- Owner of NFL New England Patriots and MLS New England Revolution operates Boston Uprising team
- Group paid $20m to buy one of initial franchises
- Kraft hoping to rent or renovate a venue in Boston to host games
Aside from being billionaires, what do the owners of the New England Patriots, New York Yankees and Golden State Warriors have in common? They’re all investing in the esports industry.
As competitive gaming moves from a subculture into the mainstream, many US sports organizations and their backers have begun to look for a slice of the pie. A list of investors in League of Legends competitions and the Overwatch League (OWL) – based on two of the most popular competitive esports games – reads like a who’s who of the US sports business world.
For some sports teams this relationship is relatively distant – for example, OWL team Dallas Fuel’s parent company recently received a $35m (€28m) investment from Hersh Interactive Group, a minority investor in the Texas Rangers.
Sometimes it’s a lot deeper. The Kraft Group – owners of the NFL New England Patriots and MLS New England Revolution – is sole owner and operator of the Boston Uprising OWL franchise. Robert and Jonathan Kraft have been heavily involved in the decision-making process over the team, which is run by the Uprising president of gaming Chris ‘HuK’ Loranger.
Jennifer Ferron, chief marketing officer of Kraft Sports and Entertainment, sat down with SportBusiness International at the MIT Sloan Sports Analytics Conference, to explain why the Kraft Group got involved in the Overwatch League and what it is looking to gain from the investment.
Kraft’s involvement in the OWL began when Bobby Kotick, chief executive of Overwatch developer Activation Blizzard, invited Robert Kraft to the 2016 BlizzCon, an annual convention that promotes the company’s major video games. Exploring opportunities to invest in esports, Kraft’s interest was piqued by what he saw in California.
Kotik was looking for investors for a league based around his popular and critically-acclaimed first-person shooter Overwatch – which then had 30 million players worldwide. Kraft liked the idea of purchasing a franchised team in a sustainable league structure, following his similar involvement in the NFL and MLS.
Six months after the city-based Overwatch League was announced in November 2016, Kraft executives met with members of the Activation Blizzard team to discuss the matter further. In July 2017 it was announced that the Kraft Group had paid the $20m fee to purchase one of the initial seven franchises.
There were 12 by the time of this year’s inaugural season. With entry fees predicted to rise to as much as $60m next season, getting in early has already looked a wise investment.
“Esports has been something that many people have talked to the Kraft group about more from an investment standpoint as opposed to an ownership participation,” says Ferron. “At BlizzCon the Kraft Group really got to experience what it looked like from a live participatory standpoint. That was a turning point to dig a little bit deeper and see if this was something the Kraft Group really wanted to not only invest in but also be an owner/operator.
“We wouldn’t have a seat at the table if we didn’t believe that it could be largely successful. For us to invest in anything there needs to be a lot of mindful discussion about: is this right for our bigger brand? Is it right for us to invest even time and resources in?
“Writing a cheque is one thing – and there is always a large contribution to enter into something – but I think there was a notion that we could help to grow it from what it is today.”
Having seen the benefits of being an initial owner-operator in MLS – the Revolution was bought for $5m in 1996 and are now worth around $225m – Kraft was keen to be involved from the outset.
Significantly, the Kraft Group believes fans will soon follow Overwatch teams and players far more than the league itself – and being an initial investor will give the company, according to Ferron, a ”good share of the voice” as the business model potentially changes. As Activation Blizzard owns the intellectual property of the league, it is currently more difficult for its franchises to sell sponsorship and monetise the content.
“For the publishers, the IP is theirs and over time we are going to have to work collaboratively to find a balance where the IP is as much the teams’ as something that belongs to the publisher,” Ferron said at a Sloan Conference panel.
“Over time you are going to see a greater share of voice for the teams, the partners, the sponsors and for the people who want to invest in the property in the long-term. The question is: how does that dynamic shift over time? We are helping that process along.”
Robert Kraft himself was deeply involved over the decision whether to invest in the Uprising and has taken the time to meet the team in California. Now he leaves the running of the team largely to his executives – as he does with the Patriots and Revolution.
“Robert will be involved at a very-high level in terms of league decisions and things of that nature,” Ferron adds. “From a day-to-day basis he tends to step out and allow the other executives to run the businesses.”
Challenge to engage fans and sponsors
This season – and for the immediate future – all 12 Overwatch League teams will play in a purpose-built esports arena in Burbank, California. Eventually they will play in their home cities in front of their home fans, which is when many commercial opportunities will arise.
With this in mind, the Kraft Group are taking a slow, steady approach to bring sponsors on board and get fans engaged.
“For now while we are playing in LA our initial [introduction] into this marketplace are some watch parties [in Boston],” says Ferron. Merchandise and signed jerseys are given away at these viewing parties to entice fans to take part and be involved.
“We want to bring the team to the market in the coming months [to visit] and we hope to do that between stage two and stage three of the season [late March/early April]. It is something we hoped to do prior to the start of the league and it just didn’t work out – there wasn’t enough time.
“The fact that we don’t know when we’re going to play in the [Boston] market suggests we need to be smart in terms of what we’re doing. We’re not going to spend a number of mass-media [advertising] dollars right now as we don’t have a timeline for when we’re going to be here.
“When we know we’re going to be in Boston, we’ll have a venue that we’ll either rent or potentially renovate, then we’ll start to get granular and look at ticket sales, concessions and merchandising – all those commercialization opportunities that start to develop once we’re back in our market.
