H2K are one of the teams in the EU LCS, and have done reasonably well for themselves this year, however, the organisation has announced that it will not continue to compete in League of Legends past the 2017 season unless big changes are made.
"From a business perspective we consider it irrational to continue in a partnership [with Riot Games] where our partner earns very substantial annual profits while, by contrast, we incur annual losses of over €1,000,000. The financial arrangement between Riot and the teams is unfortunately backward and upside down. The fact is that most League of Legends teams lose money. Operating costs continue to increase dramatically and Riot's team compensation only covers a small fraction of those costs. In essence, team losses are subsidizing the marketing activities of a multi-billion dollar company."
"H2K as a premier team in the EU LCS, together with the other professional teams competing in the League of Legends, are the fundamental foundation of the League of Legends' food chain. It's the teams who identify, secure and financially support the players. It's the teams who, in building their brands, also promote Riot and the League of Legends. It's the teams who principally promote their players and attract the loyalty of fans. It's the teams who will fight hard to retain the best EU players in the EU while competing with the giant size NA LCS franchise structure. Without H2K and the other teams in the professional leagues, there would be no games for fans to watch, Riot's $2 billion in annual in-game sales would decline dramatically, Riot's streaming/broadcasting revenues (which will exceed $ 50 million annually) together with in-game ads and major league worldwide sponsorships would disappear."
The post then goes on to say that the organisation has subsidised Riot Games over two million euros, and that the situation is unsustainable, with claims the relationship is not "rational nor fair".
"Accordingly, H2K ownership has made the decision that we will no longer financially subsidize Riot and will not continue in the EU LCS beyond the 2017 season UNLESS RIOT creates a new financial and operating structure. Riot must provide the EU LCS teams with the realistic opportunity to earn through subsidies and revenue sharing, minimum compensation of at least €850,000 per year. Recognizing that as teams we must perform and contribute to the success of the league, we accept that a portion of the revenue sharing should be based on competitive performance, viewership, effective branding activities and other reasonable metrics. Also, critically important to the teams is that any planned changes to the EU LCS structure planned by Riot for 2018 and beyond must actually increase the value of the legacy team slots and not diminish them."
The post ends by saying that H2K do want to continue in the EU LCS, but hope that changes can be made so that can happen. Do you agree with H2K here?
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