Franchising in professional League of Legends is on the horizon, but it may not be the main factor affecting league stability. Recently, there have been discussions about Riot Games considering a franchise model for the North American League Championships Series (LCS) starting in 2018. Additionally, the League of Legends Pro League (LPL) in China has decided to do away with relegations this summer. While there are valid arguments for franchising, such as increased team buy-in and stability, there are also benefits to the relegation model, especially for a growing organization like the LCS. The concerns over relegation are exaggerated, and franchising may not address the real issue, which is revenue generation and sharing.
The primary arguments against relegation focus on its impact on the competitive environment. These arguments include player wage inflation, disparity in competitiveness, and an economic bubble. However, when looking closely at these arguments, they fall short. Wage inflation in League of Legends is not solely caused by relegation. In fact, there is little correlation between league structure and average player salaries. Factors such as scarcity, demand, supply, and obstructions to the free flow of player services play a larger role in determining wages.
Another argument against relegation is that it negatively affects team value and competitive balance. The belief is that lower-ranked teams that face relegation are less likely to attract sponsors and resources to field competitive rosters. However, the data does not support this theory. Brand valuation makes up a small percentage of a team’s overall valuation, and it is largely driven by market factors and not competitive success. This is similar to European soccer, where teams in large and important communities like London and Manchester have higher valuations. The league format matters more than the economic structure in determining competitive success.
Relegation also serves as a way to promote better and more stable teams into the league. While relegations currently have a significant impact on the league due to the small number of teams, as the league grows, the impact will diminish. Relegation ensures that poorly-run teams are replaced by those that have proven to manage their resources better, leading to a more stable and competitive league.
The issue of revenue sharing is the key problem that needs to be addressed in League of Legends esports. Sponsorship revenue makes up the majority of teams’ revenue, and this inefficient and disjointed system hinders the potential growth of the league. Monetizing broadcasts and sharing revenue with the teams can be achieved without franchising.
It is important to consider the immaturity of the esports industry and the unique nature of franchising in American sports compared to European soccer. Esports is still a young industry, and Riot Games’ control over the production of League of Legends esports has been a key factor in its success. However, focusing on broadcast monetization and revenue sharing is crucial for the future growth and stability of the league.
Ultimately, decisions regarding the league structure should not be made hastily. There are alternative ideas between relegations and franchising, such as parachute payments or revamping the Challenger scene. The key is to promote maturity and stability in esports, regardless of the league structure.
In conclusion, franchising may not be the best solution for creating the ideal esports league in League of Legends. There are other factors, such as revenue sharing and broadcast monetization, that should be prioritized. The real issue lies in finding ways to create a league that benefits all stakeholders and promotes stability and growth in the long run.
League of Legends, esports, franchising, relegations, competitive balance, revenue sharing, broadcast monetization.