Adam Silver’s mark on eSports in North America

Posted on: Apr 05, 2018 By smartlaunch in News and trends,

Three summers ago on a steamy August night, Silver felt the urge to go to the Madison Square Garden, on his own, to catch some fresh-faced artists who sold out The World’s Most Famous Arena. The oohs and ahhs echoing throughout the building that night were the kind Michael Jordan and Kobe Bryant used to draw while putting on a show at the mecca of basketball.

The sound that Silver heard, the electricity he felt in the air, was all familiar. Yet the NBA commissioner had never seen Madison Square Garden quite like this, nor had he seen athletes quite like these rock the historic venue.

For two straight August nights in 2015, the only thing hotter than the sweltering concrete in Manhattan was the esports action that filled Jim Dolan’s Garden. The North American League of Legends Championship Series Finals drew a total of 22,000 feverish fans, including one wide-eyed NBA commissioner who soaked everything in. Millions more watched and chatted about the action online live.

If this is the future of how sports will be consumed, as so many had suggested to Silver, then professional sports’ most progressive commissioner had to see for himself what all the fuss was about.

“I remember thinking, it was a hot summer night in August, who in the world would be at Madison Square Garden for this competition?” Silver told ESPN. “I knew it had sold out, but I wasn’t sure what to expect in terms of an audience.”

Silver saw plenty that night to start a thorough process that has led to the creation of what Silver refers to as the NBA’s “fourth league.” Less than three years after getting his first taste of esports live, Silver will be back at Madison Square Garden on Wednesday to announce the first draft pick of the NBA 2K League Draft at the MSG Theater. Seventeen NBA franchises are participating, with more likely to join in the future.

Two months after he watched League of Legends for the first time, Silver and the NBA took their first baby steps toward an esports league of their own. In October 2015, the most progressive commissioner in professional sports — one who constantly has his eyes and fingers on technology and the future — delivered a pivotal esports presentation along with some of his colleagues at a board of governors meeting.

Silver put up a slide comparing the number of viewers for the League of Legends World Championship to the viewership for the college football national championship game. “That’s when we kind of looked at each other and said, ‘This is something we need to look at,'” Philadelphia 76ers CEO Scott O’Neil said. “When you have or are able to aggregate that kind of audience, I think there’s a business certainly to be had. In a nutshell, we have an organization that looks to be innovative and progressive. We have an ownership group that always likes to explore new and exciting opportunities. Then you have a business in its embryonic stages with incredible viewership numbers with seemingly a business to follow.”

The first NBA owner to dip into co-owning an esports team was Memphis co-owner Stephen Kaplan, who was part of an investment group that helped purchase a League of Legends spot for Immortals in September 2015, a month before the October governors meeting.

Silver told the other owners that the NBA would help any owners and franchises looking to get into esports and was exploring what role it could play in the gaming business.

“There was no call to action,” Silver said of the presentation. “I think I was passionate in saying that there is something going on here and also passionate in saying to our owners that this is something that those of you are who in the team-operating business — and many of our owners own multiple teams, they run arenas and are, to me, the very best operators in the sports business — I was saying to them, reaffirming to them, that we should be operating on parallel tracks, that don’t let me hold you back from making individual investments, reminding them that the league can act as a resource but also saying that we are studying very hard if there is an opportunity at the league level.”

During breaks in the presentation, there was a buzz in the hotel hallways. The conversation about esports was “pretty robust” amongst owners and governors.

“The meeting was very powerful and very impactful, and the presentation was as well,” O’Neil said. “And then pretty quickly, several teams were out in the market poking around.”

Since that meeting, 13 NBA teams’ ownership groups have invested in or acquired businesses around esports. The North American League of Legends Championship Series welcomed three new NBA team affiliates into their league in October; that 10-team league features eight teams that have partial or complete ownership from parties that are or have been affiliated with the NBA. The Overwatch League, a 12-team league that has become the costliest in esports, has five teams with some form of NBA ownership investment.

Comparatively, six teams in MLB and another three in the NFL share ownership with esports teams. The NBA, more than any other professional sports league, has set its flag in a burgeoning industry with $1 billion in revenue projections over the next three years, according to current team valuations and several studies on the industry.

The night that Silver stood at the Garden, the NBA commissioner quickly discovered that he wasn’t alone. Valued business partners such as Turner president David Levy, NBA owners such as Milwaukee co-owner Wes Edens and former players such as Rick Fox were there. Edens and Washington Wizardsowner Ted Leonsis were among the first, even before that October 2015 board of governors meeting, to share their insight on esports with their peers.

“The passion of the fans there … I was very impressed,” Silver said of what he saw. “I had once been to watch a chess match when I was younger, and I thought the spectators would be quieter and more introspective. But there was a lot more rah-rah, boisterous cheering going on than I had anticipated.”

It’s happening all around the world.

