How Do Esport Teams Make Money?

Over the last few years, the Esport industry has gone from strength to strength, becoming a global phenomenon. There are many factors to the worldwide rise of Esports, including more players, internet speeds have dramatically increased, connectivity has improved, and the prize money for individuals and teams has reached record highs.

There are now an estimated 235 million players, mainly based in Asia, North America, and Europe, playing daily. With so many people playing online and attending live competitions, the big game developers have noticed, and the money has followed. Esports has now been officially recognized as a sport like any other in many countries. But how do players and teams make so much money? Where does the money come from? And what lies ahead for Esports?

Esports, Partnerships, And Sponsorship

With the growth of viewership of Esports, players do not have to rely on the winnings they make each year. The better players and teams can sign very lucrative sponsorship deals that now make up the majority of their income. Brands have recognized how Esports can help to give their products and services reach the desired market. Hardware and electronics companies account for approximately half of all Esport revenue generated.

In 2020 alone, sponsorship reached $540 million; in 2021, the figure rose by $100 million to $640 million. That figure has been growing exponentially year on year and shows no sign of slowing in 2022. Considering sponsorship numbers, gamers’ closest source of income is the sale of media rights, which raised $192 million in 2021.

Winning Tournaments

One of the most significant revenue streams is winning tournaments. The events are either played at the organizer’s choice of venue or live on the internet. In 2019 the Fortnite World Cup saw the winner, Bugha, take home $3 million, the majority of which went to his team, LA-based Sentinals. Many teams do not take money from the players and are happy with the publicity, which can help generate new lucrative sponsorship deals.

The largest ever pot made available for an event was in 2021, held in Romania. A staggering $40 million was at stake for the winners of the Dota2 tournament. Ultimately Team Spirit from Japan won the 1st prize of $18.2 million, with French team Paris St Germain Esports taking home $5.2 million. Not many sports have anything close to those dollar figures; you would be lucky to win that much playing blackjack in any casino.

Merchandise

Selling merchandise is another good source of income for Esports teams. Just like fans of any other sport, the fans want to feel part of the team. Household names in the industry like Cloud 9 can make tens of thousands of dollars, primarily when large tournaments are being held. The merchandise is usually T-shirts or baseball caps; they are cheap to make and can be sold for a healthy profit.

Crowd-Funding Events

Crowd-funded events are widespread in Esports. The competitions generally offer less money than corporation-sponsored events but are still a good source of income for teams and individuals. One of the reasons that the events are so popular is the Esport community organizes them. This allows them to create an event based on what the teams and players want.

While many agree that these events are incredibly beneficial to the Esports community, the question remains why are the big developers like Nintendo not putting more back into the Esports when they make so much from the sale of consoles, merchandise, and games? That they manufacture each year.

What is the Future of Esports?

Nobody could argue that Esports are here to stay. With the popularity of Esport growing every year and even now getting TV coverage internationally, the future looks very bright for Esports. If Esports continues to take the model of traditional sports and continue to make as much money from sponsors and now streaming deals, it is hard to see anything slowing down anytime soon. With Esports now being recognized as a legitimate sport, many young athletes will have to choose between playing traditional physical sports that may earn them a scholarship with a prestigious college or becoming an Esport professional. Not everybody can get a sponsorship with a major player in the industry or be invited to join a team.