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Volume 26 No. 3

Esports

Riot Games has selected 10 organizations to hold semi-permanent franchises in its top-tier European circuit of League of Legends, including three with predominantly North American owners. Riot’s EU circuit is the third esports league to embrace investor-friendly franchise spots over promotion-and-relegation style systems, following the North American LoL circuit and Activision Blizzard's Overwatch League. Buyers of those franchises have seen their total valuations grow in light of the scarcity and security offered by the permanent spots. The three EU teams with major North American backing include Misfits Gaming, backed by the Heat; Rogue, owned by ReKT Global, an agency backed in part by Sterling Select, a division of the Wilpon family's Sterling Equities; and Splyce, who counts Toronto-based OverActive Media and Delaware North among its investors. German football club FC Schalke 04 is also a franchise holder, Riot said. The others are Fnatic, G2 Esports, Vitality, exceL, SK Gaming and Origen. Riot raised about $103.2M in selling the spots, and the teams get league revenue sharing in return. The six clubs that already participated in '18 (Fnatic, Schalke, G2, Vitality, Misfits and Splyce) paid $9.2M each in a franchise fee, while the four new names (exceL, Rogue, SK Gaming and Origen) paid $12M each. Along with the new clubs, Riot will change the name from the EU League of Legends Championship Series to the League of Legends European Championship.

DOUBLING UP ON FRANCHISES: Misfit and Splyce now join Cloud9 and OpTic Gaming as the only esports organizations to hold long-term spots in both League of Legends and Overwatch. “The famous saying about an esports organization is, ‘Aren’t you just a bunch of contracts?’ And yes, we don’t usually own physical buildings, or actual tangible things,” said Splyce co-Founder & CEO Marty Strenczewilk. "This is one of those actual tangible things that makes us a much more solid company." ReKT Global CEO Dave Bialek said the new team will be “Rogue’s definitive tent pole property." He said, "It means that we, as ReKT Globlal and Rogue, are an immediate and definitive force in the esports marketplace. When [co-Founder] Amish [Shah] and I started this business, we wanted to have at least one of the major franchises."

COMPARISONS TO NORTH AMERICA: Sources said the market generally considers the European opportunity in League of Legends to be less appealing than the North American league, but still a very compelling opportunity to have a guaranteed spot in front of the world's biggest esports game. Riot Head of EU League Management Marc Schnell said demand to join the league was comparable to the North American process one year earlier. They chose franchisees based on their business strength and a desire to create a diverse group of owners and team histories. They pointed to Rogue’s roots in music (DJ Steve Aoki and Imagine Dragons are investors) and Origen, an original EU League powerhouse that was relegated after '17, but got backing from RFRSH Entertainment to rejoin the league. "What we’re striving for, and we’ve achieved it, we wanted to create a lineup of 10 that would really augment each other, and create an awesome variety of flavors, so to make it so every fan out there would the ability you in one team that would resonate with them,” Schnell said.

For more coverage of the business of esports, visit our partners, esportsobserver.com.