Two models compete for control of professional esports. In one, a fixed set of organisations buy permanent slots in a closed league. In the other, any team can qualify through open tournaments and earn its place each season.
The argument over esports franchising is really an argument about who carries the financial risk, and the industry has swung decisively in one direction after a decade of experiments.
This guide explains both models, what went wrong with closed leagues, and where the sport appears to be heading.
What Franchising Means
The structure borrows directly from North American sport.
Organisations pay a fee for a permanent league slot.
There is no relegation from the competition.
Revenue is shared between the publisher and the teams.
Slots are often tied to a city or region.
Player salaries and conditions are standardised.
The league operates on a fixed calendar.
What an Open Circuit Means
| Feature | Franchised league | Open circuit |
|---|---|---|
| Entry | Purchased slot | Qualification through tournaments |
| Relegation | None | Possible each season |
| Cost to teams | High upfront fee | Travel and roster costs only |
| Revenue sharing | Contractually defined | Mostly prize money |
| Stability | High for slot holders | Low year to year |
| Access for new teams | Effectively closed | Open to anyone |
The open model is far closer to how European football operates, and it produces the same mixture of competitive drama and financial insecurity.
Why Publishers Tried Franchising
The reasoning was coherent at the time.
Investors wanted predictable asset value.
Sponsors wanted guaranteed exposure over a season.
Broadcasters wanted a fixed schedule of fixtures.
Teams wanted protection from a single bad split.
Publishers wanted committed partners rather than transient ones.
Regional identity was expected to build local audiences.
Each of those arguments was reasonable in isolation.
Why It Struggled
- Slot fees reached levels no team could recoup from revenue
- Guaranteed participation reduced the stakes of regular-season matches
- Removing relegation cut off the pathway for emerging teams
- Viewership in some franchised leagues declined year on year
- Sponsorship markets contracted sharply after the initial boom
- City-based identity failed to translate to online audiences
- Teams carried heavy costs with no route to exit
- Publishers absorbed criticism for both the structure and its results
The fee problem was decisive, because organisations had effectively bought an asset whose value depended entirely on a league that had not yet proved it could grow.
The Shift Back Toward Open Play
Several major titles have reversed course.
Partnership models replaced purchased slots in some leagues.
Qualification pathways were reopened to challenger teams.
Regional structures were consolidated to cut costs.
Third-party tournament organisers regained prominence.
Prize pools moved toward event-based rather than league-based funding.
New global events created alternative revenue routes.
Who Bears the Risk in Each Model
| Party | Risk under franchising | Risk under open circuits |
|---|---|---|
| Team owners | Large sunk slot fee | Missing qualification entirely |
| Players | Limited, salaries guaranteed | High, income tied to results |
| Publishers | Reputational and operational | Lower, costs shared with organisers |
| Sponsors | Exposure tied to one league | Fragmented across events |
| Tournament organisers | Excluded from the ecosystem | Central to it |
| Emerging teams | No pathway at all | Realistic but unfunded |
Franchising shifted risk away from players and toward owners, which is why player associations generally supported it even as organisations began to struggle with the economics.
Open circuits reverse that arrangement, placing the burden on players whose contracts may not survive a failed qualification campaign.
Lessons From Traditional Sport
Both models already existed outside gaming.
North American leagues have used closed franchises for a century.
European football built its identity on promotion and relegation.
Each system suits different commercial conditions.
Closed leagues depend on large stable domestic markets.
Open systems rely on deep grassroots participation.
Esports attempted the closed model without either foundation in place.
Frequently Asked Questions
Is franchising finished in esports?
No, but pure slot-sale models have largely given way to partnership and qualification hybrids.
Do open circuits pay players less?
Often yes, since income depends on results rather than guaranteed league distributions.
Which model draws bigger audiences?
Evidence is mixed, though open qualification clearly raises the stakes of individual matches.
Can both models coexist?
They already do, with different titles and regions using different structures simultaneously.
The Short Version
Franchising sold permanent league slots for large fees and removed relegation; open circuits let teams qualify each season. Franchising promised stability and delivered unsustainable costs and lower stakes, so most major titles have moved toward partnership models with qualification pathways restored.
Why the Debate Matters
The structure of a league determines who can realistically enter professional play.
Closed systems concentrate opportunity among well-funded organisations, while open ones keep a route available to new teams, which affects the talent pipeline for years afterwards.
The Economics of a Slot Fee
The numbers explain most of what followed.
Fees were set against projected future league revenue.
Those projections assumed continued rapid audience growth.
Growth slowed well before the fees were fully paid.
Revenue sharing produced less than modelled.
Teams could not sell slots without accepting heavy losses.
Several organisations exited the leagues entirely.
Effects on Players
Working conditions changed in both directions.
Minimum salaries were introduced under franchised structures.
Contract lengths and benefits became more formalised.
Player associations gained recognition in some leagues.
Roster sizes shrank as costs were cut.
Open circuits reintroduced income volatility.
Many players now split time between leagues and open events.
The net effect on player welfare remains genuinely contested.
Regional Differences
The two models are not distributed evenly.
North America adopted franchising most enthusiastically.
Europe mixed partnership leagues with open qualifiers.
Asia-Pacific retained large open tournament ecosystems.
Mobile titles in particular favour open qualification.
Audience size in Asia supports both models simultaneously.
Regional structure now varies by title as much as by geography.
The Role of Third-Party Organisers
Independent event companies were squeezed and then returned.
