBA and the WWE. I feel like they're just in it for the money and not the passion

  22. Fuck basketball team owners. Fuck them all! Some said it must not be considered as a sport which is called esport. Wtf! Because of them IMT is dead. Not a fan tho but their fans are crying about it. Fuck you too riot games! Bunch of whores.

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