After initially blocking NA LCS teams’ requests for franchising in 2016, Riot Games have officially revealed plans to franchise the North American League of Legends Championship Series for the start of 2018. The game publisher will fulfil the long-term ambitions of a number of NA eSports organisations by making teams ‘permanent partners’ of the league.
A franchised model will mean the end of the promotion and relegation system in the NA LCS, dramatically transforming the face of one of League of Legends eSports biggest leagues. All ‘approved’ NA LCS teams will become permanent partners of the league, gaining access to the league through a financial buy-in set at a flat $10 million ($13million for new teams).
The application process opens today and will run through to July 14th, though successful applicants will not be revealed until November. In their official announcement, Riot detailed a series of key questions for potential applicants, including queries of brand development, team operation, key stakeholders, and how teams intend to promote player welfare.
It is implied that Riot will be prioritising organisations who intend to support their players in the long-term, including offering education opportunities after their playing careers.
“Part of our evaluation process will be examining how teams will support their pros, not only in coaching and training, but in career opportunities or higher education once their playing career has ended.
“We believe that the best results happen when pros work with teams that they’re motivated and proud to support throughout their careers”
Riot Games Official Announcement
The game publisher outlined that it will be partnering with “expert third parties” to evaluate applications from prospective permanent partners, which will undoubtedly include current NA LCS organisations, in addition to the likely interest from investment groups.
If any existing LCS team is, for whatever reason, not selected for a franchise, Riot will arrange buyouts of contracted players. Any team in this position will be “compensated for the investment they’ve made to the league.”
Perhaps most importantly, revenue sharing will be introduced to the NA LCS in 2018 as part of the new franchised model. Revenue sharing forms a crucial part of the financial model for every major American sports league and was the major sticking point in the disagreement between team owners and Riot Games in 2016.
League-based revenues, like the 7-year, $300 million streaming deal announced last year and team-branded skins, will be shared amongst teams in the NA LCS. Each team will share a portion of their league-driven revenues, including sponsorship and merchandise sales, with the goal of strengthening the competitive integrity of the NA LCS by providing additional financial support to teams with less established fanbases.
Teams will receive 32.5 percent of the total revenue generated by the NA LCS, of which half will be shared equally, with the other half distributed based on league performance. The franchising model is fantastic news for professional players, who will also receive a 35 percent share of league revenue, on top of a raised minimum salary of $75,000.
The notable negative aspects of the new franchising model derive from the loss of the promotion and relegation system. The reason for its elimination is entirely understandable from a business perspective, given that the loss of an LCS spot severely hampers teams’ ability to secure long-term sponsorships. With that in mind, teams have tended to prioritise short-term gains for their rosters, as opposed to building the long-term sustainable infrastructure Riot Games has been striving towards.
With the promotion/relegation system on the scrap pile, Riot have addressed the redundancy of the Challenger Series by instead forming a secondary academy league for the 10 franchised NA LCS organisations. This in turn will mark the end to the NACS Open Qualifiers and the historic path into the LCS. The new design will ideally allow teams to develop prospects in this league, which will include more teams and more games than the previous Challenger Series.
“We’ll be rebooting Challenger as an Academy League, where each NA LCS organization will field a team of developmental players.
“This will hopefully meet multiple needs for NA LCS teams: deeper rosters to experiment with younger talent, enough spots in the league for all LCS teams to be represented, and more games played to speed the development of their Academy players.”
Riot Games Official Announcement
The fight for a spot in the North American League of Legends Championship Series will no longer take place on Summoners Rift, but instead in a Los Angeles board room. Whilst the long-term future for the NA LCS is now secured, what the announcement means for the current 10 NA LCS organisations is currently unclear. Current competitors are by no means guaranteed spots.
Flagship organisations such as Team SoloMid, Cloud9 and Counter Logic Gaming are likely to become immortalised within the NA LCS, as too are the likes of Team Liquid and Team Dignitas who have a long-term heritage and have the advantage of significant investor groups behind them. As for the new teams however, Immortals, Echo Fox, Team EnVyUs, Phoenix1 and FlyQuest, each organisation presents a range of respective strengths and weaknesses for keeping their NA LCS spot.
The move to a franchising model is the most significant move in League of Legends eSports history since the inception of the LCS itself. Riot Games have outlined a clear process for the future development of the NA LCS; the industry will wait with baited breath to learn the names of the league’s successful franchisees.