TECHNOLOGY How Do Esports Companies Compare with Sports Teams?

TECHNOLOGY

How Do Esports Companies Compare with Sports Teams?

Published 12 months ago 

on January 29, 2021

By Omri Wallach

Graphics/Design:

• Clayton Wadsworth

How Do Esports Companies Compare with Sports Teams?

Are esports on the same level as “real” sports? These comparisons range from tricky to subjective, but the monetary value of companies speak for themselves.

The world’s largest esports companies have definitely risen to the occasion. Valued at almost half-a-billion dollars, they’ve started to pass some sports franchises in value.

In the above graphic, we compare Forbes’ valuation of the top 10 esports companies in 2020 against median franchises in the “Big Four” major leagues (NFL, MLB, NBA, and NHL). Despite competitive gaming’s rapid growth, there’s still a long way left to go.

Esports Impress but NFL Teams Reign Supreme

The world’s top esports companies have grown quickly, and impressively.

As of 2018, there was only one esports company worth more than $300 million in valuation. By 2020, four of the top 10 were valued at more than $300 million.

Esports CompanyGames with FranchisesValue (2020)

TSM	League of Legends	$410M
Cloud9	League of Legends, Overwatch	$350M
Team Liquid	League of Legends	$310M
FaZe Clan	Call of Duty	$305M
100 Thieves	League of Legends, Call of Duty	$190M
Gen.G	League of Legends, Overwatch, NBA 2K	$185M
Enthusiast Gaming	Call of Duty, Overwatch	$180M
G2 Esports	League of Legends	$175M
NRG Esports	Call of Duty, Overwatch	$155M
T1	League of Legends	$150M

When compared to traditional sports valuations, esports companies have already reached major league hockey status.

TSM, the world’s most valuable esports company in 2020, has a higher valuation than five NHL franchises. In fact, four esports companies were estimated to be more valuable than two NHL franchises, the Florida Panthers and Arizona Coyotes.

But other sports leagues are further away. While the median value of an NHL franchise in 2020 was $520 million, the MLB, NBA, and NFL all saw median values of over $1.6 billion.

Esports vs. Sports FranchisesLowest Valued TeamHighest Valued TeamMedian

NFL	$2.0B	$5.7B	$3.0B
NBA	$1.3B	$4.6B	$1.8B
MLB	$980M	$5.0B	$1.6B
NHL	$285M	$1.6B	$520M
Esports (Top 10)	$150M	$410M	$188M

Differences in Esports vs Sports Structures and Growth

Try as we might to make a clean apples-to-apples comparison between esports and traditional sports teams, there are significant differences in the business models to consider.

For starters, major esports companies own multiple franchises and non-franchise teams across many games. Cloud9 owns both the eponymous Cloud9 League of Legends franchise and the London Spitfire Overwatch franchise, for example, as well as non-franchise teams in Halo, Counter Strike: Global Offensive, Fortnite, and other games.

The revenue streams for esports companies are also extremely varied. Companies like TSM, 100 Thieves, FaZe Clan and Enthusiast Gaming made 50% or more of their revenue from outside of esports, having instead expanded into diverse companies with an equal focus on content creation and apps.

But it’s this greater ability to diversify, and the still-increasing size of esports fandom, that continues to grow esports valuations. In fact, TSM’s estimated 2020 revenue of $45 million is less than half of the Arizona Coyotes’ estimated revenue of $95 million, despite a $100+ million valuation difference in favor of TSM.

That’s why the continued maturation of esports is only going to make traditional sports comparisons easier, and closer. Instead of having to pit companies against franchises, direct league-to-league comparisons will be possible, and the differences will likely shrink from billions to millions.

 

How Do Esports Companies Compare with Sports Teams? (visualcapitalist.com)

How Do Esports Companies Compare with Sports Teams?