Question 1

How much should an esports org allocate to player salaries?

Accepted Answer

A common benchmark is for player and staff salaries to account for 40-60% of total annual revenue. This can fluctuate heavily based on the game's ecosystem (franchised vs. open) and the team's reliance on prize money. High-revenue teams can support higher salaries, while developing teams must be more conservative to manage their burn rate.

Question 2

What is a healthy burn rate for a pro organization?

Accepted Answer

A 'healthy' burn rate is one that is sustainable and aligns with the organization's funding and growth strategy. A well-funded startup org might have a high burn rate for 1-2 years while it invests in top talent and facilities. An established team will aim for a low or zero burn rate (profitability). The key is that the cash runway (cash balance / monthly burn rate) should be long enough to reach the next funding milestone or profitability.

Question 3

How do sponsorships affect runway calculations?

Accepted Answer

Sponsorships are a critical revenue stream that directly reduces the monthly burn rate. A new, large sponsorship deal can significantly extend a team's cash runway. For example, if a team has a burn rate of $20,000/month, a new sponsorship deal that brings in $10,000/month in net revenue will cut the burn rate in half and double the financial runway.

Question 4

Should prize money be used for payroll?

Accepted Answer

It is generally not advisable to rely on prize money for fixed costs like payroll. Prize money is highly volatile and performance-dependent. It should be treated as bonus revenue. Stable, recurring revenue streams like sponsorships and league stipends should be used to cover fixed monthly expenses like salaries.

Question 5

How to forecast revenue for seasonal games?

Accepted Answer

For seasonal games, you should average your expected annual revenue and divide by 12 for a monthly estimate. For example, if you expect to win $240,000 in prize money spread across three major events in a year, you would input $20,000 in the 'Prize Money' (monthly) field. The same applies to seasonal merchandise sales.

Question 6

How many months of cash reserve should an org hold?

Accepted Answer

A common best practice in business is to maintain a cash reserve that can cover at least 3-6 months of total operating expenses. For a volatile industry like esports, a 6-12 month runway is often recommended to weather periods of low tournament winnings or the loss of a major sponsor.

Question 7

How to model travel & bootcamp costs realistically?

Accepted Answer

To model this, estimate the number of LAN events your team will attend per year. Research the average cost of flights, accommodation, and food for your entire team for a single event, and multiply that by the number of events. For example, if one international event costs $15,000 for the entire team, and you plan to attend 4 per year, your annual travel budget is $60,000. For this calculator, you'd input the monthly average ($5,000).

Question 8

When should an org take external investment or loans?

Accepted Answer

An organization should seek investment when it has a clear plan for how the capital will be used to generate a return, such as signing a star player to increase prize money potential, investing in a content team to grow media revenue, or expanding into a new game. Taking on investment or debt simply to cover an unsustainable burn rate without a growth plan is generally a poor strategy.

Question 9

How do taxes and payroll charges affect net profit?

Accepted Answer

They have a massive impact. Payroll taxes (like Social Security and Medicare in the US), unemployment insurance, and workers' compensation can add 10-15% or more on top of a player's base salary. Corporate income taxes are then applied to any profits the organization makes. These must be carefully budgeted for.

Question 10

How to split sponsor revenue across teams & creators?

Accepted Answer

This depends on the sponsorship deal. If a sponsor is paying for a logo on a team jersey, that revenue belongs to the organization. If a sponsor is paying for a specific player to do a dedicated stream, a portion of that revenue (as defined in their contract, often 70-90%) should go directly to the player. The best practice is to have clear terms for this in the player's contract.

Question 11

How to create a player salary cap internally?

Accepted Answer

To create a salary cap, an organization should decide on a maximum percentage of its total projected revenue that can be allocated to player salaries (e.g., 50%). This creates a total salary pool. The manager can then distribute this pool among the players based on their role, experience, and market value, ensuring that the team's total payroll remains sustainable.

Question 12

How to present financials to potential sponsors or investors?

Accepted Answer

When presenting to sponsors or investors, focus on key metrics that demonstrate stability and growth potential. This includes a clear breakdown of revenue streams, a manageable burn rate, a long cash runway, and a professional projection of future growth. Use the PDF export from this calculator to create a clean, data-driven one-pager that summarizes your financial health.

Esports Team Financial Model & Roster Budget Calculator

Revenue Streams (Monthly Estimates)

Expenses (Monthly Estimates)

Players

Staff

Financial Settings & Scenarios

How to Build an Esports Team Financial Model — revenue streams, payroll, runway, and valuation