Overactive Media, the company behind esports brands including Toronto Ultra, Toronto Defiant, and MAD Lions released their financial reports this week, with promising signs overall for the company. However, much like the world of traditional sport, there could also be problems looming for the firm, with player salaries alone totaling more than the group’s revenue for the previous three months.
Player salaries in esports
Sport, and European football, in particular, has been awash with conversations about this topic ever since the Messi story broke, with FC Barcelona unable to register new players due in part to a massively inflated wage bill. Esports companies are not currently bound by the same regulations that sports teams must abide by, and are able to spend what they want on salaries without repercussions at this point in time.
Nevertheless, player salaries outstripping revenue is not a good sign for any company, with 3.9M CAD (approx. $3.1M) spent on wages in the previous six months against revenue of 3.4M CAD (approx. $2.7M). To put it another way, player salaries amount to 114% — which, while significant, is still a drop from 169% for the six-month period ending in June 30, 2020 — of the revenue for the time period, where football clubs attempt to run at around 65-70% of revenue being spent on salary to maintain a sustainable situation.
The org is on a positive trend still
Other notes of interest include a drop in team revenue, which may or may not be related to their deal with the Overwatch League, although Chris Overholt, CEO of OverActive Media, stated that is normally reflected in the second half of the year. “Our franchise agreements with global gaming publishers entitle us to a revenue share from each league, which we typically recognize in the back half of the year.”
Overall the picture is a fairly positive one for the Overactive Media, who also saw an almost tripling of assets, from 5.5M CAD at the end of 2020 to 15.6M CAD at the time of reporting. A further injection of 23M CAD (approx. $18.2M) is expected following their recent round of financing. With the future of the Overwatch League uncertain, there could be a tricky second half of the year for Overactive, but generally, the group seems to be moving in a positive direction.