IESF charges Esports World Championship host-city to pay $1M fee but money ends elsewhere
IMPORTANT: The text below is fully based on Reporteris own investigated and only contains personal commentary on specific pieces of it. This is also a personal view of the author, in any way not associated and not representing the views of his employer.
The local Romanian website Reporteris has recently published a significant investigation regarding the alleged manipulations by the International Esports Federation (IESF) in relation to their upcoming annual World Championship. The championship is scheduled to take place in the Romanian city of Iasi in August of this year.
According to the report, the Municipal Sports Club (CSM) of Iasi, the organizer of the event, is said to be paying a “licensing fee” of $1,000,000 to host the IESF World Championship 2023. So far, CSM has already made a payment of $750,000. However, it is important to note that this payment did not come to the Ministry of Culture, Sports, and Tourism (MCST) of South Korea, which serves as the owner and primary financial supporter of the IESF. Instead, the funds were transferred to a local NGO in Skopje, North Macedonia, which allegedly functions as a regional branch of the International Esports Federation. It is worth mentioning that this NGO was established a mere seven weeks prior to the initial payment and was founded by Vlad Marinescu, the President of IESF.
South Korea has initiated an investigation into the incident since the license fee was intended to be deposited into the IESF account in South Korea, rather than the subsidiary in North Macedonia. This raises the initial question: what exactly is this $1,000,000 “license fee” and why is it necessary to pay? IESF President Vlad Marinescu addresses this inquiry in the following manner:
✍️ In order to obtain the privilige of hosting the Esports World Cup, prospective hosts are required to secure their rights by acquiring a license, which entails paying a designated amount as a licensing fee. In this particular case, the fee amounts to $1 million. Hosting Esports World Championship offers numerous advantages and benefits for the chosen city, including heightened tourism, economic growth, and global publicity. It serves as an exceptional opportunity to make an impact on the world of esports while garnering substantial exposure for the host city.
Certainly, one does not need to possess the expertise of an Esports professional on LinkedIn to recognize that this notion appears to be a complete fallacy, designed to exploit susceptible individuals within local government bodies. After all, the International Federation of Esports was established 15 years ago and operates from South Korea, with the current expenses being covered by the Ministry of Culture, Sports, and Tourism of Seoul. Without any personal commentary necessary, it is possible to reference the observations made by other industry experts as mentioned in the material from Reporteris:
✍️ License fee — is a kind of tax on trickery.
✍️ The power of marketing. The championship has been organized since 2009. In 2013, the same championship took place in Bucharest, with a fixed cost of 300 thousand dollars, significantly lower than the 5 million dollars required for Iasi. Moreover, the entire cost was covered by South Korea, with no financial contribution from Romania.
According to the contract, the City Hall of Iasi has committed to allocating a total budget of 5 million dollars for this event. This amount encompasses the expenses related to the organization itself, including the license fee of $1 million, as well as the prize pool amounting to $200,000. Additional sources from the same portal indicate that the overall cost of the event reaches a remarkable 7.3 million euros.
✍️ Approximately half of the budget, totaling 7.35 million euros, for the Esports World Championship in Iasi scheduled for August-September 2023 is allocated for player transportation, accommodation, and meals. The remaining half is dedicated to events and marketing. Within the marketing budget, there is an allocation of 802,000 euros specifically for advertising, promotion, and engaging influencers. Furthermore, 2.2 million euros have been set aside for concerts to be held during the championship, and an additional 400,000 euros have been designated for ComicCon, a festival centered around cartoon characters, with 100,000 euros being contributed by a partnering bank. The Palas Iasi venue, where the competition will take place, incurs costs amounting to 400,000 euros, while production and video broadcasting expenses reach 357,000 euros. Notably, the required SSD drives alone carry a cost of 15,000 euros.
