The esports sector has shown indications of vitality in its sponsorship landscape, exemplified by partnerships such as BMW Group Middle East’s alliance with Nigma Galaxy, and Sky’s sponsorship of the UK-based Guild Esports. However, amidst what is being termed as an ‘esports winter,’ these examples stand out in an otherwise challenging climate. It’s not just the macroeconomic conditions that pose challenges; esports organizations face a unique set of operating constraints. This article delves into these challenges and offers actionable guidance.

The Current State of Sponsorship in Esports

While there are bright spots in the esports sponsorship panorama, the situation is complex. The constraints faced by esports organizations are multifaceted. They range from macroeconomic factors to more sector-specific issues like stringent competition guidelines and sponsorship restrictions. These restrictions are often designed to protect the broad consumer base that esports attracts. With commercial opportunities becoming increasingly scarce, esports organizations are exploring unconventional sponsorship streams to sustain themselves.

Challenges in Esports Sponsorship: An Overview

Navigating the sponsorship terrain in esports is complicated due to a varied landscape with distinct rules across games and leagues. Smaller organizations face barriers when it comes to accessing lucrative sponsorship opportunities from categories like gambling and alcohol brands, as these are often restricted. The situation mirrors traditional sports like English football, where clubs in the Premier League have opted to eliminate gambling sponsors from the front of their shirts starting the 2026-27 season.

Sponsorship Guidelines: Rules and Restrictions

Various esports organizations, tournament operators, and game developers establish their own sets of rules around sponsorships. These typically include restrictions on sponsoring from sectors such as firearms, tobacco, alcohol, gambling, and high-risk financial products. Some leagues, like Overwatch League and Call of Duty, do permit gambling sponsors. However, others like Riot Games have stringent guidelines that disallow sponsorships from categories like gambling and sportsbooks for popular games like VALORANT and League of Legends.

Understanding Regional and Game-Specific Rules

The rules governing sponsorship can vary depending on the regional circuits and the games in which an organization competes. Therefore, understanding the specific guidelines applicable to your organization’s activities is crucial. For example, the 2023 rulebook for the LEC, EMEA’s franchised League of Legends competition, has explicit prohibitions against sponsorships from specific sectors like cryptocurrencies and select alcohol products.

Strategies for Effective Sponsorship Navigation

Awareness of Rules

Being familiar with the rules is crucial for both esports organizations and tournament operators. Regulations often undergo changes, and maintaining an updated knowledge base is essential.

Consideration of Multiple Operating Environments

Esports organizations frequently participate across multiple divisions. Sponsorship contracts must account for this by specifying the divisions to which the sponsorship applies.

Leveraging Rules for Advantage

Understanding the guidelines can sometimes allow for sponsorships that are otherwise restricted. For instance, a gambling sponsor might be permissible for an organization even if one of its divisions competes in a league where such sponsorships are banned.

Prior Approval and Transparency

Securing prior approvals for sponsorships from relevant authorities is critical. Organizations should maintain transparency with stakeholders, including tournament organizers and players.

Contractual Obligations

Contracts should delineate the obligations of all parties involved and should also cascade down any restrictions imposed by tournament organizers or rights holders.

Flexibility and Risk Management

Organizations need to be prepared to adjust their sponsorship strategies at short notice, especially when dealing with high-risk sponsors.

Aligning Player Interests

Organizations should align their interests with key players. Contracts might need to include provisions to manage players’ personal sponsorship deals, particularly those considered high risk.

Conclusion

Sponsorship in esports presents a complex web of challenges that require diligent navigation. Understanding the applicable rules and restrictions is fundamental for organizations aiming to secure valuable partnerships. This complexity underscores the need for organizations to remain agile, informed, and transparent in their approach to sponsorship.

For any further inquiries related to this article, Shepherd and Wedderburn’s dedicated Esports Group will be attending industry events throughout the year, including ESI London in October 2023.

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