How Far Can Rick Fox And The Yankees Take Esports?

Rick Fox and four Echo Fox gamers (Charley Gallay/Getty)

Instead of finding a documentary about Mickey Mantle or a replay of the 1998 World Series on the Yankees' TV Network next week, you might end up watching a match of H1Z1 or League of Legends. It's not just an offseason thing, either - the New York Yankees, baseball's most storied franchise, are betting on esports.

This isn't quite as strange as it sounds. Investing in esports is no longer strictly the domain of athletes looking for a new space in which to compete or Silicon Valley types throwing some money at the latest tech fad.

Late last year, the New York Yankees entered into a partnership with Vision Esports, an organisation that includes Rick Fox's Echo Fox as well as Twin Galaxies. This marks the most definitive entry of sports's old guard into competitive gaming. It's a moment that could go down as a milestone for both esports and traditional sports.

For some time, the term "esports" was purely aspirational, and more an expression of the desire for competitive video gaming to reach the large and lucrative cultural and economic spaces enjoyed by sports than a reflection of any actual reality.

Slowly, though, the barriers between these worlds are coming down. Organisations like Echo Fox, the baby of 13-year NBA veteran Rick Fox, first brought sports and competitive gaming together.

Since then, more and more sports figures have invested in esports, from fellow NBA players like Shaquille O'Neal (NRG Esports) and Jonas Jerebko (Renegades) to team owners from the Philadelphia 76ers (Team Dignitas) and the Golden State Warriors (entries in Overwatch League and League of Legends' LCS).

"You just can't deny the numbers," said Stratton Sclavos, a managing general partner of Vision Esports. "The number of daily active users playing these games, the viewers tuning in to live events, the increasing global audience that is playing these games. The numbers don't lie — and it's in a demographic that professional sports are very concerned about."

This sounds good, but also maybe you can deny the numbers. The Wall Street Journal inexplicably ran a graphic that projected esports viewership to jump from 170 million last year to 250 million this year - a spike that far outstrips the growth curve of the last few years. It is clear that esports is growing, and growing quickly, but it is equally clear that there is still a striking amount of hyperbolic hype involved in all this.

"We can almost double our viewership if we start counting both eyeballs!"

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But there are some things we know about it for sure. Regardless of its size, esports viewership is heavily concentrated in the younger demographic the Yankees are concerned about. And those viewers only have any value to the Yankees if there will be significant crossover of esports fans into the sports world.

According to T.L. Taylor, author of Raising the Stakes: E-Sports and the Professionalisation of Computer Gaming and a professor at MIT who has been observing the competitive gaming world for over a decade, that crossover is hardly guaranteed.

"I think it's an open, empirical question that we don't have a lot of good data on," Taylor told me when I asked if we could realistically expect the sports audience to be converted into revenue-generating sports fans.

"Historically, esports has primarily been seated in kind of a gaming-geek culture space. The audience for esports has certainly grown with the rise of livestreaming, but it's still to me an open question whether or not we'll be seeing that other sports demographic as well."

It seems a stretch to believe that people who watch League Of Legends on YES will tune in for a Wednesday night Sonny Grey start just because they air on the same channel.

But even if those esports viewership numbers turn out to be inflated, partnering up with Echo Fox is a low-risk opportunity for the Yankees to extend an olive branch to a younger generation that has not yet engaged with baseball as their parents or grandparents did. Over the past decade, the average age of a baseball viewer has increased from 53 to 57 as the game has steadily lost young viewers.

The Yankees see esports as a potential tool to bridge the gap between ageing parents and grandparents with cable subscriptions and their children, the next generation of bill-paying fans.

"Pro athletes play video games when they're on the road. Bringing Aaron Judge in here or bringing somebody else in here and having him play against Rick Fox in Street Fighter, or one of our players here, the best pros in League of Legends or the rest, that's got to be entertaining content for any sports fan, young or old," Sclavos said, "Especially for kids now who are going to baseball games with their parents but at the same time are playing video games for six hours a day in their bedrooms."


The Yankees' partnership with Echo Fox fits within the new reality of professional sports franchises acting as media companies. According to Forbes, the Yankees pulled in $US516 ($661) million in revenue in 2016. FanGraphs estimates $US98 ($126) million, just under 20 per cent, came from regional sports network rights fees alone, which doesn't count the Yankees' portion of MLB's national rights fee agreements, which amount to $US1.5 ($2) billion annually, which is $US50 ($64) million split across all 30 teams.

The Yankees are pulling in at least $US148 ($190) million annually off rights fees alone, just under a third of that $US516 ($661) million annual revenue, even before accounting for the club's 20 per cent ownership in the YES Network. Deals like the Yankees' $US350 ($448) million-per-year agreement with YES are currently propping up franchises in Los Angeles, Anaheim, Texas, Boston, Arizona, and Seattle.

