I agree. There’s definitely a capital sink that’s front loaded. A lot of the success depends on the management of the team, in my opinion. You need a manager on the payroll who is willing to dedicate considerable time in the acquisition and support of the talent.
I think a small team with travel and training could probably get away with around $25,000. If you have to pay the players in some part-time capacity then I’d side higher near more on the side of $75,000. At that price point it becomes harder for me to see the ROI at the end of the tunnel though.
Either way, it’s a high risk investment. If you look at the poker circuit, your bread and butter comes from smaller tournaments that add up. An underwriter that takes 12-15% of earnings depends on those to keep the operation in the black. You hope for the odd high end win but that is an outlier.
I imagine something similar in the gaming world. It might be worth speaking to poker player and team underwriters for advice and structure for deals.