Is Esports Real Estate Real?

For OverActive Media’s upcoming multipurpose Toronto stadium, esports is used as a shiny object in a plan to pull cash flows

On February 23rd, 2021, OverActive Media announced its plan to build a new esports stadium in Toronto, with an estimated cost of USD500 million. The project is expected to be completed in 2025, as one of the largest esports venues in North America with 7,000 seats, located in downtown Toronto by Lake Ontario. The facility will serve as the home for Toronto Ultra and Toronto Defiant, the local Call of Duty League and Overwatch League franchises, owned by OverActive Media. The rendering of the arena shows a sleek and futuristic design in the shape of a spaceship. Populous, the architecture firm commissioned for this facility, envisions its interior as “neither a sports arena nor an opera house” but a combination of the two. In addition, the compound will include a hotel to accommodate the viewers in attendance.

Around the world, there are esports-focused facilities with similar capacities. Esports venues play an important role in industry development. Expanding the attendance from online to offline provides the players with a stronger sense of community. Traditional sports rely heavily on fan experience to solidify loyalty. They involve fans outside the matches, spending money on victory parades and organizing ceremonious league drafts. The multitude of engagements creates a complete ecosystem that cultivates the fanbase in various stages of a team’s journey. For fans, it is exciting news to be able to witness the success of favourite players in person. Teams, on the other hand, would also benefit from feeling the level of passion and enthusiasm from supporters.

Many companies are interested in the legacy of a physical establishment for a sense of “home”. In the case of sports, the fanbase is divided based on geographic locations. In North America and Europe, viewers typically pledge allegiance to their city teams and carry on traditions from family members. This model makes sense as this is the most effective way to sell tickets: by advertising to neighbouring communities. Game publishers attempt to garner support in the same fashion. Having a home court is one of the steps towards this goal. However, it is questionable whether this is a necessary ingredient in the recipe for success. Esports, unlike traditional sports, have never been limited by the physical distances between the fan and the team. Furthermore, since ticket sales of in-person viewing are not expected to become a major source of revenue, it is difficult to imagine a regular season of a hundred games in six months, during which multiple teams travel frequently to other stadiums. Then what difference does a “home court” truly make?

The answer to that question is capital. As any growing industry should, esports attracts a large number of financial investments. For instance, the half-billion-dollar project in Toronto requires syndicated loans from multiple banks, all of which vying for the interest payments in return. They are not alone. Developers, architects, restaurateurs, hotel managers and future venue operators all become employed in esports and share a slice of the pie, which would be near impossible if the games remained online only. The President and CEO of OverActive Media, Chirs Overholt does not shy away from the fact that “the business model is largely supported by premium entertainment acts, corporate product launches, gala dinners and award shows. (The facility in Toronto is) truly built as a versatile business venue for premium entertainment in the city.” To a certain extent, esports is used as a shiny object in a plan to pull cash flows.

This unveils more problems with building esports stadiums. As a multipurpose venue, is the interior design really in the best interest of esports viewing, when it has to take into consideration other functions? This is important due to the current low geographical density of fans. Most of the audiences have to travel long distances to see an event, for which they probably have better seats at home. The increased cost of time and money sets an expectation for an awe-inspiring venue with top-notch technologies that significantly enhance the visual and auditory experience.

It is undeniable that the interest in watching esports in-person is growing. Although the pandemic has made a major dent in live entertainment, the desire for offline interactions remains strong. Nonetheless, not every real estate venture in esports is created equal. Some are dedicated to becoming the sanctuary of the game and some are merely passing as a venue. The convoluted landscape of competition structure between different games does not help with the situation either. What happens if the geographical division is abandoned? With many puzzle pieces unsolved, it is unclear what the future holds for esports arenas.