eSports Leagues Set To Level Up With Permanent Franchises

If you open the history books, you'll see that nascent eSports leagues are not unlike the early Big Four North American leagues, which were volatile places where commercially viable teams were here one day, but gone the next. For example, when the Basketball Association of America and the National Basketball League merged to form the NBA in 1949, the league had 16 teams, but only eight of those were still around in 1955. Original NFL franchises also came and went in the 1920s, as the early league found its footing, and the NHL barely survived its first year, when one of its four teams (the Montreal Wanderers) disbanded after their arena burned down.

What gave the leagues stability, and helped them grow into the mammoth enterprises they are today are a host of changes that fueled profitability, aligned the owners' interests and helped them run their business in a predictable manner, on the field and on the balance sheet.

Riot Games and Activision Blizzard ATVI -1.72% are making similar changes to their nascent eSports leagues, by adding permanent franchises, revenue sharing agreements, player-centric features and other tried and true elements of their traditional sports brethren. Taken together, the changes are a massive leap forward for eSports, which will result in a much more predictable ecosystem for game publishers, owners, players, sponsors and other industry participants.

Activision Blizzard aims to have at least 28 international, city-based Overwatch League teams at a reported franchise fee of $20 million, while Riot Games is planning on having ten permanent franchises in its North American League of Legends Championship Series (NA LCS), at a cost of $10 million for existing team owners, and $13 million for new ones. Some of the details of the Overwatch and NA LCS franchises are still being hammered out, but we know many NBA, NFL, MLB and NHL owners are in a prime position to secure franchises.

League of Legends has reportedly received franchise applications from all of its existing teams, which include Rick Fox's Echo Fox, the Philadelphia 76ers' Team Dignitas, Milwaukee Bucks owner Wesley Edens' FlyQuest, and Team Liquid, which is owned by aXiomatic, an eSports company with star-studded investors including Tampa Bay Lightning owner Jeff Vinik. For its part, Overwatch has already announced nine franchises, including a Boston team owned by New England Patriots owner Robert Kraft, a New York team led by New York Mets COO Jeff Wilpon...