Sorry for the essay but i see this a lot and I think it warrants a further breakdown of the entire picture. Valorant esports does not stand on its own - it is part of a much larger valorant ecosystem.
People are quick to blame orgs for stupid contracts, but it's important to follow the money.
There are only 5 places money comes into the valorant ecosystem:
VC investment into orgs
Orgs selling merch/subscriptions (e.g. C9)
Advertisers/sponsors on org streamers
Advertisers on esports events
Skin sales
#1 is actually a lie. It is not an income stream, it is a cost. Yes it's huge dollars, but it is a trap. It is basically a loan that requires repayment (+ interest!). The VC that gives this money expects to get their money back and more. Therefore, this money is actually a NEGATIVE ASSET TO VALORANT if the org is successful because more money LEAVES the ecosystem than came in. It's only a positive asset (TO VALORANT) if the org folds and the VC eats the loss. That doesn't make it inherently bad - loans are useful to grow a business. But THIS IS NOT INCOME.
#2 is a tiny, tiny, tiny baby business, and has not yet been sufficient to cover the cost of VC investment. Even SEN can't sell enough t-shirts to keep up with costs, let alone repaying their investors.
#3 is also a tiny, baby business. Not only does it not pay back the VC - it doesn't even cover the cost of the content creators + staff that went into securing this sponsorship in the first place. With better sales and support this could be profitable - other media niches have profitable-but-not-huge media companies (think linus media group, mythical studios, dude perfect, etc). Solid companies making sustainable money, but 3 orders of magnitude smaller than riot games. Also, somehow these orgs haven't unlocked the sustainability yet - probably because the cost of content is too high without the benefit of direct profit (the youtube/twitch revenue goes to the streamer, not the org). Also notice that none of those media companies took on outside investors in order to grow. Outside investment is a COST, not revenue.
#4 is miniscule, and goes directly to riot.
#5 is where almost all of the Actual Money is. This is the cash cow, and Riot remains in complete control of it.
It's all about the skins.
eSports is nothing more than a means to sell more skins. It is a marketing product. It is a cost center, NOT a profit center. Maybe in 10, 20, 30 years that will be different and we'll have multi-billion dollar esports teams that are profitable in their own regard. That's what the VC's are hoping for - it's a lottery ticket for billionaires in order to become more-billionaire-ey. But it is NOT a reliable projection to build a sustainable business around.
Riot's Valorant team does not care about the 30 year outlook of esports. They are focused on making real, actual money - not speculation.
That means that riot views the orgs ONLY as expenses that they must support. They'll tell you it's a partnership, but realistically they care only whether a team can help them sell skins at a reasonable ROI. It is a marketing arrangement. They are the 2023 equivalent of madison avenue.
Riot does not care if SEN goes bankrupt, just as long as it doesn't effect the quality of the esports product.... if the product is compelling, there will be another team that people will support. Therefore Riot will put just enough money into the partnered orgs so that it doesn't effect the fan experience too badly... i.e. it's better long term to have consistent team names for fans to root for instead of just players. But Riot will try to pay those orgs as little as possible.
The question is not "Should player salaries come down?"
The question is "What can the players charge for providing their marketing services?"
The orgs will always be nothing more than middle men in this arrangement, skimming whatever tiny fractional percentage they can from the giant pool of riot's money. Orgs are the marketing agency, Players are the marketing product.
But make no mistake - it is RIOT's money. All 5 of those income streams are all eventually going to John Riot's pocket and nowhere else... even the money that's going to the orgs directly just means that riot has to pay them less skin money.
So let's ask teh question again: How much money does riot make off of skin sales? What percentage of that money is driven from the esports division?
Now, of that money, what percentage are the players entitled to?
Being the liberal commie scum that I am, I believe that the vast majority of that money should go to the Labor. In this case, the labor is: The players, the casters/talent, the production team, the programmers, the designers, the salespeople, etc.
In reality a much too high percentage goes to John Riot's pocket.
Don't blame the players for charging the most they can for their services.
Blame the billionaires for milking the system dry before moving on to the next shiny investment.
i stole this all from reddit lol
edit/addendum: This is why i suspect orgs like Mogul, DSG, etc will be the actual sustainable orgs in the end. They are being built by people who are trying to build a media company not a pro sports team. Not that all creator-owned orgs will be successful, but I think the long-term successful ones will be from creators who know how to make media/marketing businesses.
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