After various discussions over the past few years, the LCK has decided to follow the LPL in implementing a salary cap starting from the 2023 offseason, right after Worlds 2023 ends.

Image Credits | @LCK Twitter

LCK will be regulating player salaries’ based on the teams’ ability to generate revenue

The Sporting Financial Regulations (SFR) confirmed on July 18 the introduction of a salary for the LCK after the 2023 off-season. The goal of the salary cap is to ensure sustainable growth for the Korean League, with the hopes of regulating each team’s salary expenditures to an appropriate level.

For the squads that are looking to spend above the cap, they will be subject to a luxury cap, similar to the one used in traditional sports, as well as the LPL. According to the statement, the cap will be based on the total salary paid to the starting roster by each LCK organization, and it won’t include any substitutes or benched players. 

This announcement comes in after esports organizations have struggled to make a profit with their LoL teams. Even Gen.G, who has been the strongest team in the past two years on domestic soil, hasn’t turned a profit, according to Gen.G chief executive Arnold Hur, who has shown high concerns for the esports industry as a whole.

“I’m extremely concerned. I’ve been saying the esports winter is coming but even I didn’t think it would be this cold. Now I’ve changed my forecast and think 30pct+ of esports teams worldwide won’t make it the next 2 years,” he mentioned in a Reddit AMA in January 2023. “Esports is just an unprofitable marketing cost center for the game,” he added.

Arnold also mentioned that the LCK average player cost has gotten higher than even the LPL and the LCS. Luckily, the implementation of the salary cap seems to come in at the right time, after he mentioned how there is a “very strong alignment from top to bottom that the existing esports business model just doesn’t work”.

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How will the LCK salary cap work going forward?

The LCK salary cap will include both an upper limit and a lower limit as well, which is set to 70% of a team’s revenue earned over the course of 2022. All the teams spending over the imposed limit will be forced to pay an excess as a “luxury tax”. That money will be split among the teams that were below the upper limit. That being said, the eligible teams for the “luxury tax” must also reach the minimum level of the cap to ensure more fair treatment.

The Korean League will be only looking at the total expenditure for the five starting members combined (which must fall within the aforementioned 70%), but there are no limits to how much an individual player can earn. There are also special treatments for the top-tier players and those who stay with the same organization.

According to the regulations, players that have won the LCK title 5 times or more, or have won an international tournament 3 times or more, will only have 50% of their salary reflected in the cap. In a similar way, the players that stay with the same team for 3 years or longer will receive a 30% reduction in the cap. Based on the current LCK rosters, only T1’s Faker and Gen.G’s Peanut satisfy the requirements for the 50% reduction. For the 30% reduction, instead, you have players like Gumayusi, ShowMaker, and Canyon.

The exceptions can overlap. Korizon Esports journalist Kevin Kim stated that players with their current contracts remaining after the 2023 season will be counted as holders of “existing player contracts”, and until expiration, their contract will be counted as one-fifth of the team’s cap. He also added that players that see their salary increased due to the development player clause or as designated players will not have the increased amount reflected in the cap. He concluded by saying that the SFR’s salary cap will be reviewed every two years and will be subject to change.

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