Digital merchandise and in-game revenue sharing: Teams earn income from in-game skins, stickers, battle passes, and other digital items tied to esports competitions. Publishers share a portion of the revenue from these virtual goods with teams or in prize pools.
How Esports Teams Make Money When Prize Pools Aren’t Enough
The Prize pools make headlines but they rarely pay the bills. The International 2021 set a record with a prize pool exceeding $40 million, yet that sum was distributed among dozens of teams across an extended season, taxed in multiple countries, and spread thin across full organizational rosters.
A team winning a single major tournament covers only a fraction of its annual operating costs. For most organizations, tournament earnings account for between 10 and 25 percent of total revenue, which means the rest must come from elsewhere.
The broader gaming and iGaming ecosystem, which includes everything from competitive shooters to titles like chicken road online, has shown esports organizations that fan monetization can take many forms beyond tournament viewership. Organizations that thrive over the long term are those that treat prize money as a bonus rather than a primary revenue stream. Understanding how the other 75 to 90 percent gets earned requires looking at the full picture.
Sponsorships Are the Backbone
Sponsorships consistently rank as the largest single revenue source for esports organizations. Brands pay for jersey placement, social media integration, branded content series, and in-game activations. The exposure is compelling: esports audiences skew young, digitally active, and notoriously difficult to reach through traditional advertising channels, which makes them valuable territory for brands willing to invest.
Endemic vs. Non-Endemic Partners
Endemic sponsors are brands native to gaming, such as peripheral companies, energy drink labels, and gaming hardware manufacturers. These deals have existed since the earliest days of professional play and remain common today.
Non-endemic sponsors are a more recent development and often represent significantly larger budgets. Banks, insurance companies, automotive brands, and fashion houses have all partnered with major esports organizations in recent years. T1 has worked with BMW and Nike, while Team Vitality signed deals with Adidas and BNP Paribas, which demonstrates just how far outside gaming these commercial relationships now extend.
Content, Streaming, and Media Rights
Teams run YouTube channels, host podcasts, maintain active presences on TikTok, Instagram, and X, and generate advertising revenue, which makes them more attractive to sponsors. Some organizations sign exclusive streaming deals with individual players or content creators associated with their brand.
Media rights deals represent a growing piece of the pie, particularly for organizations competing in franchised leagues. The Overwatch League negotiated a multi-year rights deal with YouTube, while the League of Legends Championship Series has attracted platform-level investment from Amazon. These arrangements distribute revenue to member organizations and provide an annual income stream that is entirely independent of tournament results.
Merchandise and Fan Products
Team Liquid, Fnatic, and 100 Thieves have each developed merchandise programs that function more like streetwear operations than traditional sports souvenir shops. 100 Thieves, in particular, built a clothing line that sells out largely on brand strength alone.
Digital merchandise is becoming increasingly important as well. Some organizations sell exclusive digital cosmetics, in-game items tied to their brand, or fan tokens through blockchain platforms. These products generate significant income without incurring manufacturing or shipping costs, which makes their margins considerably healthier than those of physical goods.
Franchised League Revenue Sharing
Rather than qualifying through open competition each season, franchised teams pay an upfront fee for a permanent slot, then receive a share of league-level revenues, including sponsorships, media rights, and merchandise deals. The League of Legends Championship Series required teams to pay buy-ins reportedly ranging from $10 million to $13 million, but in return, those organizations received revenue sharing and protection from relegation.
The Trade-Off
Franchising provides financial stability but concentrates power at the league operator level. Organizations give up a degree of autonomy in exchange for predictable income, which suits some business models and frustrates others. The contraction of the Overwatch League demonstrated that these arrangements carry real risk when league-level revenue does not grow as initially projected.
The Smartest Teams Think Like Media Companies
The organizations generating the most sustainable revenue have moved beyond treating esports as a sport and started treating it as a media and entertainment platform. For example, FaZe Clan went public in 2022, which formalized its identity as a content-first brand with competitive gaming at its core.
Talent management is another growing avenue. Some organizations represent content creators and streamers outside their competitive rosters, which earn commissions on deals and monetize relationships that would otherwise exist entirely outside their ecosystem. This diversification means that a poor tournament run in Q3 does not have to damage the annual balance sheet.
Ways to Stay Competitive Off the Server Prize Pool
Prize pool headlines will always attract attention, but the teams building lasting organizations understand that competition is only one part of the product. Revenue in esports today comes from sponsorships, media rights, merchandise, franchise fees, content production, and talent management, with each stream reinforcing the others. The organizations that figure out how to grow all of these simultaneously are the ones that will still be competing a decade from now.