Esports organisations and how they operate

Written By Johnny Troset Andersen

In my introduction to this article series about esports player contracts I gave examples of some of the suspect contract terms my son Martin “MrSavage” Foss Andersen was offered.

This ragged contractual landscape is hard to navigate. To make it easier for parents of young players we need to start out with the fundamentals. First out is esports organisations and how they operate.

Esports player contracts - part 1

I knew little about the esports industry when Martin had his breakthrough in 2018. I learned over a few weeks that esports was growing and thriving. According to Newzoo, esports’ global revenue surpassed $1 billion in 2021 (prize pools and player salaries excluded). The growth continues at a high rate; Statista forecasts the revenue to reach $1.6 billion by 2024.

I also learned that the revenue of the broader gaming industry was comparable with the entire global film and music industry combined(!) According to Statista, in 2020 the film and music industry made $186 billion compared with $160 billion for video games. And today, games are the most popular entertainment media and consumed by younger generations across the globe, with the top esports athletes treated like the new pop stars.

Tier 1 organisations

There are almost five thousand esports organisations – or ‘orgs’, ‘clans’ or ‘teams’ – worldwide, according to eSportsflag. Orgs with a combination of high viewership numbers and outstanding competitive results, in one or more games, are known as ‘tier 1’ orgs. This is an informal label for orgs who stand out internationally, and does not relate to any categorization into multiple tiers. Examples of tier 1 orgs are 100 Thieves, FaZe Clan, NRG Esports, TSM, Team Liquid and Fnatic. Getting signed as a player to any of these orgs, is like signing to Liverpool F.C. or FC Barcelona in football and New York Giants or Seattle Seahawks in the NFL.

Many of the tier 1 orgs have large investors and celebrities behind them, for example 100 Thieves are backed by the musician Drake and the venture capital firm Sequoia, among others. NRG Esports was co-founded by the businessman Andy Miller, who is a former VP Mobile Advertising at Apple, Inc.

In later years, more celebrities from traditional sports have entered the esports industry and have either invested in or created their own teams, such as the former basketball player Michael Jordan who invested in Team Liquid. From football (soccer), David Beckham has invested in Guild Esports, Gareth Bale in E11 Gaming and Mesut Özil in M10 Esports.

Large brand sponsors or partnerships stand behind the biggest orgs, like Cash App and AT&T for 100 Thieves, LEVI’S for NRG and G Fuel and Nissan for FaZe. Check out 100thieves.com/pages/partners, nrg.gg/partners and fazeclan.com/partners for a full list of their sponsors.

Esports branding and culture

As football teams have variations in culture, so do esports orgs.

FaZe Clan is pushing boundaries and acting a bit rebellious, which is underlined by their preference for using the word ‘clan’ instead of ‘organisation’.

NRG’s Founder and CEO Andy Miller says the letters N.R.G. are a play on the word “energy” (see our interview with Andy here), which is fitting, since NRG cultivates a more light-hearted and upbeat image than FaZe. Their home page (as of September 2022) depicts gamers and creators with happy gestures, smiling and laughing, mostly filmed at their creative centre – the content castle, a ‘gaming fantasy factory’ – in downtown Los Angeles. They have a large and popular set of Fortnite players and creators, and all-in-all seem to appeal to a younger audience than FaZe and 100 Thieves.

FaZe grew out of a group of friends who created YouTube content. NRG originated from Andy Miller’s genuine interest in sports and keen eye for viewer trends, 100 Thieves, on the other hand, was built by and around Matthew ‘Nadeshot’ Haag, a successful former competitive Call of Duty player. Esports and winning are therefore at the core of 100 Thieves, exemplified by taking home the League of Legends Championship across the US and Canada in late 2021. They have a large esports facility (the Cash App Compound) in Los Angeles, their share of large content creators and a strong apparel offering. 100 Thieves radiate entrepreneurship and agility, crowning them as the Esports Organisation of the Year in 2021.

Newcomers are also benefiting from the pathways created by other orgs. One exciting example is Become Legends, a European org out of Norway, with their esports headquarters and facilities in Warsaw, Poland. They are centred around Fortnite with a very competitive mindset. In the first high stake Fortnite LAN tournament after the Covid pandemic, at the DreamHack Summer Battle Royale in Sweden, June 2022, their players Iwo “Setty” Zając and Michał “Kami” Kamiński secured the top two spots. Become Legends competitive mindset as well as their European presence were among the main reasons why Martin accepted an offer to join them in July 2022.

Esports home bases

Orgs and traditional clubs differ in the fact that clubs are localised to a city or a region, while most orgs are virtual organisations without any physical hometown. Orgs are built for a modern and online world, which means that players get fewer chances to meet in real life. As nothing can beat human real-life interaction, this is something that both orgs and players need to be conscious about. I think the onus falls on orgs to create physical meeting places for their players, either event-based or at facilities such as 100 Thieves’ Cash App Compound, NRG’s content castle or Become Legend’s top-of-the-range facilities.

However, when comparing orgs with e.g., football teams, there are more similarities than differences. They both participate in leagues, and they sell merchandise. One fan may view one team or org as being better than the other. It all boils down to personal preferences, whether it is a league, a game, a content creator, a pro player or the org itself that fuel a fan’s interest most.

Esports is a young and growing industry, and the culture and composition of orgs will certainly change as time goes by, but players about to be signed need to do their research and decide based on the information available at the present time. It is as important to find a match cultural-wise, as it is compensation-wise.

Summary

  • The esports industry is huge, surpassing $1 billion in 2021, and still growing fast, attracting a lot of young players.

  • The revenue of the broader gaming industry is comparable with the entire global film and music industry combined.

  • There are almost five thousand orgs worldwide and getting signed to any of the tier 1 orgs is like signing to Liverpool F.C. and New York Giants in traditional sports.

  • Behind the biggest orgs stand large brand sponsors like Cash App, AT&T and Nissan.

  • Orgs vary in culture and aspiring pro players need to do their research and learn more about the industry, contracts, org culture etc. before signing.

Next post

An org hires a player to create extra value in terms of additional viewers and fans, with increased income from sponsors as a result. A player needs to understand his or hers value to an org, so the player doesn’t get exploited and retains their fair share of the value created when they enter into a partnership.

Following on from this, the next post will be about how orgs make their money.

Questions or comments?

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Resources

Johnny Troset Andersen https://deeperdown.com
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Interview with Andy Miller - CEO of NRG Esports