Publishing player salaries: A former players perspective
The topic of player salaries is one I’ve always been acutely aware of. Ever since I received my first contract from SK Gaming almost 5 years ago, I became very sensitive to understanding my market value and also more broadly; my teams market value.
In this piece, I want to share a unique perspective in that I was a former player that has also been exposed to the business environment. Fortunately, I have more freedom to talk about this subject than some other former players or current players will have or feel comfortable to.
When talking about player salaries, it’s imperative that you don’t think of them in a vacuum. Ultimately, how much talent gets paid effects the bottom line of teams; which at the end of the day are businesses that at minimum need to look at breaking even.
Esports Team Revenue
At present, the bulk of revenue from teams is generated by endorsement deals from endemic brands such as peripheral companies (Razer, Logitech, HyperX, NeedForSeat, Twitch, iBUYPower, Alienware, Corsair, etc) and the Riot Games stipend. These endorsements from endemics can range anywhere from $50k-$500k and are what most teams rely on. There is the introduction of some non-endemics (Coca Cola, Draft Kings, Fan Duel, Red Bull, Nissan, HTC, T-Mobile, AT&T, Monster, etc) over the past few years which some of the more successful teams have secured and these non-endemics have significantly larger marketing budgets.
However the teams that were making much more money from these larger endorsement deals were by in large not re-investing that into the team(s) and instead diversifying into other games or expanding their business in areas such as; merchandising, content creation, staffing etc. From a purely business perspective, this might make sense — however you have to be mindful to compensate your talent what they are worth, considering they are one of the main reasons you got those endorsement deals in the first place.
You can make the argument that it is understandable that not all teams are capable of competing on salary, but instead can demonstrate value in other ways. This is prominent in traditional sports, where some teams might have better coaching infrastructure, branding or prestige for example.
Introduction of Angels & Venture Capital
It’s a huge opportunity for these guys, because their competition is few and far between. The only organisations that can compete are those which secured those large non-endemic marketing budgets, where as the rest which are dependent on endemic brands simply cannot compete and get left with arguably bottom of the barrel talent. These teams have millions of dollars and are artificially inflating player salaries in what is at present an unsustainable business model. One thing to keep in mind is that not all of these Angels/VC’s are looking for direct ROI on esports at a team level; it’s somewhat of a passion project to them as they could never necessarily afford or justify owning a traditional sports team. It’s pretty awesome to say you have an esports team as part of your portfolio; especially with the buzz surrounding it in mainstream media and investment circles in the US at present. Having the attention of all those eyeballs in sports might not necessarily monetise right away, but it can be a powerful asset.
It’s an investment, which has associated risk, I respect that. However I think you can manage that risk more, whilst still maintaining the competitive advantage that capital injection provides. On the flip side, these inflated salaries are forcing some teams to invest more directly into their talent, which is a positive!
What about the players?
So, players are getting paid more on average — that is all that matters, right?
I’m an advocate of the players and believe that they should make the most out of their relatively short career span (avg. 3 years), however I’m passionate about this industry as a whole and I’m conscious of the long term stability of it when VC/Angel money over inflates player salaries.
Raising player salaries is a good thing, by in large players have not been getting market value in the past one-two years. However raising them by almost 300%-400%, isn’t the most responsible business decision or beneficial for the industry in my opinion.
As a player who was relatively savvy to my market value throughout my playing career, I actually wouldn’t have wanted my peers to know how much I was making. The reason for this is that it could have disrupted our team dynamic or had other players within the industry look at me in a different light. At present it’s so hard to really determine the market value of the player with so much outside capital being injected in which unfortunately can skew a players expectations away from reality.
Let them be public?
Publishing player salaries isn’t necessarily the Holy Grail. Honestly, all it really does is serve as food for the community to judge the players and teams. I also think the timing of doing it was unnecessary and rushed. We could have spent far more time doing due diligence and having an open dialogue with all parties before irrational jumping to a conclusion. Most players have already signed their contracts for the spring split and all this does is cause dissension amidst teams, as well as players.
What I believe is most important is that the players speak amidst, this will allow them to gain a better understanding of their market value in comparison to their peers. It’s important to note that just because you are more skilful than ‘Y’ player, it doesn’t mean you will get more money. It’s a little bit unfair in some regards, but it is how the current ecosystem operates.
Player salaries being public has nothing to do with the community and shouldn’t. It’s more that some players do not know their value and in some cases have been discouraged to talk amidst their peers. There is actually an argument that is illegal to prevent employees talking about their salaries, however as most players are treated as contractors this becomes a grey area. For a new player who might not know enough people (foreign import or fresh from amateur scene), it is very difficult for him to find out his market value and is vulnerable to being exploited.
We need to encourage players to talk freely amidst themselves and those with more experience to act as a support network for newer players coming into the industry. Teams need to improve their monetisation efforts before inflating salaries to unsustainable heights.
Tell me your thoughts! I would love to hear them. The intention of this article is to inspire discussion. If you enjoyed it, please ♥ and share.