The Gold Rush: Why Are Football Clubs Investing In eSports?

Throughout the 19th century, opportunist merchants engaged in a desperate race to strike gold, seeking their new-found fortune in the mineral rich nations across the globe. The wealth established from the ‘gold rush’ phenomenon served to shape the identity of entire cultures and paved the way for some of the present-day’s most powerful economies. Two centuries later within the prodigious sporting industry, the gold rush mentality has reared its head once more. Powerful investor groups and sports clubs are clambering to hit the jackpot in sport’s fastest growing title: eSports.

The eSports industry has experienced double digit growth each passing year for the past half-decade. Between 2014 and 2016 alone, the global audience for eSports grew from 204 million to well over 292 million; this number is projected by analytics service, Newzoo, to reach 427 million by 2019.

The emerging industry boasts a worldwide community of 148 million ‘enthusiasts’ – a term used to describe fans who actively consume dozens of hours of eSports content each week – expected to surpass 215 million by 2019. The weight of this audience is already beginning to show: the 2016 League of Legends World Championship amassed a concurrent audience of 36 million, dwarfing the viewership for the NBA finals.

Source: Riot Games Flickr

An audience worth its weight in gold? The eSports economy grew to $696 million in 2017, after generating $463 million in 2016, Newzoo now estimate that the industry will smash $1 billion by 2019… these numbers don’t escape the attention of intrigued investors. Within Europe, football clubs have emerged as the front runners in the eSports gold rush.

Why Are Football Clubs Investing In eSports?

Given the size and relative wealth of the footballing industry, an investment into eSports represents a drop in the ocean for many of the heavyweight names who have moved into the space. Manchester City, West Ham United, VFL Wolfsburg and Schalke 04 are just some of the clubs who have developed their own eSports departments in the past 12 months, each with the ambition of tapping into the invaluable millennial audience eSports has the potential to unlock.

Football clubs have made no attempt to mask their motivations: eSports opens the door to a previously untouched segment of a potential future fanbase. What perhaps was not foreseen, was the possibility for this acquisition strategy to backfire. As a community, eSports enthusiasts have witnessed their beloved industry flourish, as a direct result of the passion and dedication of every stakeholder involved. The attempts of a mainstream sports club to use their industry as a ‘marketing mouthpiece’ have naturally been met with an element of scepticism:

“They see it as being valuable, therefore everybody is jumping on the ‘e-bandwagon.’

“There is a danger that [football clubs] are trying to latch on to a market… and that market doesn’t want it to be latched on to.

“[The eSports community] don’t want to have this big sort of corporate sponsorship that’s in other sports.”

Patrick Nally, ‘The Founding Father of Modern Sports Marketing’

VFL Wolfsburg’s FIFA players showcase the team’s latest sponsorship with headphone manufacturer, Turtle Beach. (Source: VFL Wolfsburg)

How Will The Influx of Football Clubs Affect the eSports Industry?

Whether the influence of football clubs will have a positive or negative effect on the eSports scene remains a point of contention. Whilst the eSports scene is naturally willing to embrace the increased acknowledgment and endorsement of non-endemic entities, a desire remains to preserve the identity of the industry amidst a flurry of opportunist gold miners.

As one of the longest-standing and widely supported eSports organisations, the influx of football clubs is not considered to be a direct threat to an eSports brand with the size and popularity of Fnatic. Whilst the London-based organisation remain wary (if not somewhat sceptical) of their new competitors intentions, their primary concerns lie with the smaller teams who have served to build eSports into the flourishing industry it is today… but may yet be wiped from existence by the spending power of the scene’s new players:

“There’s a domino effect: where some sport club sees their competitors coming into the space and they start to further analyse ‘this is a young demographic, this is how we’re gonna make money one day.’

“There is an opportunistic mindset coming into it; a gold mine to grab short-term… but it’s not the reality.

“I can imagine for a smaller eSports team right now, it’s a bit concerning that these clubs are coming into the space – I can definitely feel for the smaller team owners right now, it’s probably very tough: both financially but also as a brand competing for these players.”

Patrik “cArn” Sättermon, Fnatic Chief Gaming Officer

Once a professional Counter-Strike player, Patrik has continued his work for Fnatic as their CGO. (Source: HLTV)

Schalke 04 eSports: Shattering Preconceptions

German Bundesliga club, Schalke 04, are widely regarded as the first football club to express a serious signal of intent for their eSports division. Where the normal course of action had previously been to launch a more-accessible FIFA division, Schalke opted to first acquire a League of Legends (LoL) roster and a spot in the European Championship Series; the game’s premier competition within the region.

As the most popular eSports title, the decision to buyout the failing organisation LoL Elements was seen as a particularly bold move. After an encouraging start to their campaign, the football club were dealt a hammer blow as the roster suffered relegation from the top tier of competition.

Yet, at a point when many anticipated Schalke 04 would discontinue their League of Legends investment, the club rallied behind the project, relocating and restructuring to provide their team with the best possible chance of promotion. The decision silenced many of the club’s critics, demonstrating a genuine belief in the future of eSports as opposed to treating the team as a marketing tool.

Schalke 04 eSports’ revamped lineup for the start of 2017 (Source: Schalke 04 eSports)

“New things always have their critics, it doesn’t matter what we’re doing there will always be critical voices.

“We’re super convinced that this is not a marketing gag, we want to be successful – we do know this is a good move for the club and for the future.

“We weren’t happy with the relegation… but that’s sports.”

Tim Reichert, Schalke 04 Head of eSport

After falling short in their first attempt at requalification to the European League of Legends Championship, S04’s decisions in the coming months will provide further evidence for the continued debate – whether it will be for the prosecution or defence is uncertain. Whilst the logic behind football clubs’ investment in eSports is immediately apparent, what will take longer to determine, is whether their gold rush into the scene will provide the long-term prosperity every party is hoping for.