Blog #5.0 eSport Tournaments 101

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Every tournament organizer's dream / Credit: Nathaniel Tucker

Over the next several posts, I am going to be discussing tournaments: what they cost, how they are produced, how they are broadcast.

I am going to do this by telling you the tale of two tournaments: the LoneStar Clash produced by the Texas eSports Association earlier this year in Austin and the Day[9] Launch Party for SC II that I produced in 2010. Both tales contain many moments of horror and near escape, as befits a pre-Halloween blog. Don’t read these posts alone in the dark.

Once our tales are complete, the Day[9] Crew will collaborate with TeSPA to supply you with checklists, recommended equipment, suggested practices, sample budgets and marketing materials to help you produce your own eSports event. We hope these resources embolden you to go where no man or woman has gone before, producing high school, college, and regional tournaments for the games you love.

First, however, a few caveats:

Tripping Hazard: jcolman / photo on flickr

Cash flow.

Tournaments held in front of a live audience take money to produce. Lots of money. Tournaments held in front of a live audience and simultaneously streamed over the internet take even more money. That means that your first order of business is to raise enough cash through sponsors or ticket sales to finance your event.

At the same time, you should note that even if you valiantly hustle up $30,000 in sponsorship commitments or tickets sales this is not necessarily the same thing as $30,000 cash-in-hand to spend. You will sell the majority these tickets just days before your show opens—not three months in advance. Your sponsors may well pay you six months after your event ends.

This begs the question: how will you pay in advance for your production set up? Put down deposits for the venue? For the equipment? For the food? Personal credit cards? A short term loan? You need to think this through. This is a cash flow issue and it is a central issue in all businesses—not just event production.

Some people are shocked to learn that they may not get sponsorship money up front. “Why do sponsors do this?” they ask. “Isn’t this behavior immoral?”

No. The sponsors are taking a gamble on you. It is reasonable that they should to want to see hard evidence that you pulled off the event professionally and brought in the audience numbers you promised. Especially if you have no track record. We will talk more about how to work with sponsors in a future blog.

Taxes.

Taxes: DonkeyHotey / photo on flickr

If sponsors are sending you tens of thousands of dollars in sponsorship money, they may well be reporting to your government that they are doing so. If sponsorship checks are made out to you in your own name and tax id number, this may be treated as taxable income to you and you may be held personally liable.

To avoid this, you may want to set up a small entity. Be aware you may need to file corporate taxes if you create such a corporate entity. You may also want to create a separate bank account and a bookkeeping system to show any government auditors how the money came in for the event and how it was spent. Be careful who has access to the bank account and demand receipts before handing out petty cash. Track, track, track in real time. It is surprisingly difficult to reconstruct all these financial transactions after the fact.

Lawyers.

Tax laws, accounting, setting up an entity, contracts—these are unbelievably complex areas. Don’t be a smart ass and think you can do them all yourself. Don’t think you can cut and paste legal copy from the internet, come up with a contract and save yourself money. Be aware that business laws are different in every state and in every country.

Lawyer: peggydavis66 / photo on flickr

Good business lawyers are expensive, but they are worth their weight in gold. They are there to keep you out of trouble. Lawyers can be awesome. Get one. Explain to your lawyer that you are young and inexperienced and ask what it would cost to give you advice and set you up with the templates you need. Ask him to cap his billable hours. You will be amazed how much direction you can get for a couple hours of time.

Your lawyer might even be interested in what you are doing and offer introductions to potential sponsors. Lawyers know everybody and like to facilitate useful hookups between their clients.

If you are at a university, get referred to a business professor or a campus law clinic, and benefit from as much free professional advice as possible. Offer your business up as a real world learning experience for an entire business or law class. Benefit from the collective brainstorming.

Permission.

Permission: andymangold / photo on flickr

Get a license from the game publisher for your eSports event. This is easy to do (we will give you the contact details in a future blog) and inexpensive. These guys are not giant monopolies, they are guys like you who happen to have worked hard to engineer the games you love. Everything you do is being built on their work. Respect that. In fact, think of obtaining a license as a business investment: you are establishing an important business relationship with a key player in the eSports world.

On the other hand, when it comes to university administrators, bar owners and venue managers, sometimes it pays not to ask for approval on every little detail. These folks can be uneasy about the nature of your event ("What the heck is eSports, anyway?") and are likely to take the conservative path and just say no. Better to forge ahead, use your best judgment and produce a kick ass event that makes everybody happy after the fact.

Negativity.

Ignore naysayers and push them out of your inner circle as you work on your event production. People either love to build things or they are threatened by those who do so. Realize that many of your critics want you to fail for personal reasons that have nothing to do with you. They do not want you to succeed because it will rob them of their rationale for leading a safe, dull, passive life. Your success makes them mediocre.

Instead, recruit the smartest, most positive people you know to work alongside you. People who know how to hustle and get stuff done. Don’t assign roles and titles until you have tested people in a variety of duties. Learn to delegate to and reward your best performers. Encourage people to second guess you, but keep control of the process.

Next up: An interview with the Rosen brothers of TeSPA about the LoneStar Clash