We’ve all been there, watching our favorite sports team before a stupid decision throws all hopes of a championship out the window. Immediate reaction is to ball up our Cheeto dust covered fingers and scream at why the coach has made that call or how the owners don’t care about the players, fans or team’s success. Screams of “I could do better” or “I should be running the team” bouncing off the tv before you have the brain blast and google “how much does man united cost?”. (For those wondering >£3bn so will have to stop buying overpriced flat whites and avocado toasts ASAP)

In reality, for us mere mortals with degen portfolios, owning a sports team is way out of reach. The next logical step; what about an esports team? I grind ELO, know the meta and love competitive gaming but is still niche so must be achievable. TSM, Cloud9, Fnatic are just a few on the list that are valued in the 100s of millions of dollars. Even mega-creators are jumping in the mix such as MoistCr1TiKaL and his org, Moist Esports. Before we look at esports organisations (org for short) is it esports, e-sports or eSports?

What are esports?

Esports, short for electronic sports, refers to the world of competitive, organized video gaming. This involves professional players and teams who compete against each other in various video games, often in front of live audiences, and it’s also streamed online to millions of viewers across the globe. With those millions of views come the potential for monetization through advertising and other revenue-generating routes.

How do esports teams make money?

Esports orgs have many revenue streams, although the profitability and effectiveness of each can vary greatly depending on the organization’s size, reputation, and the specific games they compete in.

1. Sponsorships and Partnerships: This is often the largest source of revenue for esports organizations. Brands pay to have their logos and products featured during esports events, on team jerseys, and in social media promotions. These sponsorships can come from gaming-related companies, such as hardware manufacturers, but increasingly non-endemic brands (those not directly related to gaming) are also getting involved.

2. Prize Money: Winning or placing highly in tournaments can earn teams significant prize money. However, this is a less reliable source of income as it’s dependent on the team’s performance, and often a portion of the prize money goes directly to the players.

3. Media Rights: As esports grows in popularity, broadcasting rights for tournaments and leagues can be sold to various platforms. This includes traditional broadcasters as well as online platforms like Twitch and YouTube.

4. Merchandising: Esports organizations often sell branded merchandise, such as clothing, accessories, and gaming gear. This not only generates revenue but also helps to build and promote the organization’s brand.

5. Ticket Sales: Live esports events draw large audiences, and ticket sales for these events provide another source of revenue.

6. In-Game Items: Some games allow for revenue sharing on in-game items. For example, CSGO team stickers, and a portion of the revenue from these sales goes to the respective team.

7. Player Transfers: Organizations can earn money by transferring or selling their players to other teams, much like in traditional sports.

Issues with the current business model

It’s important to note that while these revenue streams can bring in substantial income, esports organizations also face high operating costs, including player salaries, training facilities, travel expenses, and more. Balancing these costs with income is a significant challenge in achieving profitability as an organization and a business.

Orgs often receive investments from venture capitalists (VCs), celebrities, or traditional sports figures. This provides essential capital for growth with the caveat of revenue share agreements that need to be passed back to investors in exchange for liquidity. Financial, corporate, and roster decisions are rarely discussed with those outside of the organization, let alone put out for consultation with fans of the brand. This is where Nouns DAO comes in to flip the script.

Nouns - more than a word

Nouns is an NFT project that launched in 2021 with a focus on more than just identity through a PFP collection. Rather than launch with a 10,000 NFT collection, they have a unique mechanism where the Nouns Auction contract generates and auctions one Noun every 24 hours until the end of time. Once an auction is settled, the settlement transaction will start the Noun generation, minting the next Noun and starting the 24-hour auction.

The goal is to provide a treasury to the community, with 100% of auction proceeds automatically deposited in the Nouns DAO treasury. This is governed by Noun owners using a fork of Compound Governance where one Noun is equivalent to one vote. As of writing, the Nouns treasury holds 28,916 ETH, just shy of $53,000,000!

The availability of these funds to the community has resulted in a Nouns ecosystem of projects and sub-DAOs funded through community-approved proposals. These include a coffee brand, empowering extreme sports athletes, and a community-driven and owned esports organization.

