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League of Legends abandoned pro/rel in favor of franchises. What can MLS learn?

Photo by Juergen Schwarz/Getty Images

As many American soccer fans wonder whether a promotion and relegation system will ever be possible in their country, one of the world’s most popular esports leagues is steering its North American competition in the opposite direction. Built initially with a pro/rel model, the North American League Championship Series — competitive League of Legends — will switch to a franchise model in 2018.

Teams who were in the first division at the end of 2017 didn’t get to stay automatically. Instead, they had to apply for their place and pay a $10 million fee if Riot Games — LoL’s publisher — let them stick around. New entrants had to pay a $13 million franchise fee. The second- and fourth-placed finishers from the most recent season got booted out, with new teams backed by rich owners taking their places.

Given League of Legends’ exploding popularity, this is a big deal. Head over to Twitch at any given time and you’re likely to find that LoL is the game with the most viewers. The game has over 100 million active players worldwide, and the League of Legends World Championship is watched by roughly as many people as the the NBA Finals.

If you think esports should remain separate from traditional sports because they’re just people playing video games, you are fighting a losing battle. The Paris 2024 bid committee is pushing to add esports to the Olympics. It’ll be a demonstration sport at the 2018 Asian Games, then a medal sport in 2022.

So why is Riot abandoning a model that’s worked well thus far and embracing the American sports franchise model? They insist that eliminating the possibility of relegation was imperative to ensuring the continued growth of NA LCS.

“Relegation is a large point where fans might actually break from following a team,” Riot Games co-head of esports Jarred Kennedy told SB Nation. “It’s so much harder to be a fan of a team when they are playing in a league that’s not as popular. It might be harder to watch, not on as frequently, the team may have less revenue. Not just within LCS, but with any sports league. That’s something that we felt has its moments but we think it holds back the sport from blossoming into its full potential.”

There is no more heated argument in American soccer than the one over pro/rel. Major League Soccer and the National Women’s Soccer League have closed franchise systems like most American sports, while every other major league in the world uses some form of promotion and relegation, with teams moving up and down divisions based on their record. At any given moment, you can find American soccer fans getting so riled up about this issue on Twitter that their argument devolves into personal insults.

According to some loud voices online, pro/rel is a sort of magic bullet that can fix the problems with American men’s soccer without significant negative externalities. The argument goes something like this:

By doing away with MLS’s closed system and opening up the possibility of first division participation to everyone, dozens of new clubs will form. This would ostensibly lead to more youth academies starting, many of them in currently underserved areas, granting players access to high-level coaching and playing opportunities that they are shut out of in the current American soccer system. Existing clubs will see a huge boost in investment, with potential financiers seeing the value in acquiring a lower-division club on the cheap and guiding it into the top tier. With MLS’s restrictive roster rules gone, teams would sign better players, and quality of play would improve. Between the wider geographic spread of well-backed teams and the death of the single entity structure that gives MLS teams incentive to collude with each other rather than compete against each other, the product would become more interesting to more people, causing TV ratings and sponsor interest to increase.

In summary, the result of scrapping the franchise model and implementing an open soccer pyramid with movement between tiers based on performance would hopefully lead to more clubs making more money and producing better players. In this scenario, the USMNT would get much better and actually have a chance to win the World Cup.

MLS: U.S. Open Cup-FC Cincinnati vs Miami FC
Miami FC have an owner pushing for pro/rel. FC Cincinnati is trying to buy into MLS.
Jasen Vinlove-USA TODAY Sports

Recently, the idea that American soccer could benefit from switching to a pro/rel system has gained some mainstream acceptance. One of the idea’s biggest proponents is Riccardo Silva, founding partner of sports marketing company MP & Silva and owner of Miami FC, which plays in the second-division North American Soccer League. He recently pitched MLS on a $4 billion media rights deal contingent on switching to a pro/rel model, which the league rejected.