“For now, it’s really keeping up an engaged fanbase and making sure that people in Boston know about the Overwatch League and that they’re excited to have the opportunity to be part of it in person.”
The naming of the team in a global league [outside of the US there are also teams nominally based in London, Seoul and Shanghai] was hugely important and ultimately the Kraft Group went with the Boston Uprising and not New England Rising, something they were encouraged but not directed to do.
This was for two reasons. Firstly, because the Overwatch League is a city-based and not a region-based tournament. Secondly, it was felt that ‘New England’ is not well-known internationally and would potentially lessen the appeal to foreign fans.
“We thought a lot about it. Does ‘New England’ help us or hurt us?” Ferron says. “I think when you are talking about city-based teams, when you are comparing yourselves to New York or London or Seoul or Shanghai, New England as an area is potentially not as well known outside of North America.”
As for sponsors, the Kraft Group has not signed any major partners yet, but it has brought interested parties to watch Uprising matches in Burbank to teach them about esports and the Overwatch League.
“We’ve not gotten into it to make money in the first couple of years. For us it is always a long-term view on everything that we are doing,” Ferron said at the Sloan Conference panel. “I do think the teams in the league are having a lot of success in bringing in partners and sponsors and even exceeding some projections and expectations that they have had, both in terms of viewership and partnership. That is all very, very positive, but we are [very early] into the league so it is too early to say one way or the other.”
The Kraft Group is actively engaged in conversations with “traditional sponsors” but is also seeking commercial opportunities specific to the esports field, such as the hardware: headphones, mice, keyboards, computers and even chairs.
“There will be some typically endemic partners that we have historically not had a relationship with,” Ferron adds. “Part of this [experience] is learning that space and being comfortable having introductions being made to those companies and having really good conversations with them.
“Some of the conversations we are having with our more traditional sponsors are very healthy and very positive but it is very much a bit of an education process. We are educating ourselves and also educating a potential partner about ‘why esports?’
“We’re very comfortable telling the NFL story, we’re very comfortable writing the MLS story. Now we’re writing the story for esports if you will – and for the Overwatch League.
“And while we are talking about esports in general we are talking about a particular game and a particular league to invest in. So it is fine-turning that message for our audience and helping them make a smart business decision.”
Ensuring a good deal for Uprising sponsors is of huge importance for the Kraft Group as a whole, says Ferron. “If we are promulgating something that isn’t going to be a good return on the investment then that is something that could damage our relationship we have with them for other pieces of the business.”
How the Uprising can help Patriots and Revs – and vice-versa
The Kraft Group’s main properties, the Patriots and the Revolution, are already involved in esports to an extent, via the Madden NFL Club Championship and the upcoming eMLS Cup respectively.
Being an owner/operator of a team in the Overwatch League, Ferron says, will help the Kraft Group navigate commercial activities in the esports world and learn how to engage with its young, digitally-savvy audience.
“We are going to learn an immeasurable amount from the endemic esport business and from the individual companies and teams that have been involved in esports for years,” Ferron says.
“It will be an opportunity to leverage experiences from the esport conversation. Not that we couldn’t pick up on it for our NFL and MLS operations but it allows us to be more intelligent and smarter and find ways to engage with that fanbase.
“It’s also an exciting opportunity to think about how to create Boston fans and how to start to get to know them better and market to them on a one-to-one basis. We want to reach out to this young, digital, really technology-driven, really smart global audience and use the data capabilities we have as a company to really drive that forwards.
“In addition, we can use a lot of the principles and practices that we have from our NFL and MLS experiences to try to [help other Overwatch teams] in terms of what we have seen as successful as from a real fan-engagement, fan-experiential proposition.”
The Kraft Group has already utilised its teams’ social media accounts to promote each other but Ferron says the company is wary of alienating the company’s hard-earned American football and soccer fans with too much cross-pollination.
“There is great opportunity but we have to be mindful about it,” she adds. “It can’t feel fabricated or unauthentic and I think we’ve done some really fun things with our first Boston Uprising match this year.
“We sent out messages from our Patriots Twitter account and Facebook page and they were wildly received by both audiences and I think they saw that association that the Krafts are doing something new and that one team in our portfolio was recognising another and that was really great.”
This cautious philosophy applies to marketing activities, too. ”We have been very careful not to message people with something that they are not interested in,” Ferron adds. “So if you are part of our family as a Patriots fan but you don’t care for the Overwatch League I’m not going to want to market to you.
“So part of it is exploratory and testing the waters a little bit. It is something we have done between the Patriots and the Revolution over the past 20 years and it is something that we will do between the Patriots, the Revolution and the Uprising.
“If you’re happy in more than one of those then we are happy to cross-promote but only when it makes sense and it’s what the audience wants.”
The Patriots and Revolution players can also be utilised, Ferron says. ”If we learn that one of our players on one of our teams is an avid esports fan or participant, we will look to leverage that and have fun with it in a way that is entertaining and value-added. It won’t be for self-promotion or to take advantage of the teams to leverage another one.”
This year’s Super Bowl, in particular, was golden opportunity for cross-branding. A viewing party was held in LA for players from the rival Uprising and Philadelphia Fusion teams to see the Patriots take on the Eagles. ”That is the unification that sports can have,” says Ferron.