Post
City-based or permanent team ownership structures modeled after traditional professional sports leagues.
Franchise models in esports assign permanent league spots to organizations, often tied to specific cities, in exchange for significant buy-in fees. This approach, borrowed from American sports leagues, promises stability: teams cannot be relegated, revenue is shared among franchisees, and the league controls scheduling and broadcast rights. The model attracted massive investment from traditional sports owners, venture capital, and celebrities. However, it has been criticized for inflating costs, reducing competitive urgency since there is no relegation, and creating barriers to entry for new organizations that cannot afford multi-million-dollar franchise slots.
Example
The Overwatch League launched as a fully franchised, city-based league with $20 million buy-in fees, attracting owners from the NFL, NBA, and tech industry. Its subsequent struggles with viewership and team sustainability raised questions about whether the model works for esports. League of Legends' franchise leagues cost organizations millions for permanent spots in LCS, LEC, and other regions. Call of Duty League followed a similar city-based model with mixed results, while Counter-Strike has notably avoided franchising in favor of open competition.
Why it matters
Franchise models represent a bet that esports should mirror traditional sports business structures. When they work, they provide the stability needed for long-term investment in players, facilities, and fan development. When they fail, they burn enormous amounts of capital and prove that what works for the NFL does not automatically work for competitive gaming.
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