But for these deals to maintain their value, regional sports networks like YES need to increase their viewership. If they don't, cable companies will lose the incentive to keep these networks in their basic package as millions of subscribers opt to cut the cord in favour of other, cheaper sources of content — including, yes, Twitch.

For regional sports networks to stay rich, they will need to stay on basic cable packages; the profit, there, hinges on them getting their share of subscriber fees from the majority of cable subscribers who do not watch sports. Consider the 20-year, $US1.5 ($2) billion dollar deal agreed to between Fox Sports Arizona and the Arizona Diamondbacks, for example.

According to What You Pay For Sports's Dave Warner, the Diamondbacks average 83,000 viewers per game. But because the network is on the region's basic cable package, the network brings in subscriber fees from approximately 2.5 million homes.

The problem for MLB is that cable companies in some regions - Los Angeles and Houston, most recently - have pushed back against including the high-cost, low-audience sports channels on their basic packages. This has led to staredowns that have left fans unable to watch their teams for months.

The sports cable bubble is not just a baseball phenomenon, either. The Yankees and the rest of the sports teams that have decided to add esports organisations are doing so at least in part because they need to find a way to make their regional sports networks worth a pricy cable subscription for younger consumers.

For the Yankees, an organisation valued by Forbes at $US3.7 ($5) billion, an equity partnership with a young esports franchise is a comparatively minor investment. The specific financial terms of that agreement are not public, but given that the single largest esports acquisition on record was for a relatively meager $US74 ($95) million, and given that the Yankees bring in over $US500 ($640) million in revenue per season, the Vision investment is likely a drop in the bucket for the club.

If Echo Fox or the larger esports industry fails, the Yankees will hardly notice; this is a franchise that has routinely paid tens of millions of dollars to pitchers too injured to pitch.

But if the numbers continue to grow as people like Sclavos believe they will, the Yankees will have an inside track at reaching the young people who make up the vast majority of the esports fan-base, and will be able to offer them exclusive content from Echo Fox, a brand that has already built a strong reputation in the world of esports.

A picture of Carl Pavano from 2008, when he made seven starts for $US11 ($14) million (Steven Dunn/Getty)

"They really believe in our content now, whether we're producing live events like we did for The CW in April, or whether it's now original content shows like we're doing on Facebook," Sclavos said. He likened these shows, particularly one called "Game Talk Live," to sports debate shows like ESPN's First Take or Fox Sports 1's Second Take.

The ease of access to highlights granted by the internet has rendered highlight shows like SportsCenter, which were once the backbone of ESPN and other cable sports networks, effectively obsolete.

Networks now need cheap, abundant content, and with a constant stream of events to fuel discussion, esports could be just what the doctor ordered in that regard.

Sclavos comes from a sports background. He was the managing general partner for the NHL's San Jose Sharks for five years and was an owner for another 15. "When we looked into this last October and November, we could see the same exact thing was going to happen here," Sclavos said. "That's what intrigued the Yankees, and I think if you talked to Randy Levine or Steinbrenner there, they'd tell you the same."

When Sclavos says the same thing is going to happen here in esports, he means the explosion of revenue, largely from media, experienced by the sports industry at the end of the last century. In 1981, MLB pulled in $US89.1 ($114) million in television revenue. By 1991, that figure had ballooned to $US664.3 ($851) million.

In 2001 it was up to $US1.3 ($2) billion. Major League Baseball's revenue pushed $US10 ($13) billion in 2017. A massive portion of that comes from these same media rights, and similar stories can be told across the major professional sports leagues in America.

Player salaries also ballooned over these periods. The first million dollar athletes appeared in the 1980s; now, minimum salaries in the team sports fall in the mid-six figures, average salaries come in at well over a million a year, and peak deals are over $US30 ($38) million for the best athletes. Things aren't there yet for Echo Fox's athletes, by a longshot.

But Sclavos said Echo Fox's League of Legends players will all make $US100,000 ($128,090) to $US500 ($640),000 per year, although Compete could not confirm the degree to which those contracts are guaranteed.

Taylor doesn't share Sclavos's beliefs in the similarities between these two spaces, though. "Whether or not some of the processes and structures of sports map over easily or get ported over easily, or at all, is another question," Taylor says.

"Esports has fundamentally come from a community-driven, grassroots space, where different game communities were formulating rules of play and structuring themselves and organising competitive events. There are certainly things from traditional sports that I would love to see come over - for example, players associations and collective bargaining."

"But these are not inevitable developments. They're going to require intentionality, they're going to require coordination."

The explosion of big-time esports is great for the players with the ability to make an Echo Fox roster, but that is only the top 0.1 per cent, or top 0.01 per cent, of esports participants. What about the people who comprise the grassroots communities, who have been there from the start? Many of them are concerned that the entrance of big money into competitive video gaming - the broader idea of "going esports" - will rob the scenes they love of the individuality and character that made them what they were.

