HOW DO ESPORTS TEAM BUSINESSES DO?
Few get to look into esports financials for teams. It takes balls to bare any esports business to the world, let alone the teams. Through MTG in Sweden, TO’s ESL+Dreamhack have publicly reported financials but they don’t operate the same way teams do. Afaik, Astralis are the only publicly traded esports team in the world. They’re listed on the NASDAQ First North Growth Market. That is a market designed to get your company attention from larger investors and prepare you to be listed on the regulated Main Market (in this case, the Nordic Main Market).
ASTRALIS
It’s pretty amazing the Astralis Group are publicly traded this way. As a comparison, there is not a single publicly traded NBA team (the teams are private businesses and so is the NBA). I wonder if more esports teams will consider this? Those are thoughts for another note session. I read the Astralis Group’s Annual Report for 2019 and was left with a question. Will this be the year CS:GO Player Salaries drastically fall?
I laid out my journey to that question below
I recently read a great breakdown of the report on Esports Observer. It gives a great summary of the report and the numbers I’m mentioning below. Definitely read it.
So, first the STRUCTURE OF THE GROUP
The Overall Astralis Group (ASTRALIS GROUP A/S) owns a company called ASTRALIS MANAGEMENT APS which owns the Astralis CS:GO Team (ASTRALIS ESPORTS APS), Origen LoL Team (ORIGEN ESPORTS AP) and the Future FC FIFA Team (FUTURE FOOTBALL CLUB APS).
Some QUICK DEFINITIONS (from the report)
External expenses: ‘include corporate expenses, marketing costs and direct external costs relating to training of players, costs of travel and accommodation related to tournaments, valuein-kind sponsorship expenses, equipment to players.’
Staff costs: ‘comprise salaries and wages including prize money passed on to staff as well as social security contributions, pension contributions, etc. for the Group’s staff.’
THE NUMBERS
The Overall Group made (converted from DKK to USD today) $7.1M USD in Revenue over 2019. They had total external expenses of $3.1M USD. They also had total Staff Costs of $7.2M USD. After Depreciation, amortisation and Financial Income+Expenses taken care of, the group made a loss of $3.2M USD before tax.
ASTRALIS CS:GO TEAM
Of the $7.1M USD in Revenue made, the Astralis CS:GO team made $5.7M USD (Roughly 80% of the entire groups revenue) of that. While they made $5.7M USD in revenue, the team costs $6.5M to operate. At the end of 2019, the Astralis CS:GO Team business made a loss of roughly $728,000 USD.
LEAGUE AND FIFA TEAM
The Origen LoL Team made $1.2M USD in revenues and costs $3.2M to run. In 2019, this was a loss of $2M USD. Future FC the FIFA Team made roughly $200K in revenues, cost $58K to run so made a profit of $146,000 USD.
The FIFA team is small but profitable. The League of Legends team is part of the LEC and if RIOT do more deals like its most recent one with ESPN (for the LCS), there’s a good chance League teams will start to earn more revenues as the league grows.
CS:GO
What I’m interested in is the CS:GO team. Counter-Strike was a big part of my childhood (2000/2001) and eventually is how I started working in esports (2013 with Fnatic). The fact the game is still around and growing so much is testament to its position as the don of all esports. It’s also very unique for a top tier esports title. There is far less attention paid to it by Valve (relative to other big esports), the publisher. They endorse (using the word loosely) every League that they deem fit to operate CS:GO events but do not do too much beyond that (again relative to the other top esports).
ASTRALIS CS:GO TEAM REVENUES
For esports teams, this means revenues have primarily come from Sponsorship and Prize Money. Between 31 July-31 Dec 2019, The Astralis CS:GO Team made $3.9M in revenue. Out of this $2M USD was made through sponsorships (51%), $1.47M USD was made through Prize Money (37%) and $431K USD through Merch and Stickers (11%).
For perspective, the Astralis Group (made up of all the teams) shows that Prize Money+Money from Tournament Participation makes up 36% of the companys revenue, Sponsorship is 54% and Merch+Stickers make up for 10%.
With the above background and numbers in mind, it’s clear that having the winningest CS:GO team in the world has earned the Astralis Group $5.7M USD in Revenue (they won 2x Majors and 6x tournaments last year). What’s important here is.. Astralis is the world’s most successful CS:GO team. No other CS:GO team in the history of this 8 year old version of the game has made more prize money than Astralis. Esports Earnings puts every member of the team as the top 5 prize winners in the game. The cost to run the best performing team in CS:GO is $6.5M USD.
ASTRALIS CS:GO TEAM COSTS
The largest portion of that is money paid to the players (also includes prize money earnings). For the Astralis CS:GO team, a 30% reduction in their team business costs (roughly $1.95M USD) and assuming the same revenue in 2019 of $5.7M, would mean they would have earned a profit of $1.1M USD ($5.7-$4.55) in 2019. This is based on assumptions, of course.
Makes me think: How are teams that are not the winningest CS:GO team in the world doing?
THE QUESTION
With the world today being challenged tremendously, will this cause CS:GO player salaries to correct? All of the team owners are experiencing the same challenges during the current crisis. I sense that a lot of the highest funded CS:GO teams may be able to minimise their losses and potentially be profitable if this happens.
On the flipside, some of my peers at 99 argue that the COVID-19 outbreak may mean more money is spent on esports than ever before. A big potential increase in revenue for CS:GO teams.
I wonder.
Here’s a link to the report if you’re interested in reading through it all. These are my personal thoughts and do not reflect the views of anyone I work with or for.