According to a report (opens in new tab) by independent journalist and former ESPN writer Jacob Wolf, teams in the Overwatch and Call of Duty leagues owe Activision Blizzard up to $420 million in deferred payments.
The Overwatch League has been a critical project for Blizzard since the game’s inception. In contrast to other esports organizations, the League was designed with a traditional sports ownership system in mind, with privately owned teams associated with specific cities, such as Boston Uprising, formerly owned by the Kraft family, or Houston Outlaws, of owned by Beasley Media. Group. Activision Blizzard also tried to replicate the system with a Call of Duty League.
New franchises joining the Overwatch League faced buy-in costs in excess of $20 million, in addition to annual membership fees, but Activision Blizzard suspended these payments with the onset of Covid-19, with reimbursement expected in Fall 2022. According to Wolf’s sources, Overwatch and the Call of Duty League franchises still owe the company millions of dollars each of these unpaid debts, totaling between $390 million and $420 million in both leagues.
Activision Blizzard isn’t exactly in the strongest position to collect. The high cost of entry made it difficult for the company safe investors (opens in new tab) in franchise expansions, and also appears to be struggling to retain current owners. Robert Kraft, owner of the New England Patriots, appears to have been persuaded by Bobby Kotick (opens in new tab) to invest in the Boston Uprising as the League’s founding owner. Since then, the Kraft family has transferred much of the ownership burden to the Oxygen Esports group.
Activision Blizzard has also struggled to retain advertising sponsors since the eruption of its workplace harassment scandal (opens in new tab)with companies like Coca-Cola and State Farm (opens in new tab) pulling its support at the end of last year. Ahead of the release of its fifth season this spring, the League was struggling to secure sponsors (opens in new tab). Also, the tepid response to Call of Duty Vanguard and Overwatch 2 (Overwatch 1.25? (opens in new tab)The first public look by ) leaves me wondering whether Activision Blizzard will be able to relive the boom times of the 2018 Overwatch League anytime soon. It may be that Activision Blizzard will continue to accommodate franchise owners if it wants to keep the leagues together during this difficult time.