When the novel coronavirus, now designated COVID-19 by the World Health Organization (WHO), first emerged from the Hubei province capital city of Wuhan, China, the scope and seriousness of the disease and what effect it would have on various business sectors wasn’t fully understood. However, now that the virus has reached global pandemic status, its effects on esports are coming into focus.
NRG Esports CEO and Founder Andy Miller, who is also the co-owner of the Sacramento Kings, is seeing the effects firsthand—to sports and esports. Tough decisions are being made by executives of esports organizations all around the world. From layoffs to cutting players and teams, these are difficult times.
“Yeah this is tough. But one of the things we know is that the health and safety of everyone is the most important thing,” Miller told The Esports Observer. “Hopefully, we get through this with minimal effect on people’s health and lives.”
And so far, Miller has done his best in order to see that the people under his care are being looked after. Just as Mark Cuban pitched the idea of creating a fund to take care of those employees at the American Airlines Center where the Dallas Mavericks play, Miller and the Kings’ leadership have decided to pay their employees during suspension of NBA play. Approximately 800 employees will continue to get paid.
However, do esports organizations have the ability to do the same thing as Miller is helping to facilitate for the Kings? Miller knows this is an entirely different situation.
“Esport organizations don’t have millions of dollars being generated by signing TV rights deals. They have player salaries, facilities to pay for, and everything else,” Miller explained. “For some, something has to give, but that doesn’t mean it’ll be bad. It’ll be a correction which was already starting to happen anyway.”
When looking at the esports ecosystem, it does look to be in a position for a market correction now being accelerated by the effects of the COVID-19. Several team owners speaking on background have stated that esports organizations are losing money at increasingly faster burn rates.
Whether or not it was due to downsizing or cost-saving measures associated with the effects of dealing with COVID-19, Houston Outlaws have parted ways with General Manager Matt Rodriguez. When contacted by The Esports Observer, Rodriguez said that he couldn’t comment.
While staff layoffs and team dissolutions are a distinct possibility during these trying times, Miller points to one idea that separates esports from other sports and other live entertainment mediums. Esports can be played from the home of each player in aggregate as a team without ever having to sit next to each other or be in close proximity. This, Miller says, is the key to esports surviving and weathering the storm.
“When you cancel leagues, you cancel ticket sales, concession sales, and everything else designed to bring in revenue when talking about sports and entertainment in general,” Miller said. “The thing that makes esports viable even in situations such as this is that players don’t need to be in the same room to play and at the same time people have a need to watch something and be entertained.”
As player salaries continue to rise, organizations are finding it harder to justify keeping some of its rosters as investors have started examining financial details more closely. When asked if the effects of the COVID-19 virus would do anything to affect player salaries, Miller said there is a possibility, but that nobody can be sure.
As it stands, there have been no wholesale layoff of staff or players, but if more restrictions are put in place and tournaments cannot be attended, prize money won, and sponsors adorning jerseys can’t be seen, it seems probable that some organizations will have to make some very hard decisions.
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