Following the massive changes in scheduling, format, and overall structure for both the Overwatch and Call of Duty League this year caused by COVID-19, Activision Blizzard has reportedly decided to offer the ownership groups of its teams some form of financial relief.
The company is allowing teams to defer multimillion-dollar franchise fees that would have been due this year, according to The Washington Post.
This has reportedly been in the works for several months since the ambitious plans for both leagues had to be scrapped due to COVID-19 in favor of a different online-only tournament model.
“It’s a tough year for everybody,” Philadelphia Fusion president Tucker Roberts told The Washington Post. Roberts also said that Activision Blizzard has “worked with us to ensure there is support.”
Each league was supposed to have multiple live events for its teams in their individual home markets, but only a handful actually happened prior to the shutdown. Like traditional sporting events, the ticket, merch, concessions, and other sales, along with team and event-exclusive sponsorships, would have driven a good chunk of the revenue for OWL and CDL teams playing in their local markets.
The Esports Observer reported in July that simply delaying franchise payment fees would be the most obvious way to provide relief and make sure no organization needed to make a drastic move due to “cash crunch.” These fees make up a large portion of each franchise’s yearly operating costs as they work to pay off the initial buy-in required to own a team.
That initial buy-in was reportedly $20 million for an OWL team in season one, though there’s been no confirmation on what the expansion teams paid to join in season two. For the CDL, the price was set at $25 million per team, with OWL ownership groups getting first dibs, according to ESPN.
It’s unclear how a payment deferral would affect a team’s franchise fee moving forward, but Activision and each individual ownership group have already determined what percentage of the original buy-in price needs to be paid each year. It’s likely that a deferral will simply lead to a slight increase in what owners need to pay throughout the remainder of the payment terms.
