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Esports teams make money mainly through sponsorship and advertising, supplemented by league or publisher distributions, merchandise, digital-item licensing, content, tournament prizes and sometimes player transfers. The model can still be financially fragile: payroll and other costs recur, while sponsorships, prize results and contractual revenue shares may change or disappear. Recent company filings illustrate that pressure, but they do not show that the organizations discussed here filed for bankruptcy.
Where does an esports team’s money come from?
A team’s revenue usually comes from a mix of commercial deals, competition-related arrangements and fan-facing products. Which sources matter most depends on the organization, game, league and contracts it has; there is no single revenue split that applies to every esports team. The World Intellectual Property Organization describes sponsorship and advertising as the sector’s most important revenue source and sponsorship as the primary source for team organizations (WIPO’s overview of esports stakeholder business models).
Sponsorship and advertising
Sponsors pay for exposure through placements such as jersey logos, team names, player appearances, social posts and branded content. A team may also sell advertising around its streams and videos. These arrangements can make a large audience commercially valuable, but audience size alone does not establish the amount of revenue a team earns, whether a sponsor deal will renew, or how much profit remains after costs.
In March 2024, Riot Games’ then-President of Publishing & Esports, John Needham, said, “We all – leagues and teams alike – are overly reliant on sponsorship as a revenue stream.” The statement described a concern about the League of Legends ecosystem at that time, not a universal financial statistic for all esports organizations. Riot also noted business pressure despite audience growth; it reported that the average-minute audience for the 2023 Mid-Season Invitational grew 58% year over year and the figure for Worlds grew 65% (Riot Games’ March 2024 discussion of League of Legends esports strategy).
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League and publisher arrangements
Some teams receive payments or distributions under league agreements, or share in sales of esports-related digital items. The exact arrangement is contract-specific. A publisher or event organizer may initially receive money from media rights, tickets or sponsorships, then distribute some of it to teams according to an agreement. It would be inaccurate to assume that all broadcast, ticket or league sponsorship revenue belongs directly to a team.
Riot’s March 2024 article described its then-current League of Legends partnership model as requiring teams to commit approximately $10 million to participate and giving them 50% of certain league revenues, not 50% of profits. Riot also outlined a proposed arrangement for the LCK, LCS and LEC involving a fixed stipend and digital-content revenue sharing. Those statements concern Riot’s title and the plans described in 2024; they are not a current entry price or rules for all games and leagues. Check the relevant league’s current agreements before applying them to a specific team.
Prizes, transfers and licensing
Tournament prizes depend on results, so they are not predictable recurring income in the same way as a guaranteed contractual payment. Even when a team wins money, the organization may owe players a contractual share. FaZe’s 2023 filing, for example, described distributing a contractually agreed percentage of prizes to players (FaZe’s 2023 quarterly filing). That example shows why a prize pool should not be treated as team profit; the precise split depends on the team’s contracts.
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Organizations may also earn money from player transfers or licensing arrangements. These are distinct from routine operating receipts: transfer activity can vary, and licensing depends on the rights and commercial agreement involved. NIP Group’s 2026 filing lists tournament participation, transfers, merchandise, sponsorship and other activities among sources of esports-team revenue.
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Merchandise, digital items and content
Teams can sell jerseys and other branded apparel, license their name or identity for in-game digital items, and monetize live streams or video. These are different businesses with different economics. A physical jersey involves production and distribution costs; revenue from a digital item depends on the applicable licensing and sharing terms. In either case, reported sales are not automatically profit after expenses and contractual payments. WIPO’s overview identifies merchandise, content and licensing among esports business-model activities.
What do recent filings show about the economics?
NIP Group’s 2026 filing offers a dated example of a team segment under pressure. The figures below are specific to NIP’s esports-team operations and are not industry averages. Its detailed revenue schedule is before the separately shown surcharge-tax adjustment; the company’s management discussion reports rounded net team-segment revenue of $14.7 million for 2024 and $11.8 million for 2025.
| Fiscal year | NIP esports-team sponsorship and advertising revenue | NIP esports-team operations revenue | Team-segment gross margin |
|---|---|---|---|
| 2023 | $8,147,298 | $21,664,621 | Not stated in the cited filing figures |
| 2024 | $3,860,800 | $14,725,503 | 17.1% |
| 2025 | $847,073 | $11,818,097 | 6.8% |
Source and scope: NIP Group’s 2026 filing; revenue amounts in the detailed schedule are before its separately shown surcharge-tax adjustment. The margin figures are team-segment gross margins, not company net margins. See NIP Group’s 2026 annual filing.
The sponsorship line declined substantially over these three reported years, while the team-segment gross margin also fell between 2024 and 2025. The figures show how a company-specific revenue mix and margin can deteriorate; they do not establish an industry-wide trend or identify the exact cause of every change. Gross margin is also not a complete measure of financial health: it does not account for all company-level expenses, financing needs or cash flows.
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Why can a team have revenue and still face bankruptcy risk?
Revenue is money recognized from business activity; it does not mean the organization has enough cash to pay its bills when due. A team can bring in substantial receipts but remain vulnerable if sponsor income falls, a league payment changes, payroll and operating expenses remain high, or available financing is insufficient. Insolvency risk is about the ability to meet obligations, not simply whether the team has an audience or has generated sales.
