Mentioned in this article Games: Dota 2

As reported by The Score Esports and Mashable, at least three Dota 2 teams, a broadcaster and a production company, BEAT Gaming, are claiming that they have not received the negotiated payment from Northern Arena, after working with the company for the November’s Northern Arena Beat Invitational. The teams, compLexity Gaming, Alliance, and Team NP, are owed a total of $26,000 and still awaiting payment, while MoonduckTV, the company representing the broadcasters, plans to send a legal notice.

Not living up to contractual agreements is a fairly frequent symptom of poor contracts and unprofessional business practices still plaguing the esports ecosystem. With many managers and owners being ex-pros without significant management or legal experience, the absence of contracts and the consequent issues are predictable. Similarly, many players are inexperienced and willing to sacrifice long-term professional security and reputation for immediate payoffs or team switches.

In this recent case, Northern Arena CEO Carl-Edwin Michel confirmed these allegations but promised to make good on the terms, “We have already paid most of the teams,’ Michel said in an email to TheScore Esports. ‘We are in touch with the remaining ones and made payment arrangements with them. One thing for sure is that we are committed to pay all the remaining teams and move on to our next events. We want to make good on our word and deliver even greater events this year.”

Similarly, production company BEAT Gaming has not been reimbursed for expenses and fees paid out of pocket during the event. A representative told TheScore Esports via email, “BEAT Gaming has paid staff wages and various expenses out of pocket for admins. This being said, the responsibility for payment of expenses related to the event, including payment of prize pools and the expenses of the teams in attendance, lies with Northern Arena.” As Northern Arena CEO Michel claims the company is “on the verge of signing a big investor to sustain the future of Northern Arena,” suspicions arise about the financing structure. It seems likely that the prize pool relied on securing a sponsor after the event, which is obviously a bad business practice.

This is barely more than another anecdote in an ecosystem, which has yet to grow up and embrace professionality. Another example from last year is that Team Secret, delayed payouts, took unnegotiated cuts from prize pools and worked entirely without contracts. You can read Dota star player Jacky “EternaLEnVy” Mao blog post about the mismanagement here.

Unfortunately, this conduct is fairly typical in esports, and has sparked focused law firms as well as a wealth of articles and interviews about the necessity of establishing standardized contracts. This, many authors argue, would benefit not only players but also teams and leagues, as it allows for better planning and negotiating. Furthermore, teams and leagues are highly dependant on sponsorship deals, which in turn expect a measure of consistency and professionalism from their partners. Being open and clear about payment cycles, sponsorship rights, and prize pool distribution should be a no-brainer and allows all participants to fully leverage their assets.