COVID changed the football world. Clubs couldn’t rely on ticket sales as teams rumbled through empty, depressing stadiums. Revenue from broadcasts became vital and streaming services gained more power.
It also changed the business plans of many teams and leagues. With empty stadiums, the associated income from ticket sales and concessions is dormant. As a result, teams began to lean on league revenue rather than making money themselves. National revenues, which included major broadcasting deals, league-wide sponsors, and merchandising, began to eclipse local revenues, which included those franchises, ticket sales, and shirt sponsors.
FC Schalke 04 recognized the potential of Esports. It was the first German football club to win a League of Legends team. League of Legends is one of the most popular video games in the world. And in many ways, it’s the driving force behind Esports.
Schalke, one of the most historically important clubs in Germany and even Europe, is now one of the biggest League of Legends teams. It set a trend for clubs to pursue Esports alongside traditional sports.
With revenues declining, clubs were striving for more than just Esports. Clubs launched projects like cryptocurrency and NFTs or growing social media presence with TikTok, Twitter and more. However, esports emerged as the most stable and viable for clubs to continue. It connects these clubs to a younger audience in a profitable and frankly fun way.
A League of Legends dream
Like the Schalke team on the football field, Schalke’s Esports team has players who fill certain roles, directors and coaches.
Sitting in a room in the club’s home stadium, the VELTINS-Arena, Marco Buljevic, Schalke’s Head of Esports, smiles. His carefree face doesn’t suggest that running an Esports division can come with challenges and obstacles. In fact, he makes everything look pretty simple.
He says Schalke’s decision to launch itself into Esports was a choice based on several factors.
“Just as the audience of a football club gets older and older, and as younger people play football and become interested in it, chances are they will actually love gaming and Esports. So it’s actually a very wise idea. It wasn’t what it looked like. We just jump in to see how it goes and you know, we have another section in our club. Our ambitions have been clear from the start. With Esports we reach a completely new and different target group and we also increase the reach of the club. But of course we always want to be successful in what we do and win titles.”
Schalke’s League of Legends team actually started in 2016. After buying a franchised League European Championships (LEC) spot for around $8 million, they spent three years working towards promotion before moving to the LEC in 2019.
And when they got to the legendary League of Legends competition, they went 9-9 against some of the world’s best players. They improved until they started competing for some titles. That was, until 2022, when a debt-ridden Schalke, facing relegation, sold its LEC franchise spot to another team for around €26.5 million. It now plays in the Prime League along with a host of different DACH based teams.
When factoring in player salaries, buyouts, tournament fees, equipment and many other behind-the-scenes factors, Schalke’s League of Legends team looks like a losing streak.
Not so down
Unlike traditional sports teams, which use a mix of national revenue and local revenue to make a profit, Esports teams almost all operate with local revenue. Clothing, including game jerseys and autographed memorabilia, is a big part of their structure, much like traditional sports. Two other factors make esports a risky operation: entertainment and prize winnings.
Winning played a part in Schalke’s business plan. “It was also very important to have success in the competitions, whatever we can say. We were in the final of the [League Championship Series] in Madrid, and we went to Athens for the final. We were very close [the World Championships]. So I can say that we have achieved that goal,” says Buljevic, glowing with pride.
A Worlds appearance would likely have given them more income to work with, and their success in the LEC helped them attract sponsors and recognition. Entertainment is perhaps the most important solution.
“The entertainment part is also very important. To be really interesting for sponsors and partners, we need to have a substantive department.”
When Schalke still had a LEC spot, they not only had to change their roster, but also work on increasing their audience. Other games outside of League of Legends play a role in building that audience.
Schalke extends Esports reach to FIFA
Schalke’s FIFA team continues to be just as successful, if not more so, than their League of Legends squad. They have finished near the top in several high-level events, including one appearance quarterfinals in the FIFAe Club World Cup in 2022. With smooth management, including contract extensions, player signings and team links, Schalke has excelled in the ever-changing FIFA Esports business.
“Movement within the scene is quite rapid as the contracts are generally not as long-term as in most traditional sports leagues where you sometimes see multi-year contracts of a certain player with a team. ]I feel like more players jump into the scene very early. In general, you don’t have many older players in the Esports scene. That means that the career of a 25-year-old is probably already on the wane,” explains Buljevic.
“But in traditional sports, one’s career usually goes up from there and you reach your peak around age 30. That’s not the case in Esports.”
Schalke’s balance between staying competitive and spreading content on social media platforms makes them one of the most avant-garde football teams turning to Esports. By posting to Twitter and Facebook, making vlogs on YouTube and even hosting a Discord server, the team continues to attract much younger fans.
Problems everywhere
One major thing that stands in the way of football teams is the first adventure in Esports. Although all and many German teams play in the eClub World Cup, it is small compared to the club football landscape. One major reason is because of franchising. And no, it is nothing like the proposed European Super League.
Take the competitive VALORANT scene. While there are several teams involved in the annual seasons, Riot Games (the developer) wants to create a league format of 10 teams for North America, 10 for Europe, and 10 for Asia. While it reminds some of Super League that football fans were shocked to their core in the beginning, there is an elaborate qualification process to move from anonymity to the big leagues. It can take years to climb through the Ascension League, but teams have a chance if they can field winning teams.
The only problem is that most people don’t have time for that. Unless the competition promises billions of dollars at the highest level, football clubs have reason to be skeptical about investing millions of dollars for just a glimmer of success and years of constant rebuilding. Therefore, Real Betis and Besiktas left the VALORANT scene after being rejected for a collaboration slot.
Esports is also a long-term commitment to something that doesn’t promise immediate profits. Although Schalke’s motives were not money-oriented to begin with, they soon realized how important money was to their business. “Building this infrastructure really took some time. Then we rolled out this business case,” says Buljevic about the early stages of Schalke Esports. According to Buljevic, Schalke needed gambling houses, players’ apartments, professionals to help roster performance, and content consultants.
What could it mean for football?
With the birth of its Esports teams, Schalke has a new way to market its brand to young fans while getting a foot in the door of a growing, profitable young industry. Teams in the Americas and Europe sign FIFA players and promote gaming-related content geared towards teens. It helps the club to become familiar with the younger generation and to get quite a bit of attention on social media.
And yes, we could see Schalke’s business plan being applied across the world of football, with FIFA working as a gateway for football teams to a wider world of Esports. Manchester City plays FIFA and Fortnite teams, while Paris Saint-Germain sponsors Dota 2 and FIFA teams.
Not only that, but the rise of Esports in football is changing the way media view FIFA coverage. While it’s barely covered on traditional Esports sites and never mentioned on ESPN or FOX, 15 or 20 years later we could be discussing the eChampions League or FIFAe World Cup at First Take (or World Soccer Talk itself).
Schalke dipping their toe in the waters of Esports is monumental. It was important in 2016 when the club bought its LEC slot and now in 2023. There is a lot of money to be made in Esports and Schalke was one of the first to see it.
PHOTO: IMAGO / Lutz von Staegmann / FUNKE Photo Services
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