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For every Dota 2 esports player and team, winning Dota 2’s The International (TI), and hoisting up the Aegis (the trophy of TI) are supreme honors, but it also means a life-changing income due to TI having the highest prize pool money in esports history every year. This year the event will be held in Shanghai from August 15-25, and main event at Mercedes-Benz Arena from August 20-25.
The current TI prize pool has outpaced the Fortnite World Cup ($30M USD), surpassing $33M at the time of writing. According to the prize money distribution and current amount of TI Shanghai prize money revealed by Valve, the winner could take 45.5% of the total prize money ($14.6M). Even the last two teams (17th and 18th place) could have 0.25% of the total prize money ($80K), which means winning a TI spot has a potential income of $80K-$14.6M.
Unlike other esports titles such as League of Legends or Overwatch, which use a franchise-style tournament system, Dota 2 slots are earned simply by winning competitions. Team owners purchase franchise slots to get the right to compete in Overwatch League or League of Legends regional tournaments, with no worry about being kicked out (due to losses), as well as annual salaries, revenue sharing, and other guarantees for players. The franchise slots from those tournaments have specific bid prices. For example, the costs for Overwatch League 2019 was reportedly as much as $20M for each franchise slot in the inaugural season, and $35M-$60M for each expansion slot.
But TI is different. The tournament is crowdfunded by the Dota 2 community through digital sales, and the spots are earned by teams, through either winning the top 12 in the Dota Pro Circuit or the TI regional qualifiers (6 slots). Despite there not being a real price tag for a TI spot, for many esports investors and team owners it is worth knowing what the value and the cost of a TI spot potentially is.
The Back Story: Newbee Purchasing a TI Spot
On July 22, North American Dota 2 team Forward Gaming (FG) announced that the company had closed due to insufficient revenue and a lack of funds to cover player salaries. FG CEO David Dashtoyan confirmed the bad news on Twitter. FG had just won the North American qualifier of TI Shanghai and became one of the 16 qualified teams.
On July 25, Chinese esports organization Newbee announced that it had acquired the full roster of FG players (indirectly purchasing the TI slot), with financial terms of the deal undisclosed.
Newbee was founded in 2014 and is considered one of the largest esports organizations in China. The organization competes in Dota 2, Warcraft III, Starcraft II, Hearthstone, FIFA Online 4, Clash Royale, and Fortnite. In addition, Newbee was crowned champion of The International 2014, and took second place at The International 2017, which makes it currently the highest prize pool money earning esports organization in China, and fourth in the world.
It should be noted, Newbee disqualified in The International China qualifier this year. After the acquisition, it was announced that the original FG players would represent Newbee at The International Shanghai. In addition, players will wear Newbee’s team jersey and share the organization’s sponsors including Intel, Nvidia, Sennheiser, Secretlab, Raybet, and Chinese sportswear brand Li-Ning.
The Costs and Expectations of the FG Purchase
In order to better understand this purchase, The Esports Observer reached out to Newbee CEO Tong “CU” Xin to confirm the financial terms, the period of the terms, and future plans for the team:
“We actually beat a lot of buyers, and have everything FG players need for The International, and also we need a team to represent Newbee to attend the TI, the biggest Dota 2 event of this year,” said Xin.
Xin explained that Newbee paid the contract fee for FG players and covered the unpaid salary and prize money from the original organization. In addition, Newbee will cover the living costs including training/housing and food for the players until the end of The International this year. Xin declined to comment on the exact financial terms of the deal.
“This deal will only be valid before the end of The International,” Xin pointed out. “For the future corporation, Newbee and the [FG] players will discuss after this TI – based on [a] few conditions like the result of the tournament.”
In addition, Xin disclosed to The Esports Observer that the organization actually wanted to build its overseas Dota 2 team after The International 2018, and discussed the plan with Jack “KBBQ” Chen, the former team manager of FG. Unfortunately, the plan didn’t come to fruition due to Valve implementing a rule that only allows for one team to operate under an owner or organization to compete in The International in 2018. It should be noted that the original Newbee team did not qualify for this year’s event, so this purchase should not violate the original rule.
Conclusion
For investors or esports team owners, a TI spot (a fully TI qualified team) has a high return on investment. In some ways, TI believes in the “underdog story.” Last year’s winner, OG, took a lion’s share of $11.2M from a total of $25.53M, but at the time the team was close to disbanding and got the TI spot by winning the European Open Qualifier. In other words, every team, as long as it qualifies for TI, can not be underestimated and puts a significant investment value on its spot.
Despite the life-changing prize money, the TI spot is also an opportunity to expand the esports business into other regions, especially this year in China. For example, the Russian Dota 2 team Virtus.pro created a Chinese social media Weibo account to engage more with fans in the region and unveiled its Chinese exclusive team jersey and logo for The International. For European team Team Secret, its CEO and founder John Yao (who was born in Shanghai), stated on Weibo that the organization will operate more activities in China.
For Chinese esports organization Newbee, this purchase has not only bought a spot in The International Shanghai, but also helps its reputation with current sponsors. One of Newbee’s sponsors is Li-Ning, a major Chinese sportswear company. It will be the first time the company has sponsored overseas esports players, and displays its Li-Ning-branded esports apparel at The International.
In addition, during TI sponsors and the team can run social media campaigns on Weibo, or operate offline activities. Those opportunities would not be available without the purchase of FG because Newbee lost in its China qualifier. As for valuing the purchase of FG – that depends on how well the team does at TI9. “Definity is the Aegis (the trophy of TI),” according to Xin, and it will also be the only goal for those five new Newbee players.