“When you see 200 million-plus esports viewers worldwide, if that doesn’t get your attention, you should go into another business; maybe the Salvation Army, Kris Kringle at Christmas ringing a bell on a corner,” Peter Guber, co-owner of the Golden State Warriors, told ESPN. The Warriors started a League of Legends team in October, in addition to Guber’s personal investment in endemic esports organization Team Liquid. “Because this is not an alarm bell but a clarion call to recognize that an audience is engaged deeply with esports, and a large portion of that audience are people who are interested in basketball and potentially vice versa.”

From Magic to Shaq to Mark Cuban, some of the NBA’s biggest names have invested in esports, with other owners plotting to do so.

Many still might not know a lot about esports, but Silver is banking on changing that with his NBA audience with the NBA 2K League. Esports is an industry that generated more than $655 million in revenue with a global audience of 335 million in 2017. Forecasters predict it will generate more than $1 billion in global revenue and double its audience by 2020, according to data company Newzoo.

“I was so impressed with myself that I am an early adopter to [esports] but then realizing everyone else is here as well,” Silver said.

However, Silver was looking forward, toward perhaps a new future for the NBA and its fans.

 

Silver prides himself on being prepared and informed on every topic surrounding his league, whether it be the current political climate and how it might impact pro sports gambling to societal issues that some of his players and coaches are actively trying to impact. He even keeps tabs on the weather and if the latest Nor’easter will come to fruition and impact games or fizzle out. He takes notes to his meetings, including our interview in March 2017 on the 15th floor of the NBA headquarters in the heart of Manhattan, even though he rarely needs them.

Staying connected is one of Silver’s greatest attributes, but it is admittedly also his vice. His iPhone was not out during our interview, and it might have been one of the rare moments in the day that Silver was not glued to it.

“It’s embarrassing,” he said. “I think when people compliment me on how responsive I am on email, I am embarrassed because I am continually determined that I will set boundaries for myself in terms of spending more time reading and less time responding to emails.”

One of Silver’s missions is to bring the game to every fan’s fingertips via smartphones, consoles and computers and reach every corner of the planet as easily as Giannis Antetokounmpo reaches the rim in one stride from the free throw line. The NBA isn’t ready to start a franchise in Europe knowing how international travel would negatively impact players’ rest and health. But perhaps it can bring the game — and more importantly, the experience of being at a game — virtually to fans across the world.

Silver deflected credit, though, and pointed to a new wave of NBA owners.

“The secret sauce here is the NBA owners,” Silver said of the NBA’s ability to identify and invest in trends in advance. “We have sort of next-generation owners who are forward-looking, are passionate about the sports business, enjoy being operators and love finding new opportunities.”

“When I first came into the league, that’s all we did. We played games,” said O’Neal, who debuted in 1992. “I would go in a room during the playoffs, and there would be guys having Madden tournaments in the room. I don’t know about baseball or hockey, I don’t know what they do in their pastime, but I know a lot of the NBA players are big into games. Esports is part of the gaming industry, so I’m sure the guys that are invested are really, really into games.”

O’Neal and Fox, who won three consecutive NBA championships together with the Lakers in the early 2000s, are among former players who have invested in esports. Fox and his group purchased Gravity Gaming’s League of Legends Championship Series spot for a reported $1 million. Among current players, the Utah Jazz’s Jonas Jerebko purchased Renegades, an esports franchise that previously held a team in League of Legends and at the time of the purchase in September 2016 had a team in Counter-Strike: Global Offensive, the two most popular games in esports.

Boston’s Gordon Hayward and Brooklyn’s Jeremy Lin are avid gamers and esports enthusiasts, both doing previous advertising deals with IGN, Vici Gaming and HyperX, respectively. Now Fortnite is the latest video game to keep several NBA players, such as Minnesota’s Karl-Anthony Towns, up all night. It could be another big esport in an already crowded field.

Silver said the NBA wasn’t initially considering starting a league around its NBA 2K video game. But as he and Zelnick spoke more about a way for the NBA to enter the esports realm, the idea of an NBA 2K league grew more appealing.

It made sense for the NBA to promote the sport through its most popular video game. NBA 2K17 is the highest-rated annual sports game of the current console generation, selling nine million copies worldwide, with NBA 2K18 on pace to become the best-selling edition in franchise history, according to the NBA.

The NBA already has organizations that know how to run and operate teams as well as a model already in place for a league structure.

“I will say what I have learned is it is an incredibly passionate audience,” Silver said of esports consumers. “If you look at the numbers that Amazon shared with us about their Twitch audience, the numbers that YouTube has shared with us about the enormous amount of their traffic that is due to gamers, it is in the hundreds of millions on a global basis. I think there is a reason, therefore, why all of us are focused on this potential audience.

“I realize that just because we have a popular global sports brand does not mean that those hundreds of millions of egaming fans will automatically convert over to be interested in an NBA league. But certainly [it] creates enormous opportunity.”

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