Promotion & Relegation fosters better athletes and competition

The United States is the largest economy in the world ($19 trillion USD), ranks 3rd in population (324 million people), yet ranks 25th in soccer.

In a promotion & relegation system, there is always something at stake. Even if the team knows they won’t make the playoffs, they are still competing to ensure they don’t get relegated to a lower league. This increases the intensity of competition throughout the entire season, which is something that leagues in North America certainly don’t always embody.

Near the end of a season in the North American franchise leagues, there’s actually incentive to do WORSE in order to have a better pick in the draft next season. This type of competitive structure is unhealthy for athlete development as well as fan engagement.

Below are a few quotes from prominent coaches who agree:

“The most successful soccer leagues are based on competition. And that’s what’s probably missing in U.S.soccer. There is no motivation for teams to invest in quality because you can’t move from the third division to the second or from the second to the first. We believe the increase in quality can be achieved from the bottom up, with teams investing in quality and we believe right now it’s not really happening.” -Riccardo Silva, Miami FC Coach (MLS) “I would like to see promotion-relegation because I think it just raises the stakes and gives so much hope to some of these smaller clubs.” — Jesse Marsch, Red Bulls Head Coach (MLS) “This thrill of the relegation battle is non-existent in the U.S. league. The risk for club investors to all of a sudden play in the second league would be too high. But the sporting side would benefit from it. Our players from Europe know that. That furthers our national team. Something is at stake week in, week out. Be it at the top or at the bottom, you always have to perform.” — Jurgen Klinsmann, US National Soccer Team Coach

Esports: a few ideas and suggestions going forward

In esports, new games and titles are being released constantly. With so many new entrants, consumer tastes, and a fluid consumer base, asking investors to spend an exorbitant amount upfront for a franchise fee is no longer necessary or viable. To keep up with an ever-evolving landscape, a more flexible structure for the evolution of the competitive scene needs to be adopted: promotion & relegation.

Here are a few actionable ideas and suggestions:

Outsourced League Operators: Game publishers should outsource the management of these leagues to third party league managers like ESL. For licensing this I.P. on a per game title basis, they get a healthy revenue share (25–50%) on everything that league generates (media rights, league dues, merchandise, tickets, etc). This allows publishers to stay in their lane (creating and launching video games) while profiting from the growth of their game title’s competitive scene. Reasonable Annual Dues: promotion & relegation leagues should charge an annual fee for being part of the premier, secondary, or tertiary leagues. These fees can help pay for operations, marketing, and events. Additional revenue for the league to be profitable will come from media rights, content, subscriptions, merchandising, and more. For example:

> Premier League = $1M per year (10–40 teams)

> Secondary League = $100k per year (10–40 teams)

> Tertiary League = Free / entry fee-based, and likely online only Regional Qualifiers: These leagues should have regional qualifiers (NA, EU, Asia, LatAm, etc) that conclude in a global championship, just like LoL, CS:GO and Dota2.

CONCLUSION:

After doing the research here to flesh out our theory about franchise vs. promotion & relegation leagues, we believe promotion & relegation is the best way forward for the development of esports globally.

1) The rationale for franchising is antiquated and no longer pertinent 2) Esports is global, making promotion & relegation the best model to follow 3) Promotion & relegation creates value for an investor’s capital just as well (if not better) than franchising 4) Esports fans and athletes would both benefit from a healthier competitive structure supported by promotion & relegation 5) Video gaming is not as fixed as traditional sports, we have the opportunity to fix this with new titles (e.g. Apex Legends) 6) Established games that have showed “staying power” (CS:GO, Dota2, CoD, Super Smash, etc) should not pursue franchising for the benefit of their fans, players, and investors

Given that new video games come out every 6–12 months that take the world by storm we have many chances to get this right. The OWL and LCS have helped graduate esports to the next level of league infrastructure development but the franchise model is not the best way forward.