76ers Take a Shot at Competitive Videogaming
September 26 2016 - 5:50PM
Dow Jones News
The National Basketball Association's Philadelphia 76ers on
Monday became the first organization among the four major U.S.
sports leagues to invest in teams that compete at videogames, a hot
area attracting major advertisers and talent with ties to
traditional sports.
The 76ers acquired a controlling stake in two so-called eSports
squads, the latest in a number of high-profile moves in the space
that include investments by professional athletes and live coverage
of tournaments on Time Warner Inc.'s TBS and Walt Disney Co.'s ESPN
networks.
Global revenue from ticket and merchandise sales, ads and other
areas of eSports is on track to more than double to $1.13 billion
by 2019, according to research firm Newzoo BV.
Terms of the deal weren't disclosed.
The eSports teams—Dignitas and Apex—were represented by talent
and sports agency WME/IMG. Greg Richardson, a venture capitalist
who is being brought in to oversee the combined entities, said such
teams typically are valued at between $5 million and $12
million.
76ers Chief Executive Scott O'Neil confirmed the price was in
that range. The franchise will share the investment with NextEquity
Partners, which counts former senior members at Apple Inc. and
Elevation Partners among its founders.
Traditional sports and eSports have crossed paths before.
European soccer clubs including Valencia CF, Manchester City FC
and West Ham FC have built up eSports teams or signed players.
The NBA's Jeremy Lin and Jonas Jerebko, Major League Baseball's
Jimmy Rollins and Alex Rodriguez, and retired basketball star
Shaquille O'Neal, among others, all have ties to eSports teams.
Brazilian soccer's Wendell Lira in July said he was hanging up
his cleats to pursue a career in competitive gaming.
"If you look at the power and numbers of eSports, it's
intoxicating," said Mr. O'Neil, who also is CEO of the National
Hockey League's New Jersey Devils.
Competitive-gaming athletes, like their traditional sports
counterparts, use high-end gaming gear and wear jerseys with
sponsor logos.
Major competitions for games such as "League of Legends" and
"Dota 2" fill stadiums around the world, attracting millions of
additional viewers online. In some tournaments, the prize pools
stretch into the millions of dollars.
"We think there's a huge market opportunity," said Adam Hopkins,
co-founder and managing partner of NextEquity. "It's an attractive
demographic—young, above-average income and high-spend propensity.
It will be a multibillion dollar market within a few years."
Over the summer, TBS aired a Friday night eSports competition
that drew major advertisers including Arby's Restaurant Group Inc.
and Buffalo Wild Wings Inc.
Dignitas and Apex will merge and go by the name Team Dignitas,
gaining access to the 76ers' nutritionists, psychologists and
trainers.
The 76ers plan to help the team strike sponsorships and may
promote it at its NBA games.
"We have relationships throughout Corporate America," Mr. O'Neil
said. "We will talk with them about the incredible upside of
eSports and see if there's a way we can work together."
(END) Dow Jones Newswires
September 26, 2016 17:35 ET (21:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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