The North American LCS will be franchising
in 2018. That means no more relegation, and a lot of
structural changes to the league system. Let’s break down some of those changes in
comparison to another major franchise system: the NBA Franchise systems turn team owners into permanent
partners, meaning the same teams play every season. And because nobody leaves the league, it’s
harder to join. In the LCS, Riot will be choosing ten franchise
teams through a strict application process. Organizations will send proposals on how they’ll
handle their business, from branding to salaries to general management. After that, Riot will do some snooping into
their credit and financial histories. And then this November, Riot will announce
the franchise teams. In the NBA, the current team owners can vote
to add a new expansion team, but this happens very rarely. More teams in the league means more competition
for talent and revenue. The last team to join was the Charlotte Bobcats
back in 2004. For teams already in the LCS, it’ll cost
10 million dollars to join the franchised league. New teams will have to pay Riot an extra 3
million on top of that. The cost is meant to bring in serious investors,
but also to raise capital for the league. When the Charlotte Bobcats (now called the
Charlotte Hornets) joined the NBA, they paid a 300 million dollar fee. That money is split among the existing team
owners, to make up for the downsides to expansion. With NBA teams growing in value, the joining
fee would probably be way higher today. The last NBA team to be purchased, The Hawks,
went for $850 million. And for more popular teams, well, The Clippers
back in 2014 were sold for 2 billion dollars. Franchises use revenue sharing to keep mega-popular
teams from dominating and to help smaller teams stay competitive. The LCS will use revenue sharing to split
money between Riot, the teams, and players. Both Riot and teams will contribute some money
to a revenue pool from media rights, sponsors, merch sales, and team-branded digital goods. 32.5% of the total league revenue will be
allocated to teams — half of that amount is split evenly to each team, and the other
half will be used to reward teams who place higher, have more fans, and bring in the most
viewers. The NBA teams also contribute a chunk of their
revenue to a shared pool. There’s no third party like Riot, so the
30 teams split around 50% of shared league revenue evenly across themselves. NA LCS players will have a minimum salary
of $75k, and players as a whole must receive 35% of the league revenue. So when all the combined player salaries make
up less than 35% of total league revenue, they’ll receive the difference directly. If they make more than 35% of LCS revenue,
they get to keep the extra. Instead of minimum salaries, the NBA has salary
caps that keep teams from paying huge prices on players, more evenly distributing talent
and salaries. Each team has a cap for how much they can
be spending on all of their players combined, and each player’s individual salary is capped
based on their years of experience. Similar to the LCS, though, combined player
salaries also have to meet a certain percentage of league revenues. In this case, the players get around 50%,
and if they don’t, team owners have to pay up the difference. So who’s in charge of all this? Riot makes final decisions on LCS franchise
rules, game rules, and more, but is planning on tri-party negotiations between them, teams,
and players. Later this year, Riot is launching the Players
Association, a group of representatives, elected by players, that will serve as their voice
in league decisions. Over in basketball, the NBA Board of Governors
(made up of team owners and their representatives) make decisions on things like game rules,
tournament formats, and expansion. The NBA also has a Players Association, a
labor union that negotiates a Collective Bargaining Agreement with the team owners. This contract lasts for years, and it sets
the rules for salary caps, trade rules, and more. The NA LCS franchise is sure to evolve over
the years. Like other sports, it’s probably going to
see changes to the revenue sharing model, a system for adding teams, and stronger decision-making
power for the Players Association. And, of course, we’ll probably see lots
of money. Last season, the NBA teams made around $5.9
billion in revenue. As the LCS franchise takes off, streaming-service
BAMtech will be paying Riot $300 million for streaming rights over the next six years. That $50 million a year, along with bigger
sponsorships and other media deals, will be a big start to the League of Legends franchise
here in NA.