League of Legends Esports Salary Cap Full Explanation

Riot Games halt on the skyrocket increase of players’ salary through the salary cap. This is frequently used in mainstream traditional sports leagues NBA. Yet, League of Legends initiated to adapt these salary cap mechanisms. But what does the League of Legends esports salary cap really mean?

The Rising Cost of Esports Talent

The recent years saw the leap in the salaries of many esports players in the scene. With this, it becomes a burden on team organizations, particularly in their finances, to sustain the spiking numbers. Around 2017 to 2019, the North America’s League of Legends Championship Series, or LCS, reported a jump on the average salary. With this, players managed to earn wages ranging from $300,000 to $410,000 by 2021. 

Notably, during this period, star players received more than these reported numbers due to extreme compensation. For instance, SwordArt received $6 million over two years after signing with TSM. Besides, Chinese players were also noted to earn up to an astounding $6.6 million annual salary. These numbers are significantly huge, as they only account for an individual player.  

The entrance of venture capital investments in the latter half of the 2010s led to the growth of the esports industry. Due to this, the organizations now go the extra mile to absorb financial losses to sign winning rosters. 

Furthermore, they also put emphasis on establishing competitive brands that help to attract the attention of companies. However, numbers are quick to change, and many esports businesses found themselves struggling to protect their finances.

Riot Games’ Sporting Financial Regulations

Given this issue, Riot decided to take a proactive approach by implementing the Sporting Financial Regulations, or SFR. It used a mechanism similar to the regulating policy in the NBA where it demands a luxury tax system. Through it, teams that keep their player salary spending below the stated threshold will receive incentives. 

However, the implementation of it in the League of Legends esports scene has been gradual rather than radical. It first introduced the concept in one of its biggest regional leagues, China’s League of Legends Pro League, or LPL, in 2020. Later on, League of Legends Champions Korea, or LCK, adopted these same regulations by July 2023. Eventually, the League of Legends European Championship, or LEC, followed as September 2023 began. 

Regional Variations and Localized Approaches

In Riot’s Sporting Financial Regulations (SFR), it did not specify the threshold amount of the player’s salary. Each regional league has the capacity to decide on the amount they’ll be implementing in alignment with this regulation. The French League of Legends League (LFL) revealed teams agreed to a cap of €250,000 this coming 2025 season. 

This salary cap in LFL only applies to the five players included on each team’s rosters. Yet, it already made significant changes in the lineup of teams as they worked on rebuilding their compositions. Moreover, the opportunity opened doors for negotiations on other factors such as gaming houses, coaching staff, and promotions. 

Besides the LFL, the European League scene set an approximate €2 million annual salary cap for teams. They will have to pay for a proportional fee once they exceed this threshold. Afterwards, they’ll distribute these collected payments as incentives to non-offending LEC teams and in the tier-two LoL scene. 

Conclusion

League of Legends esports salary cap basically keeps the teams responsible in terms of their financial spending over players’ wages. If the jet speed increase in their salary continues, it will likely be impossible for most organizations to sustain it. Over time, this will accumulate as a burden and debt for these companies and organizations. Through this way, they are also able to