Relegation: Financial and other risks: One viable alternative.
Relegation is an issue for all EU LCS (and NA) teams irrespective of prior performance. At some point, all teams, IN ALL SPORTS, have down cycles. The Boston Red Sox appeared in the World Series one year and finished last in their division the next.
All LoL teams are also subject to certain uncontrollable risks such as disability, prolonged illness, death or major disagreement with one or more key players. The risk of poor performance (leading to potential Relegation) is magnified because the starting five consists of only five players so the unavailability of any one is generally devastating; teams cannot afford to maintain quality substitutes for each position.
The overhang of Relegation limits EU LCS teams’ access to capital, significantly reduces the value of the teams, and makes their sale very difficult. Schalke04, having made a sizeable investment during 2016 and losing this investment six months later, has sent shockwaves through other Soccer teams, VC’s and high net worth individuals.
Relegation also makes sponsors reluctant to make any meaningful financial commitment to a team since any brand association may disappear in a year. Additionally, Relegation fosters team instability and makes player retention more difficult.
In the last 2-3 years EULCS (and NA) teams generally have been forced to make substantial investments in their teams. Their operating costs have increased significantly; RIOT’s subsidies have not kept pace with these increases and League of Legends has not yet developed a definitive revenue sharing model. Accordingly, team revenue opportunities are generally limited to modest sponsorships (which are highly competitive) and merchandise sales.
The teams should not be subject to the risk of having their substantial investments become worthless, and make meaningless the huge personal efforts of the team owners. Unlike the Premier League, relegated teams in the League of Legends do not receive compensation payments from RIOT nor do they receive revenue sharing from RIOT as occurs with FIFA for a Division 2 soccer team.
Relegation is also financially hurtful and disruptive to the players. With this kind of uncertainty overhanging their pro careers, it adversely affects them emotionally and makes it more difficult for them to make any long-term commitment to a team.
RIOT has viable alternatives other than Relegation to fulfill its obligations to the Challenger League. One possibility is to expand the number of teams in the EU LCS (and NA) to 16 by having the three top teams in the Challenger League added in 2017 and 2018. Expanding the leagues to 16 teams (perhaps four divisions) will create more competition and present a broader range of opportunities for the players.
Thereafter, the Challenger League could be maintained for community based teams with roots in their communities. The teams will offer younger players the opportunity to develop their skills and talent for the EU LCS teams. Perhaps each of the then expanded EU LCS of 16 teams might each have an affiliation with one of the Challenger League teams. This suggested structure is only one of many viable alternatives that permits eliminating the Relegation system.
The competitiveness of the EU LCS (and NA) teams will be assured by their natural desire to be successful. In addition, meaningful minimum salaries (adjusted from time to time) could be mandated by RIOT to assure that these teams don’t just sit back, spend little for their players, and remain uncompetitive.
November 23, 2016