Franchised leagues initially displaced their calendar slots.
Several organisers consolidated or closed.
Open circuits restored demand for their expertise.
Large international events now sit outside league structures.
Publishers increasingly license rather than operate competitions.
That split reduces publisher cost and operational exposure.
It also reintroduces calendar congestion as a problem.
Audience Behaviour
Viewing habits influenced the outcome heavily.
Esports audiences follow players more than organisations.
City-based branding meant little to online viewers.
Regular-season matches without consequence lost attention.
International events consistently outperformed domestic leagues.
Clips and short-form content drive discovery more than fixtures.
Structures built on traditional sport assumptions underestimated this.
Funding From Outside the Industry
External capital reshaped the picture again.
Sovereign investment created large new global events.
Prize pools at those events dwarf most league distributions.
Teams increasingly plan seasons around them.
That reduces dependence on any single publisher league.
It also concentrates influence in a small number of funders.
Critics raise concerns about long-term sustainability.
Supporters point to stabilised team finances in the short term.
The Hybrid Models Emerging
Most leagues now sit between the two extremes.
Long-term partner slots without a large upfront fee.
A limited number of qualification places each season.
Revenue sharing tied to performance and content output.
Shorter contract terms with review points.
Regional leagues feeding into international events.
Publishers retaining operational control of the top tier only.
These hybrids are explicitly designed to avoid both failure modes.
What Teams Want Now
Organisational priorities have changed since the boom.
Predictable costs matter more than guaranteed status.
Content revenue has become central to budgets.
Multi-title presence spreads risk across games.
Academy systems are valued as a development asset.
Sponsorship is pursued per event rather than per season.
Few organisations now want to buy a permanent slot.
That alone has made pure franchising difficult to revive.
Competitive Consequences
League structure changes how the games themselves are played.
Closed leagues encourage long-term roster experimentation.
Open circuits reward immediate results over development.
Relegation pressure discourages risky strategies.
Guaranteed slots allow rebuilding across a season.
Talent from outside the top tier reaches visibility faster in open systems.
Both effects are visible in roster turnover statistics.
The Grassroots Question
Entry pathways have become the central concern.
Amateur circuits feed professional rosters.
Closed leagues weakened the incentive to run them.
Academy teams partially replaced that function.
Open qualifiers restore a visible route upward.
Regional scenes depend on that visibility to retain players.
University and community competitions fill gaps unevenly.
Long-term talent supply depends on solving this properly.
What Would Make Either Model Work
Structure alone has never been the whole problem.
Costs must be proportionate to realistic revenue.
Matches need consequences to hold attention.
Pathways upward must remain visible to amateur players.
Calendars should avoid competing directly with major events.
Revenue sharing has to be transparent to participants.
Governance needs independence from any single funder.
Both models can satisfy these conditions if designed carefully.
A Closing Assessment
Franchising was not a foolish idea, it was a reasonable idea imported without the conditions that made it work elsewhere.
Closed leagues in traditional sport rest on decades of local attachment, stadium revenue and broadcast contracts that esports never had.
Removing relegation from a competition whose audience had no regional loyalty took away the stakes without replacing them.
Open circuits are not a cure either, since they shift financial precarity onto the players.
The hybrid structures now emerging are the industry’s attempt to keep the stability without the sunk costs.
Whether they succeed will depend on cost discipline far more than on competitive format.
That point deserves emphasis because it is frequently missed in the debate.
No competitive structure can rescue an organisation spending more than it earns.
The boom-era teams were loss-making under both models.
Franchising simply made those losses contractually unavoidable for several years.
Open circuits allow a team to reduce costs when revenue falls.
That flexibility is the main practical advantage of the open model today.
It is a defensive virtue rather than a growth strategy.
Growth will have to come from audience and content, not from format changes.
On that front the evidence is more encouraging than the business headlines suggest.
Total viewership across the sector has continued to grow.
Mobile titles in particular have expanded the audience substantially.
Peak concurrent figures at major finals keep setting records.
The problem has never been a shortage of viewers.
It has been the difficulty of converting attention into revenue that reaches teams.
No league structure solves that by itself.
The most promising developments sit outside the format debate entirely.
In-game monetisation tied to teams and events shares revenue directly.
Digital items linked to competitions have outperformed traditional sponsorship.
Publishers control that channel and can direct proceeds to participants.
Several titles now generate meaningful team income this way.
It works regardless of whether the league is closed or open.
That makes it the single most important variable in the sector’s finances.
Format arguments will continue, but the money question is being answered elsewhere.
For supporters, the practical consequences are fairly simple to track.
Watch whether a league retains qualification places season to season.
Note how many organisations enter and leave each year.
Check whether regional events still feed into the top tier.
Follow where the largest prize pools are being hosted.
Those four indicators describe the health of any title’s ecosystem.
They are more informative than any announcement about structure.
Measured that way, the sector looks considerably more stable than it did during the contraction.
Qualification routes have reopened in most major titles.
Organisational turnover has slowed from its peak.
Prize money at the top of the calendar has risen sharply.
Regional competitions are being rebuilt rather than cut.
None of that amounts to a return to the boom years.
It does suggest the correction has largely run its course.
What emerges from it will probably not be called franchising at all.
It will be a negotiated arrangement between publishers, organisers and teams, renewed every few years.
That is less tidy than either model promised, and considerably more durable than the one that failed.
For an industry barely two decades into professional competition, that is a reasonable place to have arrived.
The next decade will test whether it holds through another downturn.