LCK introduces salary cap and luxury tax on League of Legends teams from 2024 season- League of Legends is considered to be one of the most popular esports titles in the world. Yet despite its popularity, it is facing financial difficulties due to worldwide inflation as well as the alleged onset of “esports winter.” In an effort to address the financial issues, the League of Legends Champions Korea (LCK) is set to introduce the Sporting Financial Regulations (SFR) after the ongoing season ends. Here is everything you need to know about this upcoming regulation.
LCK introduces salary cap and luxury tax on League of Legends teams from the 2024 season
Despite many hailing esports in a similar light to traditional sports, both work with slightly different sets of rules. But it seems as if esports is now trying to introduce many features present in traditional sports to make its work more organized. For the first time ever in worldwide esports history, strict salary regulations will be introduced in a professional esports league.
As a part of the many measures to ensure the #LCK maintains sustainable growth, Sporting Financial Regulations (SFR) will be introduced starting in the 2023 offseason.
The SFR seeks to allow the sustainable growth of teams, players and the league by regulating each team’s salary… pic.twitter.com/QCS5T1Ys8B
— LCK (@LCK) July 19, 2023
On July 18, the LCK announced that the Sporting Financial Regulation (SFR) will kick in for the Korean League of Legends division after the end of the 2023 World Championships. According to this regulation, a salary cap will be introduced for players and teams will be forced to pay a “luxury tax” if they breach this set limit. Similar regulations are also followed in popular traditional sports leagues like the NBA or MLB.
The cap will have both a minimum level and a maximum level. A League of Legends team in Korea must at a minimum use 70 percent of its revenue earned over the course of 2022 on its roster. Any team that crosses the maximum limit set by this regulation will be forced to pay an excess as a “luxury tax” to those teams who have not crossed this threshold. Only teams that reach the minimum cap limit will get a cut of the luxury tax.
There is no limit set to how much an individual League player can receive. Only when the salaries of all five players in the team are combined, must fall within the set cap limit. The LCK has included exceptions to these limits, like specific bonuses given to players on their successful individual performances at home and abroad competitions.
50 percent of a player’s salary will be exempt from the cap if they have won 5 or more LCK splits or 3 or more top-tier international tournaments. Meanwhile, 30 percent of the player’s salary will be waived if they have played with a single organization for over 3 years and are considered a veteran. If any League player satisfies multiple exemptions, the discount will instead be 30 to 40 percent.
Only veterans of the LCK like Faker, Peanut, Canyon, Gumayusi, and Shoemaker fall under some of these exemptions.
Stay tuned to get the latest updates from League of Legends and its esports scene.
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