Opinion – Esports Needs Independent Economic Impact Studies, Unions, and Transparency Regulations

By Ellen Zavian

Everyone talks about the value of esports but I oftenhear that only the publishers are making money. This means, the team owners,event operators, leagues, coders, gamers, are just making it or can handle acurrent loss for the hope of a future gain. Since the publishers own theintellectual property to the game, it would only make sense they reap thefinancial benefits of their R&D first, before all other stakeholders.

However, according to Peter Warman, Co-Founder and CEOof NewZoo, a games and esports data company, “Esports is the shiny object andwill take some time to be profitable.” In fact, Warman stated that NewZoo “didnot get into esports for the money, initially, because we knew it would take awhile for the market to mature.” The time to mature may still not yieldprofitability, as Warman believes “esports, for game publishers, is not aprofitable business and probably will never be… but this might change ifbetting is integrated.” Despite this belief, NewZoo reported that esports is currentlya $1B dollar industry.

If not the publishers, then perhaps the team owners.After-all, many of the team owners own teams in other professional sports, likethe NBA. Ted Leonsis, founder, majority owner, chairman and CEO of MonumentalSports & Entertainment, owns the NHL's Washington Capitals, NBA'sWashington Wizards, NBA G League's Capital City Go-Go, WNBA's WashingtonMystics, and formerly the AFL's Washington Valor and Baltimore Brigade. As hisconnection to esports, Leonsis is a member of the investment group, aXiomatic,which owns Team Liquid, a competitive eSports Team. Monumental Sportsadditionally owns the Capital One Arena in Washington, D.C. and manages theMedStar Capitals Iceplex and George Mason University's EagleBank Arena.

Since aXiomatic is a privately held investment group(NBA Michael Jordan is also part of) no one knows if Team Liquid has turned aprofit, just yet, but the wealthy owners often invest now for the futurepotential growth.

If the publishers and team owners are not yetprofitable, perhaps the leagues and event operators, like WESA and ESL, areseeking a profit. Back in 2016, ESL (formerly known as Electronic SportsLeague), an esports organizer and production company (that launched in 2000),announced the creation of the World Esports Association (WESA), a federationthat would work on regulating the competitive scene. Although the profitabilityof WESA remains unknown, ESL believes their event side of the business hasalready delivered a profit in some jurisdictions they are involved in.

Aleksander Szlachetko, Managing Director at ESL GamingPolska was adamant about the positive impact that the Intel Extreme Masterscompetition, which is held every year in Spokek in Katowice, Poland, has had onthe city and the overall esports industry. “Hosting one of the largest esportscompetitions in the world has already converted the Polish coal mining city ofKatowice to an industrial haven,” stated Szlachetko. In its inaugural year,2013, the small city attracted 50,000 fans over two days and in 2019 over174,000 gamer enthusiasts flocked to what is now a five-day event. “By hostingone of the largest esports competitions, the city has been able to rebranditself into a modern city,” according to Szlachetko. Although a study on theexact growth was not provided, Szlachetko has seen more companies setting upshop within city limits, to help support the event. “This has happened over thelast 5 to 7 years … but real numbers in growth, jobs being created, taxes beingcollected is something you need to ask the city.”

Although the city of Katowice was not able to provideus with an economic impact study to back up Szlachetko’s statements, we didlearn that Katowice recently signed a letter of intent to convert a localnon-operating mine into a new tech hub for the community. “Katowice hasinspired many businesses to grow over the past few years and we know esportshas been the catalyst,” according to Szlachetko.

So, where does this leave the gamers? The folks thatare playing the game. While a few standouts make a great deal money, if youlisten to the team owners, they are paying out money to gamers that isoutpacing their revenue. If you listen to the gamers, they see tons ofsponsorship money coming in, but it is not trickling down to them.

In my opinion, until we get some independent economicimpact studies, unions, and transparency regulations, everyone is going tocontinue to claim they are the poor person in the esports’ house.

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