European League Championship Series changes to include salary increase, franchising and rev share

The European League of Legends Championship Series will transition to a franchising model, increase salaries for players and share league revenue with teams and players beginning next year. Riot Games

The European League of Legends Championship Series will make significant changes to its league structure in 2019, including revenue sharing, franchise permanence and a large increase in minimum player salaries and benefits, league sources told ESPN.

The league will remove relegation completely, and partnership agreements for teams will last for three years, with the only conditions for removal being consistent poor performance or disciplinary issues, sources said.

Riot Games will begin accepting applications for the European League Championship Series on Wednesday, a league source said. Buy-in prices will be 8 million euros ($9.93 million) for current teams in the league, and 10.5 million euros ($13.02 million) for teams who wish to enter the league and are not currently participating, a league source said. Riot Games used 8 million euros ($9.93 million) as an example for existing teams when discussing price with teams in August at its Paris owners' meeting, sources said.

The North American League Championship Series charged $10 million for existing teams and $13 million for new teams when it franchised last year. Since then, financial models in esports have increased significantly, with the value of a permanent League of Legends spot being front-and-center as North American teams continue to raise capital, leveraging $140-200 million evaluations.

The restructured league will consolidate a revenue pool, which will be distributed to Riot Games, European League Championship Series teams and players. The pool will be comprised of money made from league sponsorship and media rights -- such as a $300 million BAMTech deal with Riot Games -- as well individual team sponsorships and merchandising revenue, according to a document obtained by ESPN. BAMTech is owned by ESPN parent company The Walt Disney Company.

The players will get 35 percent of the revenue pool, which will help fund part of their salaries. Excess will be distributed among the players. Additionally, 32.5 percent will be used by Riot for broadcast production, live events and other league expenses. The remaining 32.5 percent will be given to the teams; part will be equally distributed with the rest based on undisclosed competitive and engagement metrics.

Riot will also make changes to the treatment of players in the league. The minimum salary for players will increase from the current $29,791 to $74,749 yearly in 2019, according to the document obtained by ESPN. Riot will also introduce some form of a development system -- which will include topics such as guidance for personal finance healthcare -- for European players.

"One of Europe's greatest strengths as a region is our ability to nurture and develop new talent," the document reads. "Part of the 2019 structure will include a player development platform that will be essential for providing aspiring pros with the support they need to grow into star players and well-rounded individuals. We're currently working through a few different options and we'll be able to share an update on our plans once they're locked in."

To earn a spot in the league, existing European League Championship Series teams and outside parties will go through a three-stage application process that will run through December, culminating in the selection of the teams and a subsequent announcement, according to the document.

During that first stage, interested parties will send an application to the league that outlines finances, plans for their prospective teams and brands and background information about their ownership. A select number of applicants will then move to a second stage, which will see their applications reviewed in-person with Riot Games representatives in Berlin through July and September. Finally, from October to December, Riot will choose and announce the teams for the revamped EU LCS.

Riot has received interest from several soccer teams in multiple European countries, sources said. Several of these will attend Riot's next few European events -- such as the European League Championship Series spring finals in Copenhagen, Denmark, in April and the 2018 Mid-Season Invitational in Paris, in May.

These sweeping changes come after some unrest among European League Championship Series teams. The North American League Championship Series moved to a franchise model for 2018.

Two European teams -- H2K in September and Unicorns of Love in October -- were outspoken about the lack of financial stability in European League of Legends. Other European teams, G2 Esports, Fnatic, Splyce and Misfits, also applied for the North American league but were all declined entry in August and October.

In October, Riot announced the 10 teams for the North American League Championship Series. Of these, six existing teams retained their spots -- Cloud9, Counter Logic Gaming, Echo Fox, FlyQuest, Team Liquid and Team SoloMid -- and welcomed four new teams, Clutch Gaming, Golden Guardians, OpTic Gaming and 100 Thieves. Three of those new teams had application support and financial ties to NBA franchises, including the Cleveland Cavaliers, Golden State Warriors and Houston Rockets.