Response to Marc
Based on Marc’s comment, it feels like there's a belief at Riot that team owners make a lot of money off LCS and invest it into other eSports, but that is far from the truth. I've invested more into NA LCS than any other team. Instead of investing into other games early like Dota 2 and CS:GO; TSM has spent millions on content, players and staff to support LCS. We provided the first gaming house in NA before there were any sponsors at all and were the first team to provide health benefits for players. While I continued to make bigger investments into LoL, other LCS team organizations invested into CS:GO early and made more money for players in one year from CS:GO stickers than Riot paid them in three years of stipends and icon sales combined and that game is only a fraction of the size of LoL.
Starting in 2008, I invested in the scene by creating guides, hosting tournaments and making as much content as we could because of our passion and love for LoL. I made no money for two years and had to borrow from my parents because I believed so much in the game. I worked night and day, putting thousands of hours into building the community. I love LoL eSports as much as anyone in the world and I’ve invested more of my own resources into it than I can even remember.
TSM hosted some of the very first tournaments and online circuits for LoL eSports. By constantly streaming and investing our own money, time and love, we helped viewership explode for LoL in NA. Our online circuit built viewership from nothing to as many as 60,000 concurrent viewers. But as soon as this happened, Riot made the decision to bring league operations in-house which gave them control over all of the league sponsorship and streaming revenue, which eliminated much of our profit overnight, as well as tournament organizers such as IPL, MLG, and ESL, which either folded or turned to other titles
Which brings us to Marc’s post. He makes 2 main points, both of which convey an out-of-date perspective which doesn’t take into account the current state of the eSports ecosystem.
Marc’s Point #1: TSM makes a lot of money from LCS, doesn’t invest enough in its LCS players and loses money on other eSports.
I think Marc realized quickly that this is not a helpful thing to say because he edited his post and removed it, but it’s important to be clear about economics here. It used to be true that we made money from LoL eSports, but that was before LCS and the economic situation is getting progressively worse.
Most LCS teams lose money because stipends are stagnant, sponsorships for LCS team operations are shrinking and the cost of player salaries, content production, support staff and housing costs are spiraling up.
The reason why I started to invest in other games was because LCS left me no choice. The relegation system is unstable and risky for everyone, other publishers are more collaborative and provide more opportunities for teams and players to make revenue.
Over time, LCS has become more demanding and restrictive and the dynamics of a mutually beneficial relationship have become more one-sided. LCS told team sponsors, which are a necessary source of revenue, that they can’t even go backstage to watch the players compete. Teams can’t have sponsor branding on beverages or hats. Logitech is one of our greatest and most supportive sponsors and they simply can’t get visibility through us competing in LCS because we can’t wear their headsets while competing. We had to push endlessly to get permission for our staff simply to be able to film backstage. LCS even threatened to fine us if we didn’t remove sponsor content from our YouTube channel, such as this HTC commercial: https://www.youtube.com/watch?v=WBeTqzErgZI.
At the same time, LCS compensation has barely budged, but the length of the season and the number of scheduled matches has skyrocketed. As a result, the LCS schedule has created a desperate time-crunch for players. By taking almost all of our players’ available time, there simply is no time or energy for the players to do other activities to make money, such as doing event activations for sponsors (e.g., PAX Prime or PAX East), creating content and streaming. In order to fulfill our activation obligations to team sponsors, we were forced to hire non-LoL players who were able to travel to these types of events.
The bottom line is that an LCS stipend only covers a fraction of the cost of an LCS team’s operations. As a result, revenue from team sponsors is absolutely necessary, but the current LCS system is leading team sponsors to reduce support or – much worse – consider shifting support to eSports other than LoL.
Marc also made some comments insinuating that I don’t pay my players enough. I’ve always been at the very top of the pay scale in player compensation and am in the process of rolling out a stock participation plan for TSM players. I’ve regularly gone above and beyond our contracts and increased player compensation even before the contracts expired. Another commitment I made was hiring a video team to help build out our players’ YouTube channels, so when they retire - they have a transition to a continuing career (http://bit.ly/2bCEcs9). I’ve increased my player salaries more significantly in the past year, but LCS player stipends have been frozen. Combined with the fact that LCS doesn’t share sponsorship revenue, streaming revenue or even give a percentage to the World Champions for their team skins, I think that it’s unfair to imply that I’m greedy. I have made a lot of money in my business, but not from LCS team operations and TSM has made the playoffs eight splits in a row. Almost all of the profit I’ve earned has been from my websites and building out my streaming network.
Marc’s comment: http://bit.ly/2bvUG1W
Marc says that I have the power to change this dynamic, but the truth is I’m not an owner in the same sense that Marc is. Traditional major sports organizations own stadiums and franchise rights in a league. In my case, Marc owns the game and the exclusive league and he just offers me a contract every December to participate in LCS, a slot which I risk losing twice a year. I can’t earn anything related to LCS except what he pays me or allows me to earn.
I’ve done all I can and it's not enough. It’s irrational to invest even more money into LCS, given how restrictive LCS is on our team coupled with the potential of being relegated every split. Even the current and potential outside investors who are now exploring the space already assume that viable rev-sharing with the teams and players exist.
The real power to fix this situation is in Riot’s hands. They can stabilize the LCS system and provide security and sufficient compensation for the players. They can share streaming and sponsorship revenue, they can expand and promote the sale of in-game items and share that revenue, they can create a robust merchandising program and sell team and player items in their online store. If they did these things, it would help justify the huge sacrifices made by young players as they strive to become true professional athletes.
Marc’s Point #2: Teams are merely “complaining” about patches without a legitimate basis.
Marc is suggesting that patches expose weaknesses in team rosters and that players need to just man up. He is missing the point; the pro LoL players who are eligible for Worlds have been furiously practicing on the previous patch and many people don’t understand that the specialized skills which LCS players practice don’t really carry over from one patch to the next.
The system should reward those players who have dedicated the most time and energy to preparing for Worlds, but introducing a new patch near the end of the season knocks everyone back to the starting point. LCS player careers are already too short and mid-season patches ratchet up the stress on them and further increase the odds of being cut. This kind of TIMING of patches can force a team to make a roster change rather than trying to coach players through a difficult patch transition. A few weeks of poor performance can end a player’s career and nobody wants to improve player job security more than me.
The community and the players want the true best teams to represent them in Worlds, but the chances of an upset due to lack of familiarity with the new patch are too high. I have played as a pro for 5 years and Marc and others may not understand how disruptive this is to the careers of players and to the integrity of Worlds gameplay. Huge patch disruptions in playoffs results in unsatisfying results and lower-quality gameplay.
I’m fully aware and understand that Riot can’t balance for Pro players. The players and community just need more understanding about the timing of changes to competitive gameplay.
I’ve dedicated my entire adult life to building the LoL eSports community and want nothing more than a stable, growing, increasingly-professional eSports environment that will ensure that players can have long-term careers with fair compensation. I’m willing to work with Marc and anyone else to make this situation better. I’m focused on the solution, not the problem.