LCS reportedly suspends franchise fees amid revenue decline; Riot responds

Riot Games has offered franchise fee deferrals to all the teams in the LCS as the league faces a battle for survival, content creator MonteCristo has said, with the Sports Business Journal reporting that this option has been offered to teams from all regions. Riot Games classifies these reports as “inaccurate”.

With the LCS season over following Championship Weekend in Newark, many are left wondering what the future of the league looks like. The Summer split posted the lowest viewership figures in the league’s history, averaging a shocking 76,889 viewers, down 33 percent from 2022, according to data firm Esports Charts.

Such a drop in viewership is expected to impact the revenue generated by the league, which is shared with all ten franchise teams. As the LCS continues to lose eyeballs, the league could struggle to attract new partners or even convince existing sponsors to renew their current deals.

This is especially alarming as brands have become skeptical about investing in esports, with many leaving the space in recent times. In 2021, the LCS signed a seven-year, $96 million partnership with FTX, but in December 2022, it filed a motion to terminate the deal amid the collapse of the cryptocurrency exchange.

Speaking on the latest episode of the ‘Power Spike’ show, Christopher ‘MonteCristo’ Mykles claimed that Riot has offered franchise fee deferments to LCS teams “in anticipation of revenue share potentially being lower.”

“LCS has now suspended all of their franchise payments,” he said. “The teams are not actually paying their franchise fees and probably won’t be for a couple of years.

“They [Riot] are trying their best. They desperately want LCS to be alive.”

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League teams can defer franchise fee payments

Hours after the ‘Power Spike’ episode was released, the Sports Business Journal reported that Riot is giving teams that participate in all of its professional League of Legends leagues, not just the LCS, the chance to defer payment on owed franchise fees. Organizations that take the option “will be charged interest during the time payments are not being sent.”

The Sports Business Journal further reports that Riot’s decision to allow deferrals of franchise fees “stems from a decline in revenue share money that teams receive for participating in the various leagues.”

It’s not the first time in the esports industry that a league has offered franchise fee deferments to teams. In 2020, Activision Blizzard allowed the Overwatch League and Call of Duty League teams to defer franchise fees as they faced serious financial challenges amid the global health crisis, which shut down in-person events.

It’s not only in the LCS that teams are struggling to balance their books. Only last month, Gen.G CEO Arnold Hur spoke about the difficulties in running a championship-caliber team  — and this despite the fact that the LCK continues to break viewership records.

The field in the LCS is expected to look different in 2024. TSM are currently in talks with prospective buyers for their spot as they look to move to a different region, and there are rumors that another organization is looking to exit the league.

Still, Riot remains optimistic about the future of the LCS. Speaking to reporters ahead of the LCS Championship. Raul Fernandez, Riot’s head of NA esports, stressed that the LCS is “in a very healthy position financially” thanks to the company’s continued investment in the product and the support from partners and teams.

Last week, MonteCristo claimed that Riot had discussed moving the LCS away from Los Angeles as a cost-cutting measure. This idea, he noted, is supported by many teams in the league as they struggle to stay afloat during this period of economic turmoil.

Contacted by Dexerto, Riot Games provided the following comment: “These reports are inaccurate. We maintain a collaborative relationship with our team partners and do not plan to discuss rumors.”