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When FunPlus Phoenix hoisted the League of Legends World Championship trophy in Paris last year, it did so in a Nike jersey. Throughout the previous two years, it has become more and more common for traditional sports brands including Nike, Adidas, Puma, and New Balance to equip esports teams. In January, SK Gaming became part of Nike’s sponsorship portfolio. The Esports Observer talked to Dennis Schröder, general manager for 11teamsports, during the jersey reveal party for SK Gaming in the 11teamsports flagship store in Berlin.
“I won’t get tired of emphasizing that the crucial factor in making the decision was that we harmonized immediately and witnessing how euphoric Alex and Jens are about esports. I also noticed this within my team as a new dynamic was created by them observing how engaged SK Gaming’s leadership is, and internally people got really interested in the topic, which is something you really can’t offset in monetary value.”
The partnership with SK Gaming is not the company’s first venture into esports. “Especially in FIFA, we had points of contact with esports at several instances and ultimately established our 11teamsports FIFA Cup, which we use to interact with the community and guide them into our stores. Through this format, we figured out that there is an incredibly positive resonance for esports,” explained Schröder.
While soccer and team sports are 11teamsports’ core focus, the first impressions collected from its esports audience, evinced that a large overlap exists to the company’s intrinsic audience, within a group of fourteen to seventeen-year-olds, digital natives, very hip-hop affine soccer players, for whom gaming is an important interest, revealed Schröder.
Several companies and esports organizations realized that the gaming audience’s non-gaming interests could be monetized through the platform of gaming and esports. The developer of the popular Battle Royale title Fortnite, Epic Games, regularly sells character skins through which players can show their interests, such as the NFL. American esports organization 100 Thieves created an extensive lifestyle fashion line. H4X.gg created a hip-hop fashion brand for esports fans.
For 11teampsorts, an opportunity called when it was introduced to the supplier contract opportunity for Cologne-based esports organization SK Gaming by Lagardère Sports. “Where there are supplier contracts to be filled, marketers will be present. In this case, it was Lagardère Sports, with whom we already work on several supplier contract projects, that are processed through us,” said Schröder. “That means that we conduct negotiations and bring our partners, in this instance, Nike, along. At the end of the day, in part, thanks to our good relationship with Nike based on previous projects, this supplier contract was negotiated and accepted quickly.”
During the week the partnership between SK Gaming, 11teamsports, and Nike was announced, two more partnership deals between Nike and esports organizations were made public: T1 Entertainment & Sports, the parent company of three-time League of Legends World Champion T1, and Spanish organization Vodafone Giants. Furthermore, Nike entered into a four-year apparel sponsorship deal with Tencent and Riot Games subsidiary TJ Sports for its Chinese League of Legends Pro League (LPL). Nike’s apparent interest in esports was reflected in Schröder’s experience closing the deal with the company. “In the end, it actually was a 10-minute call with the right people at Nike to get the deal done.”
According to Schröder, the partnership between SK Gaming, 11teamsports, and Nike is based on a five-year sponsorship contract, including options, worth a six-figure sum. On the brand’s side, the sponsorship contract is executed by Nike Central, which is part of one of the company’s six geographies, Nike Europe. Nevertheless, esports is a global focus within the company.
“With SK Gaming we got the opportunity to work together with a clan, for which the global brand Nike is relevant as they are surrounding themselves with that kind of global professional partners including Mercedes-Benz, the Deutsche Telekom, and ARAG,” continued Schröder, describing what made the partnership attractive for his company. “For us, it is attractive to take our steps into esports by doing what we can do best ordinarily: being a supplier, inducing finishing jerseys, stockage, building online shops, and sales. We will participate in this partnership with our expertise and learn from SK Gaming’s expertise in their field. This will be a multi-year partnership during which both parties will be able to learn a lot from each other and have time to experiment.”
Doing market research is a necessity as “esports is nowhere near as tapped into or analyzed as soccer is,” explained Schröder. “In soccer, I know exactly who our target audience is. Furthermore, I also know how to address them and what products to sell to them. With and through SK Gaming, we’ll now have the opportunity to run tests with their relatively large community because it won’t work without trial and error. We need to learn who is watching esports, who is playing esports games, and what those people are buying.”
“While the retail aspect of esports is still at the very beginning, just SK Gaming’s jersey sales are already in the ballpark of a below-average German second soccer league club, so you do not start at zero,” revealed Schröder. In its 2019 annual financial report, the Deutsche Fußball Liga, the operator of the german premier soccer leagues, disclosed that the 18 clubs participating in the German second soccer league made €25.3M [$27.95M USD] in merchandise revenues in the 2017/18 season, which is on average €1.41M [$1.56M] per club.
Schröder is looking to analyze and measure the success of the partnership in three aspects. Firstly, comparing the cost of the sponsoring fee and the revenues made from selling jerseys and merchandise will be used to build a classic business case.
Secondly, the branding value of the partnership will be taken into account. Being visible through SK Gaming’s reach is valuable for the 11teamsports brand, even in spite of the fact that measuring this value can be tricky, especially in esports.
Thirdly, narrowing down an approach to address the 11teamsports’ target audience through SK Gaming and positioning the company through the medium of esports as a more attractive competitor than other sports goods dealers based on superior products and availability is a key focus of the partnership.
Looking ahead of what the partnership could bring to 11teamsports, he added that “by now we have more than a million followers on social media, who engage with us beyond just ‘here is a new shoe, buy it now’ content and are interested in the stories we have to tell. Through the partnership with SK Gaming, we have the opportunity to tell new stories and I’m curious to find out how this will be received.”
As there have been very few, especially long-term, supplier and merchandising partnerships in esports with traditional sports brands, SK Gaming’s new partnership has the potential to set an example for many following. Although, it should be kept in mind that this partnership will be SK Gaming’s second attempt at such a partnership, following a year-long supplier partnership with Intersports. Having said this, the partnership with Intersport can’t just be signed off as a failure, as it was put into place under a different ownership group and business strategy in December 2018.
“I have great expectations for this partnership, but we will have to work closely with SK Gaming and harness the potential of it. Of course, I’m aware we could be sitting here in two years and say this didn’t work out, but I’m confident in our ability to pull it off,” summarized Schröder looking at the new partnership. “Nike too has a lot planned in terms of activations in esports and specifically with SK Gaming.”