Aug 16 2017 - 4:31 pm

NA LCS Franchising Update: What we've learned since the initial announcement

There seems to be a ton of interest in the franchised league.
League of Legends Analyst
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Photo via Riot Games

The applications are in, and so begins an uneasy waiting period.

Million-dollar paydays hang in the balance for orgs and players. But the money won't come directly from a tournament prize pool. Instead, what everyone is waiting for are the results of Riot's NA LCS franchising decision.

It's been a few weeks since the application deadline, and a couple months since franchising was first announced. What have we learned so far, and was is still up in the air?

Things we know

Over the last couple months, there are a few things that have become clear.

Organizations are definitely interested

In contrast to the hemming and hawing over Overwatch investment in the period after Overwatch League was announced, organizations are definitely all-in on the NA LCS. Need proof?

Not only has each of the current NA LCS teams submitted an financially-backed application, but four EU LCS teams have as well. This speaks to both the attractiveness of the franchised model and the lack of clarity around the future of European LoL.

But it doesn't stop there. According to a report from theScore, a Chinese-backed team has also submitted an application. This, despite the fact that the Chinese LPL is initiating franchising—at the same time—indicates that there's something special about the NA LCS.

Players are sitting this one out

In contrast to the excitement from the orgs, the players have been notably less enthused. The franchised league purportedly threw the players a bone with the creation of a player's organization.

But the reception by players to that association has been tepid. According to industry attorney Ryan Morrison, very few players have been actively engaged in association meetings. While the franchised league will introduce concepts like minimum player salaries, Morrison's opinion is that player welfare will not improve without further steps, like requiring each player to have legal representation.

Things we don't know

After the initial announcement, Riot has kept a tight lid on its process, leaving a lot up in the air.

Basic economics

Most of what the industry knows in terms of economics comes from a Bloomberg story that broke early in the process. That story reported the franchise fee would be $10 million, with an additional $3 million for teams not already in the LCS. Most reporting on the subject still relies on this article.

The report did note that the fee would likely be spread out over several years and could be adjusted depending on the financial success of the league. But a recent social media post from Dan Clerke, manager of Eunited, a team that did not qualify for the LCS, indicated that the extra $3 million may not apply.

Either way, it still remains to be seen what the actual buy-in fee will be and how it will be administered.

How teams make money

With the franchising announcement, Riot also indicated that league revenues would be shared. This included things like merchandise, sponsorship revenue, and team-branded digital goods.

One of the biggest components was to be revenues earned from a $350 million streaming deal with BAMTech. But after Disney bought a controlling stake in Bamtech, Riot's implementation of the deal has stalled.

It's unclear how the league's year one revenues will be affected by the delay, but given the size of the deal, it could be significant.

When we'll know more

Initial reports indicated that hundreds of organizations had applied to the NA LCS. Riot certainly has a lot of diligence to conduct at a level it never has had to before. We don't know what the next steps are—or when it is that we'll know more.

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