Indeed, the allocated budget for the IESF World Championship Finals in Iasi is undeniably impressive, even though not all of it will be utilized solely for the event. The total budget of 3.68 million euros is distributed among various categories as follows:
- Logistics: 1.22 million euros
- including 560k euros for airline tickets
- 392k euros for hotels
- 240k euros for meals
- 31k euros for transportation - Site lease: 400k euros
- Production: 551k euros
- Allowance for referees and commentators: 56k euros
- Prizes: 500k euros
- Additional demo games and regional competitions: 350k euros
Furthermore, 802k euros will be dedicated to marketing initiatives.
✍️ The advertisement will be showcased on screens in shopping malls and airports worldwide, including prominent locations like Times Square in New York. Partnerships and contracts have been established with agencies to ensure widespread promotion. Local advertising within Iasi is also planned, with partnerships formed with companies that own street advertising spaces. These companies are contractually obliged to display commercials or advertise the Championship as per their agreements with the Iasi City Hall, according to Christian Nistor, the tournament manager.
An additional 2.2 million euros have been allocated for an extravagant music concert. Initially, the organizers had intended to invite Armen van Buuren, but due to an increased budget, they decided to abandon this idea. Nevertheless, a substantial amount of approximately 800k euros will still be dedicated to musical events. Furthermore, another 400k euros will be spent on a local adaptation of ComicCon.
Undoubtedly, these figures represent astonishing and extraordinary amounts for an event of the magnitude of the IESF World Championship. While I may not possess the expertise of the International Federation of Esports or serve as a representative-organizer of the Municipal Sports Club of Iasi, I have personally organized tournaments such as the World of Tanks Grand Finals 2017, Rainbow Six Invitational Montreal 2018, IEM Katowice, and the Berlin CSGO Major 2019. Having an understanding of the budgets associated with other global tournaments as well, I can confidently express my belief in the exorbitance of these sums.
What is particularly intriguing is not solely the budget of the event itself, but rather the fact that the majority of these funds are expected to be covered by the Iasi City Hall, utilizing the municipal budget (thus, the taxpayers’ money). The question of whether the residents of Iasi genuinely desire to witness such a grand event with the potential to shape their city is indeed rhetorical.
Now, let’s revisit the matter of the “license fee.” Setting aside the mere existence of this fee, it is worth recalling how the payment ended up in North Macedonia instead of the IESF headquarters in South Korea. According to Vladimir Danilov, the director of “Municipal Sports Club of Iasi,” they encountered difficulties in making a direct payment to Korea. As a result, they requested the IESF to provide bank details in one of the European Union countries.
✍️ The World Federation sent me an official document signed by the General Secretary, requesting payment to the Macedonian bank, Danilov stated
According to Vladimir Danilov, he was unaware that the subsidiary had been recently established. Additionally, the official correspondence explicitly mentioned the requirement for bank details from a country within the European Union, despite North Macedonia not being an EU member.
The beneficiary of the IESF regional branch in Macedonia is the notorious Boban Totovski. It was Totovski, along with Marinescu, who convinced Danilov to transfer $750,000 (out of $1 million) specifically to an account in Skopje. They engaged in aggressive correspondence with the Macedonian bank, which raised concerns about the origin of the funds and questioned the rationale behind the money intended for a tournament in Romania, under a license from South Korea, being routed to North Macedonia. Nevertheless, the bank ultimately allowed the transfer, and Marinescu’s NGO received the funds.
It is worth noting that Boban Totovski carries a negative reputation within the Esports community in Macedonia. Multiple sources have confirmed numerous instances of fraud where tournaments associated with Totovski or organizations under his leadership failed to pay out prize money. For instance, one such case involves the Skopje CS:GO Masters 2012 tournament, in which the current COO of Natus Vincere, Olexii “xaoc” Kucherov, emerged as the champion. However, Kucherov has not received his prize money for securing first place. Another incident occurred during an international Dota 2 tournament in 2016, where the organizers claimed to have lost sponsors and used all the funds for humanitarian assistance to flood victims in Skopje that year, thus failing to provide the prize money.
