The esports industry, once a niche entertainment for enthusiasts, has turned into a multibillion-dollar business, attracting attention from investors and brands worldwide. Nowadays, betting on esports is widespread among bookmakers such as Mostbet – https://mostbet-bd.mobi/login-and-play/. However, behind the scenes of this captivating spectacle lies a complex economic model that enables esports organizations to thrive and provide conditions for the professional growth of players. The variety of income sources that teams rely on may surprise inexperienced observers. In this article, we will explore the main revenue streams of esports teams and find out how they manage to maintain financial stability in a rapidly evolving industry.
Prize Pools – The Tip Of The Iceberg
Many believe that tournament prize pools are the main source of income for esports organizations. However, in reality, this source of revenue plays a less significant role than it might seem. While teams do indeed receive a portion of prize money, the lion’s share of these funds usually goes directly to the players as bonuses. The distribution of prizes between the organization and esports athletes varies from team to team and from discipline to discipline, but generally, organizations receive only a small percentage of the total amount.
Nevertheless, prize pools still hold value for esports teams, especially for young teams or those based in developing markets like South Asia, Africa, and Southeast Asia. In the early stages of their existence, they have yet to build a solid fan base and establish other sources of income, so tournament prizes often serve as vital financial support.
Sponsorship Contracts – The Foundation Of Stable Income
Undoubtedly, one of the key sources of revenue for leading esports organizations is brand sponsorship.
A vast and dedicated audience of fans, especially from the youth demographic, presents an attractive target for advertisers seeking to enter the promising market through popular teams and players.
Commercial partnerships form the basis of income for many esports teams. In exchange, brands receive various advertising activations, including commercials integrated into broadcasts, individual promo campaigns, and other marketing opportunities. The volumes of sponsorship deals vary greatly – from thousands to multimillion-dollar contracts.
One of the most notable examples was the 10-year deal between the TSM organization and the cryptocurrency exchange FTX worth $210 million, which involved renaming the team to TSM FTX. Although the partnership was later terminated due to issues with FTX, this case demonstrated the colossal potential of sponsorship contracts in esports. In turn, British Guild Esports reported that its sponsorship portfolio reached £5 million at the end of the 2023 financial year.
Attracting Investments To Sustain Operations
Despite the variety of income sources, most esports organizations still struggle to achieve profitability. The reason lies in significant expenses for maintaining teams – player and staff salaries, transportation costs, venue rental, and maintenance. Esports remains a relatively new and niche industry within the gaming sector, so teams often rely on attracting external funding to cover operational expenses.
Nearly all major esports organizations have gone through investment rounds at some point, raising funds from private investors. According to official data, Fnatic raised over $35 million, and Team Liquid raised over $80 million. However, recently, due to the so-called “esports winter” and industry-wide issues, investment volumes have significantly decreased.
Diversification Of Business Models
Difficulties in achieving profitability have prompted esports organizations to diversify their business models and seek additional sources of income. Over the past few years, we have seen teams launch parallel projects that go beyond traditional esports activities.
Among the popular directions are opening talent management agencies (such as Soul 8Bit Creative at Soul Esports), offering educational courses and programs for aspiring players, and launching branded product lines like Juvee energy drinks by 100 Thieves. The British Team Endpoint attempted to monetize its infrastructure by offering media production services and venue rentals.
At the same time, some teams preferred to sell these non-core assets, as 100 Thieves did with the Juvee brand, which was acquired by Sprecher Brewing. It is evident that diversifying business models remains a relevant trend for esports.
