Sources: Teams hesitant to buy into Overwatch League due to high cost, undesirable contract terms

An overview of the Overwatch Arena during BlizzCon at the Anaheim Convention Center in Anaheim, California. Brinson Banks for ESPN

Activision Blizzard is struggling to sign franchises to its yet-to-launch Overwatch League because the asking price is too high, multiple sources close to existing franchises and investment partners told ESPN.

Multiple sources said Blizzard is asking for a $20 million franchise fee for the league featuring its popular 2016 game, with prices escalating from there in larger markets such as New York and Los Angeles. However, following the $20 million buy-in, teams are not guaranteed revenue sharing until after 2021 and only if Blizzard meets certain criteria that sources did not disclose to ESPN. Additionally, sources said if a team sells its spot to another party, the league would receive 25 percent of the proceeds.

Overwatch was released last year and, as of January, has 20 million players worldwide, according to Blizzard. The only established major esports leagues featuring the game are OGN APEX in South Korea and Overwatch Premier Series in China.

The $20 million evaluation is significantly higher than any buy-in into an esports league in the United States. A spot in the League Championship Series for Riot Games' League of Legends, the most popular game in the world and one of the most established esports leagues, sold for $1.8 million in December.

It was previously reported that the Kraft Sports Group, the family business headed by Robert Kraft that also owns the NFL's New England Patriots and MLS's New England Revolution, had closed in on a deal to purchase a spot. One source close to that negotiation told ESPN it was a handshake deal and includes a most favored nation agreement that allows the Kraft Group to buy in at the most favorable price given to another organization.

Recently, several organizations have pulled back from fielding Overwatch teams in other leagues. In January, Overwatch startup Reunited dropped its team because of financial problems and uncertainty surrounding Overwatch League. More recently, Team SoloMid parted ways with six of its Overwatch players after learning more information about the cost of joining Overwatch League, according to former player Taylor "b1am" Forrest. Additionally, Splyce, invested in by the parent organization of the Boston Bruins and TD Garden, announced it released its Overwatch team on Tuesday, though the org cites they had been talking internally about the release for a few weeks. One source told ESPN that he believes more organizations will soon drop their teams for similar reasons.

Sources said the price is the sticking point, but the game and league are still desirable to teams. Blizzard said earlier this year that Overwatch League was scheduled to launch in late 2017, but some organizations have expressed doubt whether the league will launch on time, given the current state of the negotiation.

Activision Blizzard first announced its intention to launch the Overwatch League at its annual BlizzCon convention in November. The league is set to have geolocated franchises, with each team having a city association similar to traditional American sports leagues, such as the NFL, NBA and MLB. Blizzard has hoped to attract interest from sports investors who are affiliated with traditional sports franchises.

Blizzard did not respond to requests for comment on this story.