Business of Esports - 245. Office Hours: Esports Team Naming Rights

Hi, everyone. Welcome to another episode of

office hours with the professor. As always, I'm your host,

William the professor Kahless. And I'm super excited to do

another deep dive in an esports topic that caught my eye this

week. And what's our topic today? Well, its naming rights,

specifically, its team liquids and ALCS and Academy teams

rebranding as Team Liquid Honda as part of a sponsorship deal.

Now, this also includes other elements, including like, I

think, a Honda lounge, for Team Liquid players to compete in

sort of special Honda vehicles for the players. But the big

thing we want to talk about today is teams selling naming

rights. Because this is the second time something like this

has happened. We've seen this previously with TSM, and going

to TSM FTX. Or at least second time, we've seen a major deal

like this. And presumably that means that we've seen it twice,

we'll see more of it. So the question I have is, is this a

good thing or a bad thing for the esports industry. And the

easiest way I know to dig into that is to do some simple pros

and cons analysis. So let's start with the pros. The obvious

one is money. If you're a pro team, and you're willing to sell

naming rights for your team or for your roster, you can get a

lot more money from from a sponsor, presumably, right, it's

another asset that you can offer. And in turn, a benefit to

a sponsor here is exposure, right? This is a new prominent

way to get your brand inserted into prime placement. It's

literally in the name of the roster or the team. And I think

there's also a little bit of backdooring going on here.

Because if your Team Liquid, let's say it's probably pretty

tough to insert Honda branding and name into an LCS broadcast

without some sort of agreement with riot. But if you change the

name of your team to Team Liquid Honda, it's sort of a cheeky or

clever way of getting your sponsor in the broadcast more.

So there's a little bit of a backdoor element here. So those

are the pros money and exposure. Pretty straightforward. What are

the cons? Well, there's really only two but one that matters

the most. And it's potentially a pretty important one. It's

cheapening the brand, right? Potentially selling naming

rights deals could undermine the value of the core brand. The

naming rights are offered up to we do see naming rights deals in

traditional sports from time to time we even see hold teams that

are named after things, for example, the New York Red Bulls

and MLS soccer here in the States. But I think if we saw

something like the Honda Yankees in Major League Baseball, we

would have a mixed reaction to it fans would have a mixed

reaction to it, right? Because in some sense, it would could be

seen as degrading or making the Yankees brands lesser. And

certainly there's a world where if an esports, for example, all

the teams did this, and it was suddenly Honda versus Toyota

versus Ford. Right. You know, I think it would in the extreme

case, this would start to feel a little weird, and maybe over

sponsored or over corporately exposed, right. And that brings

me to kind of the second con of this, which is, I think this

puts pressure on other teams to do more deals like this. Because

if Team A is willing to sell their naming rights, and Team B

isn't right, that's a big advantage for Team A going with

sponsors. And there's also a sort of difficult to put back in

the box effect here. If Team A is sold their naming rights in

the past and they're doing a deal with a new marquee sponsor,

that marquee sponsor is going to know naming rights are on the

table and might insist you know, you Hey, you did it for these

guys. Look at all the money we're paying you. We want naming

rights to. So again, pros money exposure, cons brand cheapening

and a little bit of a slippery slope effect here for the

industry. So how does the professor grade this overall,

what's my final take on where these pros and cons balance out?

And I had a big think about this, and I come out with an

unusual grade for this, I give this a pass. I don't think this

is a good thing, or really even a bad thing for the industry. I

think it just reflects the state of where we are today in gaming

teams are looking for revenues. The naming rights is an asset

they seem to be allowed to sell today. So they're going to sell

that asset. I do think at some point, there'll be some

guardrails put up with this, maybe around the publishers,

right, because as I said alluded to earlier, if it becomes Honda

versus Ford versus Toyota, in every professional match, might

not be the best for the esports industry. But that just means

teams that are doing early deals like Team Liquid and TSM I think

are smart. They're sort of front running ahead and getting the

revenues while they can get them. So that's my take on

naming rights deals and esports. And one last thing before we go,

I'm actually taking a vacation. So you might not see office

hours with the professor for a little while. But if that's the

case, don't worry. I'll be back with new episodes around mid

July. And I look forward to doing a deep dive into esports

news with you then. Thank you so much.