It’s just not sustainable”: Tier 2 esports orgs discuss the shocking finances

What the report says

The North American Challengers League – North America’s League of Legends Tier 2 system – is in its home stretch.Six teams remain in the NACL Summer Playoffs, but the prize isn’t merely a trophy. The top two teams qualify for the League Championship Series’ promotion-relegation tournament, set to happen later this year.The finalists in the NACL Playoffs will join a pair of Liga Regional Norte teams and current LCS guest spot holder Disguised in a five-team event to qualify for North America’s Tier 1 system.The lure of playing on stage in the LCS is enough to excite Cupid Esports coach Samuel “boc” Boudrie and his players.

Keep Reading “It’s very sad for players and coaches”: Esports pros react to sudden Esports Nations Cup delay with further training, confusion, and a wedding“It’s important to foster the grassroots nature of TCGs”: T1 CEO Joe Marsh talks entering Riftbound, T1 bundle cards, and grassroots communities“I was in China coaching team for the Asian Games back in 2023, and being up on stage and just in front of people, having that screen, the computer, seeing the other team sitting across from you, like there’s like this electric feeling,” boc said to Esports Insider.

“And once you have that, you want more.”But the question becomes: Is it realistic? Sure, winning the promotion-relegation tournament gets you the spot, but once the trophy is raised and the confetti has fallen, there will come a new challenge.“It’s not something I suppose that I can wrap my head around right now,” Contingent owner Jose “beardsandcats” Graham said.Note: For simplicity purposes, this article will only cover teams that can qualify as listed professional organizations. In the case Winthrop or Marysville win or finish second in the NACL, neither team can move into the LCS, as both are collegiate programs and are ineligible for qualification.The price of getting thereOnce a team earns qualification, the clock begins.Teams in the promotion tournament will be audited to determine whether the organization has the financial resources to play in the LCS.The LCS and Riot Games require players to be listed as full-time employees of the company, meaning they must be W-2 employees with health insurance benefits.

Key details

The LCS player minimum is $75,000, which is also the LCS-mandated minimum, but add in all the external benefits, and the number could easily escalate into six digits.A person with knowledge of the finances of what the guest spot entails wouldn’t elaborate on the exact percentage, but said the difference is “significant” and could be more than a million dollars.Then comes the additional cost of moving a team’s operations to Los Angeles, where most of the year’s games are played. The cost could escalate if they desire a quality setup, which may need to be covered upfront as the stipend comes at specific times of the year.The same person estimated the start-up cost for a new LCS team at a little more than $400,000, though the figure hasn’t been independently confirmed.“There’s so much I didn’t consider,” beardsandcats said.Getting there with the finances is one thing, but staying up also has its own set of challenges.No rest for the promotedDisguised defended its guest spot in 2025 by winning the promotion tournament.The core of the team – Isaac “DARKWINGS” Chou, Cho “Rahel” Min-seong and Choi “huhi” Jae-hyun – was then poached by Sentinels for the 2026 year, and jungler Lawrence “eXyu” Xu left for Dignitas.It meant Disguised, despite maintaining its spot in the LCS, had to replace 4/5 of its team for 2026.“An LCS team will come and pick up one of your players, and now all of a sudden, all that development work you’ve been doing is gone,” boc said.He offered a less-than-ideal solution, but it could be better than the current system.“Or [our salaries are] going to be so little…basically enough so we can get you to sign an exclusivity contract with the buyout,” boc said, “so the [other teams in the] LCS can’t just floss us or fleece us for everything when they poach our players.”This is the reality for teams in the LCS guest spot.Disguised – or any one in the guest spots – could qualify for Worlds in any year but still have to fight for its spot, meaning players are less likely to sign long-term deals that franchised teams like Cloud9 Kia and Team Liquid Alienware can offer.“[Disguised] has to fight for relegation no matter how well they do,” boc said.