When questioned about why the funds ended up in the Macedonian branch of the IESF and its intended purpose, President Vlad Marinescu provided the following response:
✍️ The International Esports Federation (IESF) is a legally registered organization with its headquarters in Korea and its legal seat in North Macedonia. As a unified organization capable of receiving payments through its offices, the payment from the Municipal Sports Club of Iasi was transferred to the Macedonian office. These funds were then allocated to the IESF budget, which undergoes approval by the Council members and is reported annually to the General Assembly for the approval of member National Federations. IESF employs full-time professional staff at both their headquarters in Korea and their office in North Macedonia, who work tirelessly to support their activities and the primary event, which is the World Championship.
However, when a board member of IESF Korea posed a question regarding the allocation of license funds, Marinescu provided a different response. He mentioned that a portion of these funds would be used to cover the prize money from the 2022 World Championship. Naturally, such budget calculations raise numerous questions, as even an inexperienced esports project manager would understand that it is not allowed to finance the prize fund of one event using the budget of the following year. Therefore, the whereabouts of the prize money from the IESF 2022 Championship remains unclear, especially considering that the host city for the 2023 World Championship still has to pay this year’s prize pool in full. The question how this is all is even possible, once again, is rhetorical.
However, the $500,000 that was transferred to the Macedonian branch of IESF did not reach the main office in South Korea. Instead, according to Reporteris, these funds were used for various purposes such as employee salaries, airline tickets, payments to local companies, and even the purchase of an Audi car for Boban Totovski’s use. It is worth noting that according to Marinescu and Totovski, IESF Macedonia employs a total of 20 employees. Personally, I am curious to learn more about the specific roles and responsibilities of these employees, especially when considering the staff numbers of other notable companies in the esports industry.
Taking into account these unfolding events and the additional information available, the Ministry of Culture, Sports, and Tourism of South Korea has initiated its own investigation to ascertain the establishment of the subsidiary company in North Macedonia, the transfer of funds from Iasi to Skopje, and the subsequent utilization of these funds. Their objective is to determine the purpose for which the money was spent.
✍️ In order for the subsidiary to be duly registered, its establishment needed to be verified. However, this verification did not take place. In reality, there is only one legitimate IESF, which is located in South Korea. The existence of the Macedonian company is deceptive and illegal. Directly sending payments from Romania (Iasi) to Macedonia violated the law, as the funds should have been routed through the headquarters in South Korea before reaching Macedonia.
Similar consequences may potentially befall Boban Totovski, the Secretary General of IESF Macedonia, as per information received from sources in Skopje. Regardless, the situation at hand highlights yet another alarming fact: some of the so called “federations of esports” continue to inflict significant harm on the global industry. They exploit budgetary funds, deceive governmental bodies, engage regional officials in corrupt schemes, and deceive unsuspecting entrepreneurs by selling illusory “licenses” at exorbitant prices.
Let me remind you that the International Esports Federation World Championship is scheduled to take place in Iasi, Romania, from August 25 to September 3. It will provide us with an opportunity to witness the grandeur of this remarkable event, which comes at a cost of 7.4 million euros.
22 JUNE UPDATE:
Hall of Iasi denied all the allegations in corrupt schemes of hosting IESF World Championship 2023 Finals. Key points of their statement:
- Allegedly, they bid for the event back in 2021 and had funds reserved from 2022 & 2023 budgets
- Insisted that any tournament needs a license and they were lucky to buy IESF WC for $1M only, instead of $5M next year cost. Of course it’s bullshit as you don’t need a 3rd party license to host esports events, unlike in traditional sports.
- Said the money to Skopje were transferred legally as per Totovski request.
- Conducted budget costs spending investigation. Of course, no violations were found.
- Accused russian officials of spreading all these allegations as russian and belarussian players were banned by them.
IMPORTANT: The text above is fully based on Reporteris own investigated and only contains personal commentary on specific pieces of it. This is also a personal view of the author, in any way not associated and not representing the views of his employer.
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