TEO writer Ferguson Mitchell contributed to this article.

Riot has detailed its EU LCS franchising transition, which will result in a new team line-up for the 2019 season. franchising transition, which will result in a new team line-up for the 2019 season.

Speaking with TEO, Riot confirmed that buy-in to a franchise slot is at €8M for existing EU LCS teams and €10.5M for newcomers.

The new model includes revenue sharing, minimum player salary increases (from €24K to €60K annually), and infrastructure investments like player development and representation.

Riot denies earlier reports that partnerships will last three years, and says there will be opportunities to expand number of teams.

Riot Games’ premier League of Legends league in Europe, the EU LCS, will become a franchised league beginning in 2019, and the developer is finally releasing details about this transition. This move follows in the footsteps of the NA LCS, which franchised this year after an announcement in June 2017.

As for the teams that are selected, speaking with The Esports Observer, Riot Games has confirmed a €8M franchising fee for existing EU LCS teams and a €10.5M franchising fee for new ones. This amount is markedly similar to the amount asked of NA LCS teams a year ago, despite the growth of the esports industry.

Early reports that partnership agreements will last for a period of three years are false, Marc Schnell, EU esports product manager for Riot Games, told The Esports Observer, noting that the league will not be limiting franchise spots to a set time period. Just like the NA LCS, the European league will not increase from the current ten-team limit for 2019.

“What we will have is opportunities for the league to consider an expansion. For the first year we are carte blanche about looking at ten teams. As we shift into this new world, if you will, ten teams is a great, balanced number to ensure that we can strive for stability and a healthy economic side of things.”

How EU Application Process Will Differ From NA



One unique scenario this time around is that several EU orgs—namely G2 Esports , Fnatic , Splyce , and Misfits —likely vying for EU LCS spots now, prepared application processes for the NA LCS last year, which were rejected. Schnell told TEO that Riot will look at how teams resonate not only with the overall European audience, but also from a national perspective.

[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]Marc Schnell, Riot Games: “It’s definitely not a no-go factor if you’re an investor from the U.S., at all.”[/perfectpullquote]

“A big difference is that we in Europe will weigh certain things differently, I believe. We are a different region, we are operating in a region that consists of many different countries, cultures, and languages. This will definitely be an aspect that we will be looking closely at.” Just for reference: the European Union currently consists of 28 member states, with 24 official languages.

While Schnell could not give specific details on which factors would be weighed the most, he said the league would definitely be open to applicants from all sectors of any industry, and all countries. “It’s definitely not a no-go factor if you’re an investor from the U.S., at all. What’s ultimately important to us is how you’re going to bring value to the league. How is your team going to resonate with this audience?”

Two of the current NA LCS franchises are owned by NBA organizations—the Golden State Warriors and Houston Rockets—while all but Team SoloMid have ownership ties to a U.S. traditional sports team. With one German Bundesliga club already in the EU LCS, FC Schalke 04 , and soccer being the continent’s most dominant sport, many industry observers are expecting more European clubs applying for a franchise spot.

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Buying into the EU LCS may require a hefty fee, but Riot makes clear that this investment will reap rewards down the road, primarily through a detailed revenue sharing program.

“The structure consists of a league revenue pool (LRP) that all parties contribute to, and benefit from. The league will share revenues from sponsorships and media rights and in turn, teams will share a portion of their sponsorship and merchandise revenues.”

The breakdown for this redistribution is as follows:

35% for players, which pays for their salaries (increased to €60K), along with bonuses should the league perform above expectations.

32.5% for teams, which will be split into two parts: one divided equally, the other divided by “competitive and engagement metrics.”

32.5%for Riot Games, for broadcast production and organization costs.

The annual minimum salary for professional players in the league will also be increased to €60K, from €24K to date.

One NA LCS general manager revealed earlier this month that the average player salary rose 220 percent after franchising. Meanwhile, ESPN’s Jacob Wolf noted that “financial models in esports have increased significantly, with the value of a permanent League of Legends spot being front-and-center as North American teams continue to raise capital, leveraging $140-200 million evaluations.”

Three Stage Application Process Will Last Until Q4 2018



EU franchising will take place in three stages. First, interested individuals and organizations will go through a rigorous application process. They must provide details such as “their team strategy, brand, ownership details, and business plan, with the addition of tailored questions to ensure they have considered how to connect with fans and pros in such a vibrant and multicultural region.”



Then comes phase two, where selected applicants will be brought in for in-person interviews with Riot Games, where they will be asked to provide greater detail on each part of the application. This phase will take place over the summer.

[perfectpullquote align=”left” cite=”” link=”” color=”” class=”” size=””]“We will have mechanics in our agreements that allow the league to take measures against teams in the case of performance issues.”[/perfectpullquote]

Phase three will be the announcement of successful applicants, to take place in Q4 2018. This will trigger a buyout period for teams not selected to remain in the league, which includes a compensation payment to those teams “for the significant investment they’ve made to the EU LCS over the years.” While the compensation amount was unspecified, Bloomberg reported that the additional $3M new NA LCS teams had to pay, was used to compensate original NA LCS teams that didn’t make it into the franchise model.

In the NA LCS partner model, a team owner can lose their spot in the unlikely scenario that they place 9th or 10th five times over an eight-split span. “We will have mechanics in our agreements that allow the league to take measures against teams in the case of performance issues,” says Schnell. “They could also be other cases. A breach of contract is always one, but it could be economical issues.”

It’s also noteworthy that Riot Games will also be adding more infrastructure into the EU LCS scene. This is largely focused on two initiatives. The first is a player development program aimed at “aspiring pros” that want to make it into the EU LCS. The second is player support programs aimed at current pros, intended to provide resources and personal development training.

Though it had nothing concrete to announce, Riot added that it wanted to increase resources for players, ranging from personal finance to healthcare, and also wanted “to ensure pros have a voice,” suggesting it will work to build a player association, as the NA LCS also promised.

No Intention to Move Away From Tier-Two Regional League Structure



According to Schnell, there is no intention to move away from the regional league structure introduced this year.

“This is going to remain quite an important aspect of the ecosystem for us, and we want to continue building on that,” he says. “There’s the possibility that we might make changes at first, but the general idea that we have is regional leagues that cover Europe, and we want those to feed into an aspirational event that serves as the culmination for these leagues.”

On the subject of bringing in an academy league to EU, and emulating the current semi-pro structure in NA that allows LCS teams to develop talent, Schnell says Riot is exploring options, and will release further details later in the year.

The franchising of the EU LCS has been something that both fans and professionals have been asking about for months. Initially, Riot wanted to implement a series of regional leagues that all fed into an upper league where winning there means a spot at the World Championships.

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Ultimately, this proposal was met with frustration and hostility from participating teams. Some complained loudly while others opted to leave altogether. Our interview with former EU LCS player Tristan “PowerOfEvil” Schrage included a perfect summary of the situation: “It looked like it was an experiment.”

Riot buckled, rolling back that proposal and announced that the EU LCS would franchise officially in late October. Now armed with details, interested fans will be waiting as the new process plays out over the coming months.