- OWL’s 20 franchises each owe up to US$7.5m
- CDL teams owe an average of US$22.5m apiece
- Payments could be pushed back again until early 2024
Video game publisher Activision Blizzard is owed between US$390 million and US$420 million in franchise payments from esports teams competing in Overwatch League (OWL) and the Call of Duty League (CDL), according to The Jacob Wolf Report.
OWL’s 20 franchises reportedly owe the gaming giant roughly US$6 million to US$7.5 million each, equating to between US$120 million and US150 million in total.
In the CDL, teams reportedly owe an average of US$22.5 million each, having only made an initial payment of US$2.5 million prior to the arrival of Covid-19. A CDL franchise slot costs approximately US$25 million, according to ESPN.
Annual payments for both leagues were deferred in 2020 to the autumn of 2022 as part of Covid relief measures for teams. The Jacob Wolf Report adds that there are ongoing discussions over potentially pushing those payments back to early 2024.
OWL has already reduced the debt owed to it by its teams, reportedly levelling out franchise pricing for the 12 inaugural teams who entered in 2017 and the eight expansion outfits that joined in 2018. The new total franchise price for OWL was roughly US$16 million, with teams purportedly having already paid between US$7.5 million and US$10 million each.
According to The Jacob Wolf Report, Activision Blizzard has received close to US$200 million in OWL payments over the past five years.
Any changes to payment terms are unlikely to come in until Activation Blizzard’s acquisition by Microsoft is completed. The deal, expected to close in 2023, is worth US$68.7 billion.
The report has coincided with SOC Investment Group, which has a stake in Activision Blizzard, calling on the video game publisher’s shareholders not to re-elect six board members, including chief executive Bobby Kotick, for failing to address the company’s ‘sexual harassment crisis’.
The letter comes ahead of Activision Blizzard’s annual meeting on 21st June.
Make no mistake, esports may have garnered additional attention during the height of the pandemic but it remains a costly venture. OWL and the CDL are the most expensive competitive gaming leagues in the world by franchise cost, which has drawn criticism. The situation reportedly led to Activision Blizzard’s head of esports Brandon Snow, who is now at Formula One, proposing that franchise payments should be waived.
It all compounds a tricky period for the two leagues, which includes ditching travelling events plans. OWL has also lost sponsors in the wake of a lawsuit filed by the state of California’s Department of Fair Employment and Housing over allegations of widespread sexual harassment and discrimination.
The potential for further deferrals of franchise payments further highlights the difficulty esports organisations have in securing reliable sources of revenue aside from sponsorship. Put simply, turning a profit in competitive gaming isn’t getting any easier. Last November, The Washington Post reported that Riot Games’ League of Legends competitive esports juggernaut has yet to be in the black.