How Do Esports Contracts Work?

Esports contracts are becoming more and more common as the industry of competitive gaming grows. But how do they work? What do players have to do to sign one?

Introduction

Esports contracts are agreements between professional gamers and teams or organizations that sponsor them. The terms of these contracts can vary widely, but they typically stipulate how much the gamer will be paid, how often they will compete, and what their obligations are to the team or organization.

Like any other contract, an esports contract is a legally binding agreement that both parties must adhere to. This means that if either party breaches the contract, they could be sued for damages.

While the specifics of each contract will differ, there are some common elements that are typically included. For example, most contracts will specify how much the gamer will be paid (usually as a salary or an hourly rate), how often they will compete, and what their obligations are to the team or organization. The contract may also include provisions for things like travel and accommodations expenses, signing bonuses, and performance-based bonuses.

It’s important to note that not all esports contracts are created equal. Some gamers may sign extremely lucrative deals that offer them a large salary and numerous bonuses, while others may have more modest contracts that offer less money but provide more stability. It all depends on the individual gamer’s skillset, popularity, and negotiating power.

What are esports?

Esports are electronic sports, a form of competitive video gaming. The industry is booming, with estimated global revenues of over $1 billion in 2019 and estimated growth to $1.65 billion by 2023. And as with any competitive industry, there are contracts. So how do esports contracts work?

The rise of esports

With the recent growth in popularity of esports, more and more professional gamers are signing contracts with teams and sponsors. These contracts typically involve a base salary, tournament winnings, and/or sponsorship revenue.

Base Salary: The base salary is the minimum amount a player will get paid by their team. This number can vary widely depending on the player’s skill level, experience, and the size of the organization they are signing with. Players at the top of their game can earn Millions of dollars per year just from their base salary.

Tournament Winnings: In addition to their base salary, many players also receive a percentage of their team’s tournament winnings. The typical split is 60/40, with 60% going to the players and 40% going to the organization. However, this number can vary depending on the contract terms. For example, some players may have a higher percentage (70/30) or lower percentage (50/50) depending on their skill level and contribution to the team.

Sponsorship Revenue: Many esports organizations also have sponsorships with companies that help support their team financially. These sponsorships can take many forms, but typically involve some kind of advertisement or product placement during tournaments or other events. The revenue from these sponsorships is often shared with the players on the team, although the percentage can vary widely depending on the contract terms.

What are esports contracts?

Esports contracts are agreements between a professional gamer and an organization, typically a team or league. The contract outlines the terms under which the gamer will compete, including compensation and benefits.

Most esports contracts are valid for one year, with the option to renew for an additional year. Renewal terms are typically negotiable, and may be based on the team’s performance during the previous year. For example, a team that finishes in the top three of a major tournament may receive a bonus upon contract renewal.

Compensation in esports contracts is usually a combination of salary and prize money. The salary is paid out in installments (usually monthly), while prize money is awarded as a lump sum after tournaments or events. Some organizations may also provide housing and travel stipends for their players.

Benefits in esports contracts typically include health insurance and retirement savings plans. Some organizations may also provide their players with access to mental health services, financial planning assistance, and other support services.

Organizations that sign esports contracts are typically responsible for paying out all guaranteed compensation and benefits. In some cases, outside sponsors may cover part or all of a player’s salary, but this is generally not spelled out in the contract itself.

Esports contracts are governed by state and federal laws, as well as any applicable collective bargaining agreements. Gamers who are under 18 years of age will usually need to have their parents or guardians co-sign the contract in order for it to be considered valid.

How do esports contracts work?

Esports contracts are similar to traditional sports contracts in many ways. Players are signed to a team, and they receive a salary and other benefits in exchange for their commitment to the team. However, there are some key differences between esports contracts and traditional sports contracts that are worth noting.

The structure of an esports contract

An esports contract usually contains three key elements: the salary, the win bonus (also called prize money) and the sponsorship revenue. Most professional gamers also receive a signing bonus when they first join a team.

The salary is the guaranteed money that a player will receive from their team. This is typically a monthly or yearly salary, although some teams do pay their players per match or per event. The average salary for a professional gamer is $60,000 per year, although this number can vary widely depending on the game, the team, and the player’s individual skill level.

The win bonus is the prize money that a team earns for winning a tournament or event. This money is divided among the players on the team, with each player usually receiving a fixed percentage of the total prize. For example, if a team wins a $100,000 tournament, and each player on the team receives 10% of the winnings, then each player would take home $10,000. The win bonus is often much higher than the salary, and it provides an incentive for teams to perform well in tournaments.

The final element of an esports contract is sponsorship revenue. This is the money that teams receive from their sponsors in exchange for displaying the sponsor’s logo on their jerseys or use their products during tournaments. Sponsorship deals can be worth millions of dollars for top teams, and they are an important source of income for most professional gamers.

The benefits of an esports contract

Just like any other contract, an esports contract formalizes the agreement between two parties. In this case, the contract is between the esports organization and the player. This document outlines the terms of the agreement, including the duties of each party and the compensation each party will receive.

There are several benefits to having a contract in place. First, it protects both the organization and the player by clearly defining the expectations of each party. Second, it provides stability for both the organization and the player by ensuring that both parties will receive what they are entitled to under the terms of the agreement. Finally, a contract can help to prevent disputes between the organization and the player by providing a clear roadmap for resolving any disagreements that may arise.

Conclusion

Esports contracts are very similar to traditional sports contracts in many ways. Players are often signed to a team for a set period of time, and the contracts typically include provisions for things like salary, signing bonuses, and performance-based incentives. However, there are also some key ways in which esports contracts differ from traditional sports contracts. For example, esports contracts often have clauses that allow players to stream their gameplay on personal channels (such as Twitch or YouTube), and they often include provisions for things like social media use and content creation. These provisions are designed to reflect the unique nature of the esports industry and the way that players interact with fans and followers online.