Costs are often more predictable than results
Player and staff payroll, facilities, travel, production and other operating costs can recur even when tournament outcomes or sponsor income fluctuate. Prizes depend on competitive performance, and even an award may be shared with players under contract. If revenue declines faster than costs can be adjusted, the remaining cash may not cover upcoming obligations.
League access and revenue shares depend on contracts
Participation can involve significant commitments, while publishers and leagues may revise their commercial models. Riot’s historical description of an approximately $10 million commitment concerned its then-current League of Legends partnership model; the same 2024 article discussed a proposed structure for three named leagues. These are reminders that league economics are not fixed across titles or time, rather than evidence that every team has the same cost or risk.
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NIP Group reported $15.686 million in consolidated net cash used in operating activities in 2025. That figure covers the whole group, which also operated talent management, event production and Bitcoin mining; it is not the esports-team segment’s cash burn. NIP also reported a $238.1 million net loss for the group, including $122.5 million of goodwill impairment and $64.4 million of intangible-asset impairment, primarily associated with the NIP brand and league seat. Those impairment charges were noncash, and the consolidated net loss should not be described as an esports-team-only operating loss or as a cash deficit of the same amount.
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What do bankruptcy warnings actually establish?
A warning about going-concern risk is serious, but it is not the same as a bankruptcy filing. A going-concern paragraph means an auditor has identified substantial doubt about a company’s ability to continue operating under the conditions described in its financial statements. It does not establish that the company, its esports brand or a particular team has filed a bankruptcy petition.
GameSquare’s fiscal-2025 filing reported that its independent auditor raised substantial doubt about the consolidated company’s ability to continue as a going concern, citing recurring losses and current liabilities exceeding current assets. The filing includes FaZe Esports among GameSquare’s brands, but the audit is of consolidated GameSquare, not a standalone audit of a FaZe team. The filing contains inconsistent working-capital-deficiency amounts in different passages, so no single figure should be treated as settled. The filing is evidence of a company-level warning, not evidence that GameSquare or FaZe filed for bankruptcy.
Likewise, NIP’s falling team-segment revenue and gross margin are meaningful stress signals, but they do not prove bankruptcy or a particular future outcome. A careful reading separates the team from its parent company and distinguishes segment performance, company-wide cash flow, noncash accounting charges and formal bankruptcy proceedings.
How can you assess the financial risk of an esports organization?
When comparing organizations, look beyond followers, tournament wins or a headline revenue figure. The most useful questions concern the quality, durability and contractual terms of income relative to obligations. Public filings may not disclose every team-level detail; if a number is not reported for the team itself, do not infer it from a parent company’s consolidated results.
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- Sponsor concentration: How much does the organization rely on a small number of sponsors, and when do those deals renew? A large sponsor line can still be exposed to nonrenewal.
- Guaranteed versus variable income: Separate fixed contractual league receipts from performance-dependent prizes, transfer activity and other irregular revenue.
- Revenue-sharing rights: Check whether the team has contractual access to digital-item proceeds or other league distributions, and distinguish a share of revenue from a share of profits.
- Player prize obligations: Determine whether player contracts allocate a percentage of prize money to competitors; the organization’s gross prize receipt may overstate what it retains.
- Merchandise and content economics: Sales and views matter only insofar as they produce margin after production, distribution, talent and other costs.
- Recurring costs and cash needs: Compare payroll and other ongoing obligations with liquidity and available financing, rather than relying on revenue alone.
- Reporting scope: Verify whether each figure covers a single team, an esports segment or the entire parent company, and whether it is revenue, gross margin, net income or cash flow.
This framework is useful because esports businesses sit across several layers: the team, parent company, league, publisher and event organizer. Money can be earned at one layer and shared with another, while financial statements may consolidate several businesses. Clear scope is essential to avoid attributing a league’s revenue to a team or a parent’s losses to a single roster.
What is the practical takeaway?
Esports teams monetize attention and competition through sponsorships, league arrangements, prizes, transfers, merchandise, licensing and content, but those sources are uneven and often contract-dependent. Financial fragility arises when volatile income has to support recurring costs and the organization lacks enough margin, liquidity or financing to absorb a downturn. The filings discussed here document examples of stress and company-level warnings—not proof that a named team or organization has filed for bankruptcy.
Frequently Asked Questions
Can a team’s audience growth guarantee that it will make money?
No. Audience figures describe viewership, not the commercial terms attached to it. Riot reported audience growth for two 2023 events while also describing business pressure in its March 2024 discussion, illustrating why reach and profitability are separate questions.
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What should I check before treating a reported loss as a team’s loss?
Look for the reporting entity and the scope of the line item: a parent-company result may include other businesses, and an esports segment can include more than one roster or activity. Also distinguish cash flow from accounting charges such as impairment, which can affect reported earnings without being a cash payment in that period.
Does a going-concern warning mean a company has filed for bankruptcy?
No. It signals substantial doubt about the company’s ability to continue operating under the conditions described in the financial statements; a bankruptcy filing is a separate legal event. Verify any claim of an actual filing through a formal court or company record rather than treating the auditor’s warning as proof.
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