Riot Games Overhauls LoL Esports Model With Global Revenue Pool

Riot Games will hand League of Legends esports teams 50 per cent of a new global revenue pool (GRP), dismantling a franchise system that charged roughly US$10 million for league entry and left most teams without digital income.

The video game developer confirmed the new business model applies to teams in the North America-based League Championship Series (LCS), the League of Legends EMEA Championship (LEC) and League of Legends Champions Korea (LCK). Riot will also pay franchises a fixed stipend and will increase both the standard esports revenue share percentage and the quantity of digital content released each season.

How will the money be split?

The GRP will collect and redistribute all revenue from digital LoL esports content. The distribution works in three tiers:

• 50 per cent goes collectively to Tier 1 teams across the three leagues.
• 35 per cent is allocated on competitive performance, split into two tranches — one tied to regional league standings, the other to placements at international events.
• 15 per cent rewards teams for, in Riot's words, 'developing strong fandom for their players, leagues and team brands'.

The old system worked very differently. Teams paid about US$10 million to enter a league, and only clubs that qualified for international events shared in the digital content revenue tied to those competitions. That meant just 20 to 30 teams earned digital revenue in a given season, leaving the rest dependent on sponsorship sales.

Why is Riot changing the model now?

The developer framed the overhaul as a response to the sector's post-pandemic financial squeeze. Numerous esports franchises have struggled to maintain steady revenue since Covid-19, partly due to unfavourable economic conditions. Riot itself hasn't escaped: in January it announced an 11 per cent cut to its workforce.

Even so, the company pushed back on doom-laden readings of the industry, declaring that the 'imminent demise of esports has been overstated'.

Riot said the shift makes teams less reliant on sponsorship income, which has proven volatile. Digital content sales offer a steadier and larger opportunity than sponsorship deals, which are constrained by finite inventory, categories and market penetration.

On other direct revenues such as media rights and sponsorship, Riot said it will contribute a 50 per cent share to teams — but only once the developer 'recover[s] its annual investment in LoL esports'.

What did Riot's esports president say?

John Needham, president of esports at Riot Games, laid out the logic in a statement.

'This model shifts the revenue-sharing mechanism away from sponsorship sales as the primary revenue source and focuses on digital content sales, which are generally more resilient to economic downturns and have a higher ceiling than sponsorship, which is capped by inventory, categories, and market penetration,' Needham said.

He also argued that shared digital revenue lets teams and leagues sell together rather than compete. 'Another benefit of sharing digital revenue is that the teams and leagues can truly join forces to maximise sales for everyone's benefit. This has proven difficult for sponsorship sales since the leagues and teams operate their own sponsorship businesses, and supporting each other's businesses typically results in conflicting terms or rights.'

'With digital content, we reduce those conflicts and can work together as a unified force to grow the overall pie,' Needham added.

What happens to China's LPL?

Riot said it will work with the China-based League of Legends Pro League (LPL) to evolve that competition's current business model, signalling the restructuring could extend to the game's largest market. For the LCS, LEC and LCK, the immediate effect is clear: entry fees give way to stipends, and a pool of digital revenue that once reached 30 teams now reaches every Tier 1 franchise.