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The problem with prize circuits - continued

in glhf

So, it’s time for the tough love part of this column: if you guys, as gamers, aren’t up to the task of handling the business of running a sports team properly (that is what you’d like to be, right? A legitimate sports business?), then for the love of whatever you consider holy, please find someone who will be! The missing piece of the puzzle is people managing things properly on our side of the scene.

To this point, the vast majority of people who have had any business sense at all have been on the league operations side of the American professional gaming scene, and that has been to it’s great detriment. The handful of big-money-making teams of the past are just as guilty in propping up a competitive structure that served their interests second to that of the league owners, while the rest of the scene was being taken for a ride. Just as you need people on your team who can frag hard, we need people within the scene to step up on the behalf of gamers to help build a new foundation to the scene that operates in the interests of teams and players first, and not at their expense.

Where’s the equity?

If you haven’t stopped to think just what it is that makes sports teams valuable, now’s the time to do so. Say you’d like to purchase a professional sports team, you’d best be prepared to cough up some serious bucks. All that value has come from somewhere; so what is it that drives the value of teams? Where’s the source of their equity?

The answer is a combination of several factors: their brand, their locality, and their exclusivity and stability within their competitive structure.

Brand Power

The first part is pretty obvious. The weight a team’s brand carries among fans of a sport, particularly within the city they call home, is a big part of what creates value within a sports team. Teams can then use this recognition amongst a group of hardcore fans and casual followers to drive revenues through sponsorships and other marketing deals. This is present to a degree in the current gaming scene, but this is really where the similarities end. Sports teams use their brand power combined with ticket/merch sales and (for the major sports) broadcasting rights to comprise the total revenue engine for their team. It’s worth noting at this point that ‘prize money’ has no place in this equation. The team’s revenue stream, as a result, is both reliable and predictable.

Location, location, location

The idea that a sports team adopts a home city is not to be taken lightly, as the gaming scene has done to date. That all successful team sports have organized themselves in this manner is no accident, and I’d argue that the lack of stability that the gaming scene suffers from can be attributed to the fact that it isn’t organized in this manner. If team gaming were to organize themselves into a competitive structure that revolved around more frequent regional competitions, as opposed to a series of sporadic national and international competitions, it would provide a stable platform on which a broader fan base could be built.

It’s important to examine how a sports fan is born to figure out why the gaming scene is desperately missing out in this area. Even a surface examination of what drives a sports fan will easily demonstrate the link between a sports fan, a team, and their shared hometown. Rarely are fans of a sport made through television coverage (or live internet streams) alone, there has to be a more tangible, personal encounter between spectator and team that is really only possible by attending an event in-person. Even more rare is the ravenous fan of a team based in a city that said fan has never lived in, or has no connection to through family. Fans are born in the city that the team calls home as well, whether the new fan lives in that city, or used to live in that city, or has parents or grandparents in that city; the connection is typically direct along personal or familial lines.

Gaming has no home towns, just the internet. Gaming has no roots back in general society, we simply slip around in cyberspace, pandering to participants, plodding nomad-like from event to event, rarely hitting the same town twice in the same year, wondering why we don’t get all that much attention from the mainstream sports establishment or can’t generate a fan base outside those that are actively participating. It’s because we don’t look like or act like a proper sport! How are we to generate a large, robust fan base that teams can convert into lucrative sponsorships if teams have no home? How are we to keep people interested if an event might touch a particular city once every few years, if that, when a local fan base needs constant attention and connection in order to maintain their loyalties?

If participants of a team-based game were to organize a small, regional league, with even just a handful of teams to start, maybe 8 tops, I’d guarantee that if managed properly it’s growth within its region would dwarf that of the CPL at it’s height within 10 years. Why? Because it’d be able to establish an actual fan base, and generate stable revenue from it!

Such a league would be able to do the following, which the prize circuits don’t allow for:

  • a home/away schedule where each team plays half their games at home and half on the road, minimizing travel costs
  • the ability to grow a fan base by offering a consistent presence within a single town, instead of playing hit-and-run
  • Establish themselves as a entity contributing to social progress through outreach initiatives, not just as entertainers
  • garner sponsorships from a larger selection of local businesses that have no direct ties to gaming (this is the big one)

Those four points above are what gaming desperately needs in order to achieve the long-term stability we want to see in the scene, and they’re all things that the prize circuits aren’t equipped to provide team games.

Not a free market but a cartel

This final part is not as obvious but is just as important. A professional sports team retains its value quite well due to its high degree of stability within the competitive organization or structure it currently finds itself in. Even in league structures such as association football, where teams are promoted and relegated on an annual basis, the vast majority of teams retain their position in the tier they currently find themselves in. Rarely do you see an organization go into a complete freefall down the entire height of the divisional system, nor is it even possible to take a new team directly to the upper levels of play. Even in completely walled-off systems like we have here in the States, it’s a rare occasion that a team completely implodes, even after spending multiple seasons towards the bottom of the standings.

Well constructed league systems utilize principles of locality as well as supply and demand to keep the teams, and therefore the league, really valuable. Keeping the number of teams allowed to participate under strict control generates equity in the existing teams as interest in a league grows, as that growing interest only gets diluted if teams are continually added to the system – capping the supply of teams while demand for the league’s product grows thus generates equity in the teams.

In this sense, sports leagues operate more as cartels than they do as free market systems. Gaming, by relying on prize circuits as the centralizing force behind the scene, have operated as completely free markets, with little if any direct cooperation between teams. Sports leagues operate in a unique paradigm where free market forces are brought into balance by a sense that teams to cooperate with each other in certain respects in order to maximize their collective value.

Yea, sports teams look to gain every advantage they can over the other teams in their league by trying to attract the best players and offering their fans the best experience they possibly can. However, the point is not to crush the other teams into oblivion, to the point where they go completely under; sports teams don’t try to drive the other teams in their league out of business. This is because the effect of a sports team going under is similar to the effect that a foreclosed home has on the other homes in its neighborhood – one going under has a drag on the value of the rest of the teams in the league.

Where to go from here

I think I’ve crammed enough into this piece to chew on for a bit, I’ve been chipping away at this post for a while and I need to publish it before it gets too stale. I plan to continue this series to expound on the above ideas, as well as offer some practical avenues of getting from where we are today to a model that looks more like how professional sports have been proven to operate best.