The Philadelphia 76ers will become the first North American professional sports team to own an esports team.
The team will announce Monday that it has acquired long-time franchise Dignitas and upstart Apex, which offers a guaranteed spot in the highly coveted League of Legends Championship Series, and operate under the Dignitas name.
Terms were not disclosed, but more established esports team brands have been offered in the marketplace at valuations between $5 million and $15 million. WME-IMG represented Dignitas in the transaction. The acquisitions come about a year after a presentation on the growth of esports was made at the NBA Board of Governors meeting.
76ers CEO Scott O'Neil said, "We were smart enough to know what we didn't know," so O'Neil brought on Greg Richardson, an executive who has had a career in consumer tech and video gaming and will oversee the project for the team.
"The market created itself and became a product that a quarter billion people are watching, and when they watch, they're watching an hour and half a day," Richardson said. "But at the same time, it's an incredibly large, immature market that is somewhat of a Wild West."
The 76ers are used to making first moves. On May 16, the first day the NBA allowed a team to sign a company to put its logo on a jersey starting in the 2017-18 season, the 76ers announced a three-year deal with StubHub. In the more than four months since, no other team has announced such a deal.
"We like to be agents of change, rather than sit and watch from the sidelines," O'Neil said. "Our owners, Josh [Harris] and David [Blitzer], have big eyes, big vision and big appetite."
The past five years, Harris and Blitzer have acquired a total of seven franchises, including the 76ers, the New Jersey Devils, some minor league teams and English Premier team Crystal Palace.
"There's no denying the fact that esports presents corporate America with a way to reach millennials in a way stick and ball sports just isn't," O'Neil said.
Dignitas , which has been in the space for 13 years, has teams in various leagues that play in five games: CS:GO, League of Legends, Overwatch, Heroes of the Storm and Smite.
Although Richardson said there might be some fun cross-branding between the 76ers and their esports team, the two markets, he said, have their differences, "and if you don't respect that you're in trouble."
One of the most important synergies in the deal could be in the mass merchandising of esports player jerseys. Gear has been available at tournaments and online but has always been limited. Michael Rubin, owner of Fanatics, the largest online sports retailer in the U.S., is a minority partner of the 76ers and is part of this deal.
In May, German soccer team FC Schalke 04 bought a League of Legends spot in the European Championship Series.
Former NBA player Rick Fox owns Echo Fox teams. Sacramento Kings minority partners Andy Miller, Mark Mastrov and Shaquille O'Neal, along with Alex Rodriguez and Jimmy Rollins, are partners in NRG, which competes in more than five disciplines.
It hasn't been smooth sailing for these entrants, especially in League of Legends, where, in their first season, FC Schalke was relegated and NRG fell back to the Challenger league in the North American equivalent.
Teams have also entered the esports space by signing gamers. Premier League teams Manchester City and West Ham have signed esports stars, and so has Bundesliga team Wolfsburg.