File picture: Reuters
File picture: Reuters

Overwatch, Call of Duty League teams can defer multimillion-dollar franchise fees due to Covid-19

By The Washington Post Time of article published Sep 30, 2020

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By Teddy Amenabar

Activision Blizzard is allowing Overwatch League and Call of Duty League teams to defer multimillion-dollar franchise fees that were due this year to account for the financial turmoil brought on by the coronavirus pandemic, according to two people holding senior roles in the leagues.

The offer by Activision Blizzard is an acknowledgment that its competitive gaming leagues face serious financial challenges because the novel coronavirus has made in-person events near impossible to conduct. Since late January, the deadly virus has derailed the ambitious international travel schedule lined up for the third season of Overwatch League (OWL) and the live tournament events prepared for the inaugural season for Call of Duty League (CDL) in North America.

The Esports Observer first reported in July that the leagues and franchise owners were discussing "some form of financial relief" and one of those options was delaying franchise payments.

The CDL and the OWL don't just come from the same parent company, Activision Blizzard. Ten of the 12 investors in CDL also have teams in OWL. And, in both leagues, teams were preparing to host marquee live events in front of thousands of fans this year. The ticket sales, merchandise and sponsorships for these in-person events were all intended to be a key source of revenue for franchise owners.

Some teams did host weekend events early in the year to sold-out crowds - in Dallas, New York, Minneapolis and Washington - before the two leagues were forced to scrap their plans for remaining events in mid-March because of the pandemic.

"It's a tough year for everybody," said Philadelphia Fusion President Tucker Roberts, who didn't comment on the specifics of any financial agreements with Activision Blizzard. "They've worked with us to make sure there's support."

Representatives for Overwatch League and Call of Duty League did not respond to a request for comment regarding financial aid arrangements between Activision Blizzard and franchises.

The first franchise slots into Overwatch League and Call of Duty League were reportedly sold for $20 million and $25 million, respectively. Activision Blizzard has never confirmed those prices. Every year, franchise owners are expected to pay a predetermined portion of the original price tag. If a team decides to defer the payment this year, the cost will then be split among the payments in 2021 and thereafter.

The challenges the CDL and OWL faced this season are not unique to Activision Blizzard's competitive leagues. Every esports league with in-person events has had to pivot back online in some fashion. Overwatch League floundered at first, with dropped matches and broadcasting issues, but the league found some footing by devoting the back half of the season to a monthly tournament model.

Toward the end of the season, weekly match viewership started to trend upward. The league reported the second week of OWL playoffs was the most watched of the season, with some 375,000 people watching live and by on-demand video over the next three days. There's still one more weekend of competition with the Grand Finals starting Oct. 8.

Meanwhile, Call of Duty League ended its inaugural season with a bang. The Dallas Empire beat the Atlanta Faze in the most-watched Call of Duty esports event ever recorded.

Front offices around CDL and OWL agree that the goal is to return to live, in-person events whenever it's safe to do so. Activision Blizzard created both leagues to pioneer a city-based model, built like traditional sports leagues, and that's always been a selling point for franchise spots. Team presidents and owners see the attention to a local market as a surefire way to created a dedicated fan base with regional sponsors and packed stadiums.

"For us, we're in this for the long haul," said Chris Overholt, the president and chief executive of the company behind the Toronto Defiant and the Toronto Ultra. "When you take that long-term view to the industry the conversation becomes, I think, a lot, a lot easier."

The Washington Post

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