I'm interested in underwriting a pro esports team. Tell me what you know


#1

I’m interested in understanding if sponsorship opportunities really pay a respectable ROI. If I were to underwrite a team, since I don’t have a product to sell on a brand awareness play, I would need to have to the margin on sponsorship and/or winnings make sense. Is that possible?

Thoughts?


#2

I’ve never considered doing this. I guess the ROI is dependent on the team being successful. It could be rough as they initially rise up the ranks. Especially in the early stages when they are just forming, practicing and not participating in any tournaments.

How much money are you looking to invest in this? I might be interested in a joint venture. Strats 2.0 unless you wanted the team to be Vocino, Inc.

Maybe we need a product to sell.


#3

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.


#4

I have a friend that’s played semi-pro poker for quite some time, being staked many times, playing both online tables and various smaller tournaments in addition to the odd live match; if you think talking with him would be beneficial, I can talk with him about having a chat.


#5

The only esports teams I know much about are the KESPA (Korean E-Sports Association) teams.

From my understanding, the team takes all the sponsorship money, pays the coaches and players some form of salary for practice, and the players get to keep all their winnings.

The one challenge I think you’ll run into is that pro esports teams are usually started by pro players themselves, or people with many valuable connections within a particular esport. This way they have something to offer in the way of experience/coaching/connections/etc. and they can probably pull a few really good players off established teams.