“There is no motivation for teams to invest in quality because you can't move from the third division to the second or from the second to the first,” Silva told Gabriele Marcotti in an interview for ESPN. “We believe the increase in quality can be achieved from the bottom up, with teams investing in quality, and we believe right now it's not really happening.”

Riot Games had a completely different experience. “There are some unintended consequences,” Kennedy said of a pro/rel system, “particularly around the ability to invest around the long term. So what we saw in our league was, because teams didn’t know if they would be around in two splits, or brands didn’t know if team brands would be around, it was harder to make long-term investments.”

Silva and others who extol the virtues of pro/rel boast about all of the new investment an open system will bring in, but Riot found that the opposite was true with NA LCS. Without a guaranteed first-division place, sponsors and owners were both wary about making big commitments.

“We believe that having a platform where entities can invest for the longer term is a key part of being able to build a sustainable future for the league,” said Kennedy. “We want sponsors to be able to come in and be comfortable doing a three-year deal.”

Riot had no idea how popular their new model would be. Their asking price of $13 million for a new entrant into NA LCS proved to be far too low — they received over 100 applications. The new Overwatch League, from rival Blizzard Entertainment, got 12 owners to buy in at a $20 million franchise fee despite the game having fewer players and lower viewership numbers than League of Legends. ESPN’s Jacob Wolf reported numerous esports investors who bid for spots in the new NA LCS would have gladly paid a $20 million fee to enter the league.

That level of interest allowed Riot to implement a provision in their league bylaws that doesn’t exist in most closed sports organizations — the ability to boot an underperforming team.

“I think those measures will be helpful,” Riot Games co-head of esports Whalen Rozelle told SB Nation, “but I think the thing that will help the most will be that we have 10 organizations that are going to invest deeply in their team and in their support staff and all want to win.

“No one applying is content with losing and I think we have 10 owners who are very competitive and willing to make a splash,” Rozelle continued. “While we want to have a structure as sort of a last gate to ensure that it doesn't happen, we don’t think it will be a problem, but we are trying to prepare for the worst case [scenario]. But we believe, from talking to these owners that everyone is interested in winning and building a fanbase and they know winning is a huge part of that.”

But winning in NA LCS and global competitiveness are two very different things. This is yet another thing that North American soccer and LoL have in common — they fall well short of the top competition globally. Korean teams currently dominate the League of Legends World Championship, with European and Chinese teams regularly outperforming North American sides as well.

Since California-based Team SoloMid finished third in the inaugural League of Legends World Championship in 2011, no North American team or individual player has made it to the semifinals. Having the same pro/rel system as the rest of the world didn’t help North American teams at all. Riot is clearly hoping that the increased investment going into teams as a result of the switch to a franchise system will lead to those teams catching up to the top global standard.

“We want teams to be comfortable building a facility where they can improve the lives of their pros and help them compete at a higher level on the Rift,” Kennedy said, “and we feel that by bringing in more permanence we unlock those things.”

But will moving away from promotion and relegation restrict the flow of young talent into LCS? With fewer professional opportunities available, players might get discouraged and never pursue esports careers, or decide to pick up another game that has more professional teams. Riot disputes that idea, saying their move to franchises allowed them to set up a better youth-to-professional pipeline.

“We don’t think that’s true,” Kennedy says. “We think about the overall ecosystem, and in one sense we are getting rid of [second division league] Challenger, but we are replacing it with a bunch of academy teams. So there’s going to be a [youth system] built in within each of these organizations.”

Kennedy also talked about establishing programs in schools. “Beyond that we are working closely with the college and high school ecosystem to ensure that there is a seamless transition between amateur, semi-pro and professional play,” he said. “And the hope is that over time, as the LoL esports ecosystem matures, there are going to be lots of paths to play at the professional or semi-professional level, and lots of paths that people can take to reaching their full potential.”

