Ted Hickman

Why Are Esports Teams Struggling to Turn A Profit?



Back at the start of 2020, the president of popular esports organisation TSM, Leena Xu, suggested that TSM had been the only big esports organisation to turn a profit – whilst Xu has a history of putting out statements that may not be the most factual, it did lead to many fans asking questions – how can so many big orgs that have been competing in multiple online games not turn a profit? As many have turned from smaller, individual business into the giants they are today just a number of years later, the answer is quite simple.

(Image from egb.com)

Setting up is expensive, and debt remains – Starting your own esports team isn’t cheap, you have to pay the franchising fee to the league you’re going to participate in, you have to hire the talent and squad that will represent you, and you have to pay for all of the support that comes with having an esports team. This means starting out, many are already in debt, flat broke – whilst many have grown and have a larger pool of resources now available, it may remain beneficial and advantageous to still hold on to some of that debt – so whilst perhaps not being profitable, there might be some science behind it all.

Bigger contracts – As esports has evolved, some of the big talent players have been able to find an inflated contract price with some reaching into the millions of dollars already – whilst this does wonders for some parts of the business as a new signing could increase fan numbers and supporting markets such as betting at esportsbetting.site as the new pick ups could bring more revenue through those avenues – if you’re still getting off the ground and commitment six figures plus the salary to a new signing, figures will surely take a dip.

Newer orgs are making a difference, though – The first round of big organisations had little to learn from, esports was still very young and they were leaving footprints behind them, not following those in front. The newest orgs have been able to benefit the most here – paths to content creation, merchandising, and any other avenue of revenue was already laid out before them, all that was left was to follow the footprints of those who came before. So, where the older more established teams may just be coming to a point where the early costs have been dealt with, the newer teams will be able to get there much faster.

As esports continue to grow, there is now a crossover being seen of professionals from existing established sports moving over that could help ease the start for some, but for others it has become about learning to swallow the cost, and moving forward wherever possible.

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