An inside look at the new Overwatch League, with 7 city-based teams

Today, Activision Blizzard unveils the first seven teams to become part of the Overwatch League. Heroes Never Die had the opportunity to sit down with league commissioner Nate Nanzer and team owner Andy Miller to talk about what the inaugural season will look like, and where the league goes from here.

The magnificent seven

Nanzer tells us that negotiations with potential franchise owners have been ongoing since the league was first announced in November. The founding seven owners and the first seven cities to be represented in the Overwatch League are:

• Boston: Robert Kraft, chairman and chief executive officer of the Kraft Group and the New England Patriots.
• New York: Jeff Wilpon, co-founder and partner of Sterling.VC and chief operating officer of the New York Mets.
• Los Angeles: Noah Whinston, chief executive officer of Immortals.
• Miami-Orlando: Ben Spoont, chief executive officer and co-founder of Misfits Gaming.
• San Francisco: Andy Miller, chairman and founder of NRG Esports and co-owner of the Sacramento Kings.
• Shanghai: NetEase, a Chinese internet technology company and partner of Blizzard and Mojang AB (Minecraft) in China.
• Seoul: Kevin Chou, co-founder of Kabam, a U.S.-based developer and publisher in the mobile space.

As you can see, owners are a mix of traditional sports team owners, entrepreneurs and tech companies. Nanzer says that negotiations are still underway, and additional teams could be added in the near future.

But why these teams? The league’s commissioner says they represent the “best in class” of potential owners from around the world.

“We sat down and looked at the top cities in the world,” Nanzer said. “We wanted to make sure that we were targeting cities that had large populations, but also large populations of Overwatch players. And then, within those cities, we wanted to talk to the best potential owners that could really bring complementary capabilities to what we have to help us with this league.”

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Hometown heroes

In screening for that complementary skillset, Nanzer said, part of the process was to identify team owners that were ready to put down roots in a community, “to roll up their sleeves and build a local business.”

Every team in the Overwatch League will be entitled to the lion’s share of revenue generated within their market, not just through tickets and concessions but also from local sponsorships. It’s a revenue stream that simply isn’t a part of modern esports right now, and the league and its owners will be charting a new course for the esports industry as a whole.

The city-based aspect of the league was a big draw for Andy Miller, owner of NRG Esports.

“The local aspect of the league was the biggest attraction,” said Miller, who is also the co-owner of the NBA’s Sacramento Kings franchise. “One of the biggest issues with esports, and also part of its charm, is that you can create a global audience. You can have fans all over the world. But it’s always become a big challenge for fans to actually see their favorite teams. You have to fly to a major event or a finals somewhere in a major city. And there was never a hometown team.

“Coming from traditional sports, in a city like Sacramento ... it’s a one-team town and people grow up bleeding purple. We want people to grow up loving our San Francisco Overwatch team and NRG.”

The entirety of the first season will take place at a venue in Los Angeles, Nanzer said. That will give each team the time they need to find a permanent venue in their home towns. In season two, teams will travel around the world and host each other in a series of home and away games. With luck, the pomp and pageantry of this first season will help seed home cities, like Miller’s own San Francisco, with a ready fanbase.

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The rising tide

One major aspect of the Overwatch League is that it will include a profit sharing system involving every team in the league. A press release, issued just today, gives some detail into the revenue streams that contribute to that communal pool of profits.

As mentioned above, each team will be entitled to all local revenues they can drum up in their region. But that caps at a certain amount each year. Above that amount, a percentage of local revenues must be sent to the league’s shared revenue pool. Any league-wide revenues generated will also go into that pool, as will 50 percent of the revenue from the sale of Overwatch League-themed in-game items.

Teams will also be able to “license, operate and monetize” up to five amateur events in their territory each year, and retain all of that revenue.

This revenue sharing will help to bolster the Overwatch League in its early years, and help to ensure that teams in smaller markets aren’t priced out of the league’s elite tiers of play.

“We are launching a global league,” Nanzer told us, “and so the league is going to drive a lot of economics at the league level. Media rights, contracts, global sponsorships, global merchandise and most importantly in-game items: Team-branded skins and other items that we sell in the Overwatch game.”

A seat at the table

But what did team owners actually have to pay for a league franchise?

Just a few months ago rumor was that the price for a team started somewhere near $20 million, a floor that easily priced out some of the smaller teams in the scrappy, start-up world of professional esports. League commissioner Nanzer and NRG owner Miller both refused to comment on the final price during our interview, but both took the opportunity to stress that whatever the cost, each franchise slot is permanent.

There will be no relegation in the Overwatch League. Period.

“We’re not delaying relegation for a few years,” Nanzer said. “There’s actually no relegation, and that was really important to us. This is a new sport. We need to make sure there’s stability. [...] You end up running your business in a different way than if maybe but would be best because of the constant threat of relegation. So we just wanted to remove that and really give our team owners the opportunity to invest and hopefully give them their sponsors and their partners that confidence as well.”

Removing the threat of relegation fundamentally changes the way in which owners can manage their teams, NRG’s Miller said, and contributed to his willingness to spend top dollar for a seat at the table.

“What ends up happening is you inevitably create a structure where the interest is in the player and not necessarily the team,” Miller said. “It should be in both. [...] It becomes challenging for the fans to try and invest their time in a team when the team keeps changing every three, six months.”

That challenge extends to potential sponsors as well. With relegation off the table, non-endemic, local sponsorships should be easier to land.

“This is the moment,” Miller said. “This is why we ponied up and really wanted to get involved. [...] We’re part of the league now. I want this league to grow, I want our fellow teams to be winners as well so we can create something special that has much more of a lasting value for everybody in the ecosystem.”

Conspicuously absent from the Overwatch League’s big announcement was any mention of a parallel player organization. We asked commissioner Nanzer and NRG owner Miller point blank if there were plans to allow unionization of any kind.

There was a long pause.

“That’s up to the players,” Nanzer eventually said. “I think that’s sort of up to our players in terms of how they want to be represented and what they want to build on that front.”

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Game on

Many questions remain unanswered about the inaugural season of the Overwatch League. Fans still have no idea where the Los Angeles venue will be, how many teams there will be going in, what the schedule will look like or even how post-season play will be structured. Nanzer promised more information in the months to come, as well as a firm date for the league’s opening day.

For NRG’s Miller, the next steps are to find the very best players in the world and rally them around his organization. On the other side will be competitors unlike any he’s faced before.

“For us as a team, we want to win,” Miller said. “So we want to put together the best team. We’ve had a tremendous run since the announcement of the league, but now the stakes are different.

“We’re going to see what folks like the [owners of the] Patriots and the Mets do in putting together their group and how they’re going to bring some traditional sports practices into esports, and vice versa. Winning is our number one concern.”