€71.4 million in accumulated losses for the LEC since its establishment. The 2024 financial statements of the League of Legends EMEA league depict a marketing asset that is as strategically valuable as it is costly.
The 2024 recovery: winter is ending
The LEC loses money every year. A lot of it. Losses reached €28.5 million in 2023, before being reduced to €18 million in 2024. A €10 million swing that might look like progress on paper. But context matters : the league has been in the red since inception.
The good news is that revenue has exploded. They jumped from €7 to €18.4 million in a single year, a 162% increase. Sponsors like Kia, KitKat, Red Bull, LG UltraGear and Secretlab continue to invest on the ecosystem, a strong signal to stakeholders about the product's appeal.
PLANS HAVE SHIFTED
Underlying these figures is a significant strategic decision that attracted relatively little public attention: Riot has changed the terms of engagement for franchised teams.
Franchise owners are unanimous in identifying the principal challenge facing esports: financial predictability, namely, the capacity to anticipate and project revenue over the long term in order to effectively manage operational budgets.
As originally designed, the LEC guaranteed organizations a fixed stipend, regardless of their competitive performance or marketing efforts.
However, in 2024, Riot took a decisive step by reducing the fixed stipend to a third of its prior level, while stipulating that an additional portion of the compensation would be conditional upon the attainment of specified competitive and/or marketing objectives. In effect, teams are now required to exceed expectations in both competitive and marketing performance in order to balance budgets established months or even years prior.
Do we know why there is an almost 10M expense jump in 2023 ?
Riot did not respond directly but an improvement in terms of sponsorship contracts is assumed.