Rozelle is more emphatic about this change being a positive thing for youth development. “We believe strongly that this will be great for young players,” he said. “These organizations now care about winning not just next year, but 10 years from now as well, and they know they have to invest in the future, not just the present. With the unlocked economics for both teams and players, we think that they are going to have the means and incentive to do so. We think the academy league is just the beginning of how we are going to invest in the future of esports in North America.”

League of Legends College Championship Photo by Josh Lefkowitz/Getty Images

If you’re an American soccer fan, this might sound familiar to you. The Development Academy was founded a decade ago to create a nationwide standard for top-level boys’ youth clubs and improve the quality of players they produce. Results have been mixed; a few dozen alumni are professional players, but only one — Christian Pulisic — is an established star. He left the United States at age 16 to further his soccer education in Europe.

The DA did not fix what ails American men’s soccer, which is its lack of grassroots culture. “We need to shift the paradigm and create a street soccer community here,” U.S. Soccer presidential candidate and former USMNT player Kyle Martino told SB Nation. “We need to help our communities see that soccer is a part of our culture,” he said of his campaign to get futsal courts installed at schools and parks. Martino and his colleagues face an uphill battle.

Soccer largely lags behind basketball and football when it comes to pickup games kids choose to play outside of organized sports. While soccer has the highest organized participation rate of any sport in America, it’s not what kids are getting into fights over on the playground. Nutmegging someone does not have the same social cachet as breaking their ankles with a crossover. Soccer is something you play with friends on the weekends; ball is life. And in the countries that are best at soccer, the sport is to their culture what basketball is to urban America.

The same goes for esports. To most Americans, video games are just that — games. Players who catch the attention of professional organizations get serious and train hard in their late teens, but the United States does not yet have the same kind of deeply ingrained esports culture as Korea, where there have been professional esports competitions and television channels dedicated to covering them since the late 1990s.

That culture helps to produce players like “Faker” Lee Sang-hyeok, who is widely considered to be the greatest League of Legends player of all time. Faker started playing LoL seriously when he was 15, and at 17, he dropped out of high school to sign a professional contract. A 2015 interview with ESPN’s Mina Kimes paints the then-19-year-old as truly obsessed with his craft.

For the next eight hours, they practice by scrimmaging against other teams, occasionally taking breaks to study game film. Faker usually practices by himself for at least four more hours ... He has no real hobbies outside of gaming, and he’s never had a girlfriend.

American League of Legends and American soccer ultimately face the same chicken or the egg problem in their quest to reach the top of their respective games, from both a business and sporting success perspective. They need American teams to perform better at the highest international level to attract bigger American audiences. But for American teams to reach that standard, they need better players. The best way to get better players is to convince as many talented young kids as possible to play the game a lot from a young age, fall in love with it, and dream about pursuing a professional career. The best way to accomplish that is to prove a pathway to a fulfilling career exists ... by performing well at the highest international level.

League of Legends College Championship Photo by Josh Lefkowitz/Getty Images

Six years of promotion and relegation in NA LCS didn’t create that culture. Maybe they just needed to give it more time, but Riot has reason to believe that franchises were the best long-term solution for the future of North American League of Legends. They don’t think pro/rel works here. They’ve kept it in their top leagues — Korea, Europe and China — because they think it does work there, for now.

American soccer can learn something from League of Legends. Promotion and relegation is unlikely to be the disaster that alarmists claim it is, but it’s unlikely to bring the wave of investment that its proponents claim. Pro/rel would drive some owners and sponsors away while inviting others. Wealth would be less concentrated among a small number of entities than it is right now, but likely at the expense of no one having a chance to get really, truly good anytime soon.

Deciding on whether a league should use a pro/rel or franchise system is a difficult decision, with each having significant benefits and drawbacks, but neither creates or drains a culture on its own. Pro/rel might be the best thing for the business of American soccer, but it’s not magic. NA LCS isn’t great because America doesn’t have an esports culture; American men’s soccer isn’t great because America doesn’t have a soccer culture. The business model of a professional league cannot change that.

Austen Goslin contributed reporting to this story.

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