LEC introduces new system to control player salaries
The League of Legends European Championship (LEC) has announced the introduction of a soft salary cap and floor model called Sporting Financial Regulations (SFR) - aimed at changing the League of Legends competitive scene.
The outlined goal is the effort to ensure the long-term financial stability and competitive balance of the LEC, beginning with the start of the 2024 LoL Esports Season.
According to the LEC, the SFR floor and cap are contingent on various economic factors and are not set to a specific number.
How does SFR work?
SFR has two functions, namely to enforce a salary cap and salary floor, setting the upper and lower boundary of the sum total of only the five highest-paid players per team.
Upon reaching the upper limit, every dollar spent over the cap will incur a luxury fee of 50% additional payment to be paid to the LEC. If the sum reaches 150% of the salary cap, every Euro is doubled.
In part, these additional fees will go to the other LEC competitors as well as the EMEA tier 2 ecosystem. The salary floor has been set to 50% of the salary cap, though no punishment or fee for going under the threshold has been shared at this time.
According to the official announcement, specific numbers of the salary cap have not been disclosed but have been outlined as a calculation "based on a number of considerations, including LEC player salaries, League Revenue Pool of the current and forecasted years, team financial data - such as revenue and expenses - and other market indicators."
Implications
Following a general economic downturn in the esports industry, many entities in the space have started reconsidering their spending habits. For many, stepping back from spending while trying to remain competitive has proven to be a challenge.
Without knowing the definitive number of the salary cap, it proves challenging to determine the efficacy of the move or the potential harm caused to player income. It is currently unknown if the SFR threshold will ever be disclosed.
Moreover, it poses questions towards for the ability of LEC teams to both retain talent and sign import players in the global market. It stands to reason that this new system could hurt the LEC team’s ability to compete internationally.
Interestingly, the rule incentivises teams to keep the individual player's salary in check while leaving open the possibility for larger rosters with smaller individual salaries, as only the top five salaries per team are counted.
In the past, substitutions have not been overly fruitful but could remain an area of development, allowing more up-and-coming talent to be integrated into Tier 1 teams while promising a lower price tag on potential improvement.
