After the end of LEC 2023, a year where the league saw the effects of the big format changes, Riot Games is introducing Sporting Financial Regulations (SFR for short) for the start of LEC 2024. The full press release about this change and what it means for LEC in long and short terms can be found below:
LEC Introduces Sporting Financial Regulations (SFR)
To support the long-term financial stability and competitive balance of the LEC, the league will introduce new financial regulations - known as Sporting Financial Regulations (SFR) - for the start of the 2024 LoL Esports Season.
The LEC SFR will encourage teams to maintain the total sum of its five highest-paid player salaries below a certain threshold, with teams exceeding the threshold having to pay an excess fee (SFR Fee).
In doing so, the LEC seeks to create a financially sustainable environment for its pro players, partnered teams, and the league itself, allowing all parties to grow at a healthy and scalable pace, and protect the ecosystem from unsustainable spending practices. In addition, the framework will support the league by creating a better competitive balance and more engaging competition, further enhancing the experience for players and fans.
“In the current economic climate, we are dedicated more than ever to creating a sustainable future for our players, teams, and the LoL Esports ecosystem in EMEA as a whole," said Maximilian Peter Schmidt, Director of League of Legends Esports, EMEA. “The LEC SFR, which will come into effect from the beginning of the 2024 Season, is one way in which we’re continuing to work towards our goal of long-term financial sustainability. By doing this, we aim to encourage teams to operate more sustainable businesses to provide job security for players and ensure we serve our fans for decades to come.
The LEC SFR System
SFR will encourage each team to maintain the total sum of salaries (known as SFR Spend) paid to the top five highest-paid players in a team within a certain range. The range includes both an upper spending threshold (SFR Threshold) and a lower spending threshold (SFR Floor), with the lower spending threshold amounting to 50% of the SFR Threshold. Meanwhile, the SFR Threshold is calculated based on a number of considerations, including LEC player salaries, League Revenue Pool of the current and forecasted years, team financial data - such as revenue and expenses - and other market indicators.
Teams that exceed the SFR Threshold will be imposed with an SFR Fee.
If the sum of the top five players’ salaries exceeds the SFR Threshold, the team has to pay 50% of the excess to the League as an SFR Fee. If the sum exceeds 150% of the SFR Threshold, the team has to pay 100% of that excess to the LEC as an SFR Fee.
How will SFR Fees be spent?
SFR Fees collected by the LEC will be distributed in the following way:
- 50% of the fees will be distributed to LEC teams that comply with the “Team Floor” and the “Threshold” rule.
- 50% will be distributed to support the EMEA LoL Esports tier-two ecosystem
An exception will be made to teams if a player enters into a contract with the team either during or before the end of the 2023 LEC Season Finals. In this instance, the SFR Spend will be reduced by one-fifth of the SFR Threshold or the actual salary amount; whichever is lower.
The policy will be introduced starting from the 2024 LEC Global Contract Start Date (Tuesday, November 21, 2023), with the first cycle running until the 2024 LEC Global Contract End Date (Monday, November 18, 2024).
What this means
The effects of this change will affect the roster building of European teams, especially those with expensive players on their rosters. As the transfer season approaches, we will see how these new regulations affect players both in and out of LEC.
Another group that will be affected by these changes are ERL teams. According to the release, 50% of SFR fees will be distributed to support the EMEA LoL Esports tier-two ecosystem. This show of support of the second division of EMEA by Riot Games will help ERL teams build and strengthen their place in the League of Legends esports ecosystem.