Esports Leagues: Stop Franchising

Choose a Promotion & Relegation structure going forward

Josh Chapman
Feb 6, 2019 · 13 min read

Esports should follow a “Promotion & Relegation” league structure.

We believe that esports should not continue to pursue franchising as its preferred league structure for the competitive scene going forward.

Main Takeaways:

Here is a high-level definition of these two sports league structures:

History of Franchising (19th Century Baseball)

With the ability to monopolize local fan bases, the National League of Professional Baseball Clubs (now the MLB) was able to attract investors who saw a clearer path to operational feasibility given the revenue it would take to cover the high travel costs across the North American continent.

Source: The Atlantic
Source: The Atlantic

Promotion & Relegation Creates Value for Investors

Sport leagues that follow promotion & relegation create value for an investor’s capital just as well (if not better) than leagues that are franchised.

Valuations: Adjusting for GDP Per Capita

If a significant portion of a team’s value comes from its local fan base and nationwide media outlets, then it would make sense to adjust their “actual” valuation to account for the lower purchasing power of the professional team’s home country population.

Source: World Bank

In conclusion, this GDP Per Capita analysis further supports our position that promotion & relegation leagues do an excellent job of creating value for an investor’s capital over the long term.

North American Investors have invested in Promotion & Relegation leagues

Click here for the full spreadsheet of the above

Promotion & Relegation fosters better athletes and competition

Esports: a few ideas and suggestions going forward

CONCLUSION:

In esports, let’s pursue promotion & relegation.

→ Next: Esports Teams: Valued as Tech Companies

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