Over the years, Korean League of Legends has always been the most famous tournament in the world. The success of the teams from this country, especially SKT T1/T1, has later attracted a large number of Korean professional tournaments. However, currently the organizer and broadcasting the tournament – LCK has reported great losses in the past 3 years.
Accordingly, the figure reported by LCK Corporation each year as follows:
– 2022: 8.1 billion KRW (~ 5.621,000 US dollars)
– 2023: 13.2 billion KRW (~ 9.161,000 US dollars)
– 2024: 28.5 billion KRW (~ 19,780,000 US dollars)
Thus, the total number of LCK holes in the past 3 years has reached 42.7 billion won (~ 29,635,000 USD), most of them come in 2024. In addition, LCK's revenue has dropped from 27.9 billion won (~ 19.363,000 USD) in 2022 to 11.4 billion won (~ 7,912,000 USD) in 2024.
LCK's losses stem from the operating system of the tournament focusing on fixed costs and diversifying low revenue. Fixed expenses such as production costs, labor costs and broadcasting equipment are increasing, but the revenue model focuses on ticket sales, sponsorship and broadcasting rights, so the facility produces limited revenue.
A typical example is that the LCK tournament has changed to franchise by 2021 to ensure the stable tournament and improve the revenue structure of the teams. However, this also brings economic disadvantages and is directly affecting LCK. It is known that LCK belongs to the entire Riot Games and must ensure all operating costs of tournament, field or broadcast.
From here, the financial burden on LCK is huge, especially the maintenance costs related to operation. In addition, LCK also conducted many activities to help eSports organizations such as sharing profits, sharing sales and even supporting 13 billion won for teams last year. In addition, LCK must also hold two major events, respectively, the World Champions Champions 2024. Riot Korea itself has also revealed that “this (cost increases) partly from the organization of 'Valorant Champions Seoul 2024' in Korea last year”.
In 2024, LCK also lost a source of revenue from China's broadcast company to cancel the exclusive broadcast contract for the LCK tournament. Another analysis is that because the Riot Games is directly managing major and global funding contracts, the Korean and LCK corporations are relatively adverse in profit distribution structure.
Economic analysts believe that these losses cannot cause LCK to collapse. However, the parties will need to find a way to consider expanding revenue instead of focusing on the main sources today. In addition, LCK also needs to solve the problem of sharing revenue with Riot Games to “burden” partly operating costs increasingly large at the present time.