Nouns Esports ⌐◨-◨

Nouns Esports was born in May 2022 following the approval of Proposal #68, with the signing of a Dota 2 roster. Since the genesis proposal, they have received about 1920 ETH in funding from the Nouns DAO treasury across five proposals. Although only accounting for 5.3% of all capital allocated by the treasury, this is actually greater than the average seed stage funding round in this recent paper on VC financing in the esports industry.

The first four proposals were passed with very little opposition. However, both 2023 proposals (198 & 263) were met with more apprehension. Proposal #198 was the largest request in both crypto and fiat values and proposed an Esports event called THE NOUNSVITATIONAL, a five-day Dota 2 Tournament featuring ten of the top teams worldwide, held in the Weplay Studio in Los Angeles.

In the run up to the deadline, the proposers Slacks and Kyle jumped onto Twitter Spaces however were unable to rally the troops with less than 50 member voting for the proposed Tier 1 event.

Team Performance

The majority of the esports events winnings have come from the Dota 2, CS:GO, and Pokemon Unite rosters, but there’s been success across all of the games:

• Dota 2: Top 3 NA & Top 20 World. The team will be playing this month to qualify for the largest DOTA 2 tournament, The International, with a prize pool of $40m.

• CS:GO: Top 5 World & Top 40 World. Competed at the BlastTV Paris Major 2023: North American but were knocked out by NA giants Team Liquid.

• Pokemon Unite: Finished second in the World Finals under the Nouns banner

• Smash Melee: Aklo, 16th World. With help from Nouns Esports, he’s been able to compete at a number of tournaments across the nation, taking the dub at No Jawns 3.

• Fortnite: Added Bryan “mojak” Viegas and Cauã “origins” Macedo to the Fortnite roster. Mojak placed 5th at the FNCS 2023 - Major 2: Brazil - Grand Finals.

Transparency through proposal

If there’s one thing I urge everyone to do from this post is to read through the latest Nouns Esports proposal, 263. CS:GO and Dota2 Rosters 2023. This gives us insight into the start of improved transparency, accountability, and avenues for funding.

The 1850-word proposal covers updates, successes, and check-ins with all the esports teams but, most importantly, a look into how success is measured and how they’ve built on from previous proposals that were funded. If there is any doubt from members, whether it’s what the money will be spent on or the direction the org is going, they don’t have to vote for the proposal. That’s the beauty of the DAO governance structure: if Nouns Esports were to fail to deliver or capital is better placed elsewhere, the proposal would fall through. This also doesn’t mean that that’s the be-all and end-all for any further funding—just back to the drawing board for the proposers. Plus, all of this information is public for all to see, so if people want to get involved in the future, they can buy a noun and have their say!

Conclusion

Applying blockchain to esports orgs supports transparency and puts the power back into the hands of the supporters. Saying that just because the org receives its funding through a treasury governed by a DAO doesn’t mean it is exempt from the same struggles regarding these business types.

We have had a few similar stories which have not lived up to expectations. Blending the web3 and traditional sports world when WAGMI United acquired Crawley Town FC with hopes of being the next Wrexham FC with web3 funders. Unfortunately, reality fell short of execution. Holders of the WAGMI NFT were meant to be able to weigh in on team decisions. This kicked off with a vote on what position they should sign for the upcoming season. A whole season later, that was just about it. This resulted in a disconnect with the fans, with the statement “WAGMI Out” plastered all over Twitter.

In traditional sports, we saw the rise and fall of Fan Controlled Football within two seasons. 

The Indoor American football league allowed fans to actively participate in the decision-making process of the teams and games. The league’s unique concept involves fans directly impacting various aspects of the game, such as team names, logos, player drafts, play-calling, and even team strategies.

With that all said, the Nouns rosters are creeping up the world rankings in their respective games. Each proposal is growing in granularity, providing insight into the organization’s inner workings. To say we are excited about Nouns Esports is an understatement. Hopefully, we can eventually be a member of a potential history-defining organization. As with gaming, web3 is a tool—not a genre or category to be applied to web2 things.

Learn More:

Please watch the video below and tell me you don’t get goosebumps.

Oh and some more bits on Nouns:

• https://nouns.center/

• https://nouns.gg/

• https://twitter.com/nounsesports