HomeEsportsOverwatch League Vote: $6m Termination

Overwatch League Vote: $6m Termination

Activision Blizzard has revealed that Overwatch League franchise owners will be voting on a revised ‘operating agreement’ once the current season concludes. This disclosure was made in a financial filing by the company.

In the event that teams decide not to continue operating under the updated agreement, they will be required to pay a termination fee of $6 million per franchise. The total cost of these termination fees, if all teams choose this option, would amount to $114 million.

The information regarding the voting and termination fees was disclosed as part of Activision Blizzard’s Q2 financial results. Within these results, it was also disclosed that the total revenues generated by the Overwatch League constitute less than 1% of the company’s consolidated net revenue.

As previously disclosed, our collaborative arrangements for our professional esports leagues continue to face headwinds. During the second quarter, we amended certain terms of our collaborative arrangements with team entities participating in the Overwatch League. According to the amended terms, following the conclusion of the current Overwatch League season, the teams will vote on an updated operating agreement.

2023 Financial Results

The financial filing did not provide specific details about the vote, such as the threshold needed for it to pass, the exact content of the updated operating agreement, or the date when the vote would take place. However, it was mentioned that the vote is expected to occur at the end of the current Overwatch League season, which is scheduled to end on October 1st.

In June, OverActive Media, an Overwatch League franchise slot owner, made an announcement stating that they had reached an agreement with Activision Blizzard to clear their outstanding franchise fee payments. This deal was valued at $6.5 million and included a sponsorship arrangement between the two parties. While OverActive Media had to disclose the deal publicly because it is a publicly traded company, it is widely believed that other franchises may have also had their remaining fees waived in similar deals.

Interestingly, based on the disclosed $114 million total in termination fees, with each franchise receiving $6 million, it suggests that there are 19 franchises. This is peculiar because the Overwatch League was initially intended to have 20 franchises. In May, The Esports Advocate reported that the Chengdu Hunters had disbanded, but the fate of Chengdu Hunters’ franchise slot was not officially confirmed.

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