This is not new, by any stretch - that fear of selling out or going corporate that appears with any grassroots scene. But it has been notably intense in this one, and few have been more outspoken about this than those in the fighting gaming community (FGC). Street Fighter community veteran Mike Ross's infamous "What The Hell is Esports?" video is a prime example.

Sclavos is sanguine about this conflict. "I think this happens in every seminal event in the last two or three decades," he told me, "including the advent of the internet.

When the money just starts to flow in, what happens is the people who have been using it - if you remember, the internet was all about universities and educators and people who want to do free research - there was a lot of fear, uncertainty, and doubt about what was going to happen. Everything was going to be charged for and everybody was going to lose the ability to do anything.

Fast forward twenty years and I think even those naysayers of the early days would say wow, it was really a blessing for the world in general and for them in particular. I think the same thing is going to happen in esports."

But would they say that, really?

Sclavos believes that the Yankees and their money could elevate the cultural position of competitive gaming: "It's going to push down into high schools and junior high schools.

It's even going to push down into where, my mum used to take us to youth soccer or pee wee football, now you're going to be able to camps and go to competitive video gaming leagues, rec leagues, and it's not going to be a bad thing! Parents aren't going to be embarrassed that their kids are playing video games."


Taylor acknowledges what allure of money can do to and for competitive gaming scenes, but is more concerned about two things: the equitable distribution of that money, and maintaining the character of those scenes.

"It's certainly the case that money will change things," she says, "and can provide some opportunities that haven't been there before. [But] money doesn't solve everything. There are really important issues that have to be dealt with. There are ways in which the community itself may still want to have an important voice in how esports develops and unfolds.

"The FGC, when I was doing the research on the book, esports was not a term they picked up. It was not a resonant term for that community," Taylor says. If "going esports" means catering to new players at the expense of the people who built the community up from the grassroots, those communities may lose the energy that drew people to them in the first place.

As Ross said in his anti-esports rant, "All at the expense of players, organisers that have been giving their life for this… To me, personally, I feel this is an insult to everything that I've done for so long."

"I think it's important for these folks who are coming in now, maybe from big companies, big organisations, maybe with big money, to remember that esports was there long before they were," Taylor says.

"Communities tend to want to make sure that the thing that they find most exciting and are passionate about isn't lost as the space gets commercialised."

Additionally, if corporate interests focus too hard on that ever-juicy 18-29 male demographic, they may risk putting a hard cap on esports's growth potential. Women make up a huge portion of the player base on many of esports's most popular titles, which makes it that much more confounding that many esports concerns replicate so many of the things that have driven both women and men who prefer traditional gaming-geek culture spaces away from sports in the first place.

Many esports broadcasts rely on overwhelmingly male commentary desks, feature all-male or nearly all-male competition, and treat the few women who do make it onto the screen - in another cliché touch, they are often in sideline reporter-style roles - as eye candy for what is presumed to be a male viewer.

This is not to say that competitive gaming was exactly a feminist space before esports, but it will be impossible for investors that want to maintain the growth that esports has seen in the last half-decade to do so if they only cater to half of the market.

"There's something very exciting about seeing esports grow, but there are a lot of things that come with that growth that are being glossed over way too quickly," Taylor says.

"That makes a very precarious kind of growth. If you cover over pretty serious important or thorny issues, if you cover over gaps between where the community may be at and where corporate interests are at, I think you really risk inflating a bubble and inflating a situation that's not going to turn out well for anyone."

However it works out and whoever it benefits, the Yankees' entrance into esports is a clear sign that the money train is still rolling. The metamorphosis of competitive gaming into esports is progressing further than many would have thought possible. That doesn't mean there aren't problems that need solving, but all that money should help a lot.

It doesn't feel like a bubble, either. The rise of esports feels undeniable, with games ranging from League and Overwatch to Street Fighter and Smash Bros receiving primetime exposure.

What is less certain is how the windfall to come will be distributed. Maybe "esports are pro sports," but that's exactly what scares some of the more sceptical members of these grassroots communities. The rise of esports could very well mean an elevated cultural position for gaming and a steady flow of corporate money into an industry that has had to fight and scrap for cash since its infancy.

But will a rising tide truly lift all boats? In professional sports, where owners and administrators rake in the lion's share of the proceeds and those below the pinnacle of the professional ranks make peanuts - or less - it certainly hasn't worked that way.

This is all new, but no challenge facing esports will be more urgent as all of this comes together than that - making sure that the next big thing isn't just the same old thing all over again.


Comments

    That's a pretty old picture you've got there of 'four Echo Fox gamers'. I don't think any of them still play for Echo Fox.

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