Eight different esports parent companies of 13 Overwatch League and Call of Duty League teams were approved for assistance ranging from $150,000 to $2 million from the Paycheck Protection Program.
A document released by the U.S. Department of the Treasury and Small Business Administration on Monday outlined the names of more than 660,000 small businesses that were granted loans in excess of $150,000 in the program, which launched because of the coronavirus pandemic. The document does not specify the exact loan amount, but rather gives a range of how much each organization borrowed. Companies are eligible for a loan that is 2.5 times the amount of their average monthly payroll.
Depending on the date of the loan, these businesses have two or five years to repay them, but the loans are forgiven if a company maintains 75% of existing salary cost prior to the pandemic and at least 60% of the loan is used for employee payroll. Each loan carries a 1% interest rate.
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Three other notable esports organizations that do not participate in the Overwatch League or Call of Duty League also took loans from the program. P1 Esports, the legal name of Sentinels, borrowed $150,000 to $350,000, and eUnited borrowed the same amount. NextGen Tech, the business name of Complexity Gaming -- the Texas-based esports franchise who is backed by Dallas Cowboys owners the Jones family and real estate moguls the Goff family -- received a loan in value between $350,000 to $1 million. No franchises in the League of Legends Championship Series borrowed from the Paycheck Protection Program.
"We received PPP money within the range listed by SBA, and that the monies were used consistent with the intent of the program: To keep people working while dealing with the impact of COVID," eUnited CEO Adam Stein told ESPN.
The Paycheck Protection Program began in March as part of the CARES Act, a coronavirus relief bill passed by the U.S. Congress that included both assistance for businesses and individuals.
"We had a couple of sponsorship deals we were close to closing, which obviously, with their uncertainty, caused problems with sponsor commitments," Sentinels CEO Rob Moore told ESPN. "I understand everyone looks at esports and says, 'Hey, esports, you have more viewers,' which is now hopefully going to bear fruit. But in the short term, people who were managing their marketing budgets, everyone kind of stopped.
"We had a couple of sponsor deals that got delayed, so this caused a significant disruption in the revenue we expected for the year. We kept our entire staff. Everyone is working from home and have now been working on putting together the sales information to try and attract more sponsors or close revised deals with people we've been talking to."
Entities participating in the Overwatch League and Call of Duty League that took PPP loans include:
Envy Gaming, the parent of Team Envy, Dallas Fuel and Dallas Empire: $1 million to $2 million loan
FaZe Clan, part owners of the Atlanta FaZe: $1 million to $2 million loan
ESXL, owners of Andbox, New York Excelsior and New York Subliners: $350,000 to $1 million loan
Hard Carry Gaming, the organization behind NRG Esports, San Francisco Shock and Chicago Huntsmen: $350,000 to $1 million loan
DM-Esports and c0ntact Gaming, parents of Paris Eternal and Paris Legion: two $150,000 to $350,000 loans
ReKTGlobal, owners of Rogue and London Royal Ravens: $150,000 to $350,000 loan
Surge Esports, the American arm of Enthusiast Gaming and owners of the Seattle Surge: $150,000 to $350,000 loan
A spokesperson for Andbox, owned by ESXL, told ESPN the company returned the PPP loans it received in full.
The Overwatch League and Call of Duty League made massive pivots in 2020 amid the outbreak of the novel coronavirus.
Prior to the pandemic, the Overwatch League planned to hold 52 homestand events across the 20 cities represented in the league, with two occurring each week. Several of those events occurred -- in New York, Dallas, Philadelphia, Houston and Washington -- prior to the coronavirus spreading across the United States. However, in March, domestic homestand events in March and April, and several in Asia, were canceled indefinitely. The league later canceled all of the events for the remaining of the season and moved all games online.
"Envy Gaming did apply for and receive a loan through the PPP," an Envy spokesperson confirmed to ESPN. "The amount received was among the lower end of the range listed. The loss of live events due to COVID-19 was a major change to Envy's 2020 business strategy, going from an expected seven events hosted in North Texas to only the single event. The money received through PPP was used for its intended purposes, primarily to help pay for fixed costs of operation such as salaries of those in the organization."
FaZe Clan, Hard Carry Gaming, DM-Esports, c0ntact Gaming, ReKTGlobal and Surge Esports did not respond to requests for comment.
The Call of Duty League was set to follow a smaller but similar model, holding home series events every other week among its 12 teams. The first set of home series took place in Minneapolis, Atlanta and London, but eventually the rest were canceled. The Call of Duty League also moved to an online-only format and on Sunday announced the CDL playoffs will take place online.
Plans for 2020 led Overwatch League and Call of Duty League organizations to expand and rapidly adjust their staff throughout 2019, hiring additional event organization, marketing and other types of support staff. This year was a massive financial undertaking for these organizations, with the hope that offline events in home markets would provide returns over time.
The Overwatch League recruited 12 franchises throughout 2017 for the inaugural season and an additional eight in 2018 for expansion. The 2017 buy-ins included Envy, NRG, Misfits and ESXL, each of whom agreed to pay $20 million in franchise fees over time. The 2018 recruits included DM-Esports, a new organization backed by former Los Angeles Dodgers owners the McCourt family. Expansion franchises cost anywhere from $35 million to $60 million, depending on region and competition for ownership in that region.
The Call of Duty League sought out franchisees in 2019 with a flat price of $25 million per franchise.
Several Overwatch League owners also joined the Call of Duty League, including NRG with the Chicago Huntsmen; Misfits with the Florida Mutineers; Envy with the Dallas Empire; ESXL with the New York Subliners; the McCourt family with the Paris Legion; and the Aquilini family, who also own the Vancouver Titans; and Enthusiast, with the Seattle Surge.
FaZe Clan partnered with Atlanta Esports Ventures, a joint venture between major American telecommunications company Cox Enterprises and Province and owners of the Atlanta Reign, to found the Atlanta FaZe, the Call of Duty League franchise. ReKTGlobal, which acquired Rogue in 2018, also founded the Royal Ravens.