Overwatch League agrees deal to waive Toronto Defiant fees worth $8m
The esports winter and global recession following the pandemic and a lull in progress for competitive gaming have seen huge ramifications across a bunch of franchised leagues in the industry.
Just last week we saw the League of Legends professionals in North America enter a strike alongside the LCSPA against Riot Games and the league over finances, academy teams, and wages, resulting in a delay of the LCS and spurring other regions to consider the same action.
Now though, it's Activision's turn to reevaluate their franchised league systems, as the Overwatch League has entered an agreement with OverActive Media (owners of the Toronto Defiant) that will waive all outstanding franchise fees worth over $8 million.
Overwatch League waives $8million franchise fees for Toronto Defiant
Today, OverActive Media has announced a deal with the Overwatch League which waivers the outstanding fees that they owe for Toronto Defiant's place, which is worth $10.8million CAD ($8,037,263.13 USD).
The deal includes "the signing of a sponsorship deal," between Defiant and the OWL, "the elimination of outstanding entry fees," which will come into play for the 2023 fiscal year, and an agreement for the two parties to "explore further changes to the Overwatch League business plan".
Adam Adamou, Co-Founder and Interim CEO of OverActive Media, said, "Our collaboration with the Overwatch League demonstrates our commitment to a league that offers the best experience for fans, teams, and players."
"We believe this development indicates promising progress for Overwatch and esports."
What does Toronto Defiant's OWL deal mean?
Since Activision launched their two respective franchise leagues (Overwatch League and Call of Duty League), the extraordinary buy-in figures have often been scrutinised, and teams have struggled to keep up with payments.
Following the pandemic, teams were allowed two years of "Covid-19 relief" that deterred payments, but it remained that as of May 2022, Activision was still owed roughly $400 million from their partnered teams, with the 20 OWL franchises collating for approximately $120-150 million of that sum, coming down to around $6 to $7.5 million each, according to Jacob Wolf.
Wolf also reported that Overwatch League teams had begun a "bargaining process" with Activision to alleviate these fees, which now appears to have wrung true given Defiant's recent deal. The report did indicate that OverActive Media led these discussions, having also used British legal firm Sheridans before, in matters related to MAD Lions' LEC finances.
This now opens up a startling precedence for other organisations to follow, given that numerous teams had entered the bargaining process with Sheridans, meaning more deals like this could be imminent for the OWL.
Toronto Defiant also has a sister team, Toronto Ultra, operating in the Call of Duty League owned by Activision, whose fees appear to be more severe given its younger status and less teams, which also makes this deal interesting, as many CDL orgs have faced major cutbacks in the last two years.
The CDL especially has struggled, as OpTic Gaming has faced two different mergers in three years, Minnesota ROKKR (Version1) has opened up their business for partnership to help with funds, Florida Mutineers (Misfits) are reported to have signed a partnership with Team Heretics to help monetarily, and both Vegas Legion (C0ntact Gaming) and Los Angeles Guerrillas (Kroenke Sports & Entertainment) have been rumoured to be open to selling their spots.
Activision may now have opened the doors for more orgs across both of their franchised leagues to open similar talks, which could be quite a costly string of deals - although more income could be grabbed through YouTube broadcast rights deals.
We have reached out to the Toronto Defiant for comment.