Recent reports from The Esports Observer indicate that Activision Blizzard are in the midst of discussions to possibly reduce the amount the amount owed by Overwatch League and Call of Duty League franchises as part of their entry fees.
With all OWL and CDL plans derailed over the past year, Activision are reportedly trying to rework the hefty investments that organizations have made into their franchising opportunities. When the massive game development company pitched both leagues, neither was expected to be profitable in the short-term, but projections have taken an even greater hit due to current global restrictions.
A groundbreaking esports concept centered around the city-based model that is used in traditional sports, Activision required $20 million entry fees for the OWL’s first 12 teams and then fees in the range between $30 to $60 million for its next eight. For the CDL’s inaugural season, 12 teams needed to put up at least $25 million apiece, even more for cities that were in high-demand.
Now that the plans for local events have understandably shifted, neither league is expanding for their next season and ownership groups in both are looking for ways to save cash. As reported by The Esports Observer’s Adam Stern, this has engendered cost-cutting discussions with Activision’s latest new senior executive hire, Tony Petitti.
Petitti, formerly Major League Baseball’s deputy commissioner, was hired by Activision Blizzard CEO Bobby Kotick to a senior role involved with both of their leagues as the President of Sports and Entertainment. He joins Johanna Faries, a former National Football League executive, who brings a traditional sports perspective as the commissioner for both the CDL and OWL.
Given their experience with city-based sports leagues, Activision is likely aware of the profitability challenges that their current esport and sport investment groups are facing. As such, it should be no surprise that they are willing to have conversations about concessions that can make current projections fit closer to the original expectations.
As Stern reports, those discussions have included discounting some of the original entry fees: “one idea that is being weighed is reducing the amount of money they owe to the video game maker.”
With Immortals Gaming Club selling their Los Angeles Call of Duty franchise to 100 Thieves and reportedly being interested in selling their OWL spot as well, many are wondering if franchise valuations have shifted.
Fortunately, it appears that the profitability projections have remained somewhat consistent despite current predicaments. As reported by Forbes’ Christina Settimi, 100 Thieves COO John Robinson would not set an exact figure on their LA Thieves purchase, but suggested that “franchise values have held up.”
Activision would likely want to avoid an exodus of owners, so these discussions to cut costs and protect brand health are reportedly ongoing.