This first in the series of columns by Corin Cole takes a look at the CGS from behind the scenes, in particular the key changes which may have played their parts in the demise of the league.

This column is the sole opinion of the author and does not represent the opinion of Heaven Media Ltd or the opinion of any affiliates.

I doubt David Hill is a name many of you are familiar, yet this very successful man has possibly had a greater impact on esports than anyone else. In 1993 he joined Fox Broadcasting Company as President of Fox Sports, and he stayed with the company, in a number of roles, until April of 2005 when he joined DirecTV Group Inc. as the President of DirecTV Entertainment.

If you have not seen where his link with esports is, I shall spell it out for you: it was David Hill who brought us the Championship Gaming Series, a project which, whatever your views on it, has undeniably had a huge impact on competitive gaming in many ways.

David Hill
Image courtesy of sportsbusinessdaily.com

While at DirecTV, Hill happened across competitive gaming (apparently through watching his grandchildren play), and in it he saw the future. Having worked for over a decade in senior roles for Fox Sports, he knew that broadcasting rights to different sports could go up into ten digit figures; here was an opportunity too good to miss.

And so the notion of a gaming league owned by News Corporation came to be. When esports grew as big as the NFL, the NHL, and so many other sports, Hill speculated, instead of shelling out billions of dollars for the rights, they would own the rights, as they owned the sport.

You may be thinking I’ve gone on far too long about this man and his logic, logic that anyone could have guessed as being the incentive for the creation of the Championship Gaming Series, but the reason for this is that not only was he the single starting point of the league, he is also a potential piece of the jigsaw puzzle which caused the collapse, two weeks ago today.

This move took Hill away from the CGS, losing the league’s original instigator

On March 28th 2007 it was announced that Hill would be returning to Fox as Chairman and CEO, just two months after the initial press release about the Championship Gaming Series was released. Despite the fact that Fox Broadcasting Company is owned by News Corporation, this move took Hill away from the CGS, losing the league’s original instigator, and the man who might have been able to persuade News Corporation to invest even more heavily into the league, for longer term benefits.

Hill moving back to Fox was not, however, unrelated to other changes in the corporate world, in particular a deal that was to have a great effect on the future of the CGS. A company called Liberty Media owned 16.3% of News Corporation’s shares, shares which the Murdoch family were keen to buy, so three days before Christmas in 2006 it was announced that these shares would be exchanged for a number of items, one of which was a large sum of money, and another, more importantly, was the 38.5% stake in DIRECTV Group Inc. that News Corporation owned.

Part of the TV studio created for the CGS

And so it was that, despite the budget having been approved for the Championship Gaming Series earlier on in 2006, News Corporation then sold their controlling stake in the most important of their three networks who were to work together on the CGS, in a move that saw the visionary behind the league move away from DirecTV to retain a job with News Corporation.

Meanwhile, away from the United States of America, having investigated the situation with Star TV and having heard of private conversations in BSkyB it seems likely that both networks were sending reports back to News Corporation that they didn’t care for the CGS, or for esports in general. Star TV in particular had recently gone through staff changes at executive level and were in the process of making their programming more regionally focused, and perhaps didn’t want to have any part in the CGS. They did however reluctantly agree to air it for their parent company, though it seems likely that Star TV, now partnered with ESPN, would have refused to air a third season. Meanwhile in the UK, having spent an alleged $400,000 on production of the UK shows in season 1, albeit distancing themselves by hiring Steadfast TV to handle it for them, BSkyB reduced their budget for season 2 to a reputed and rather lowly $20,000, not even the commissioner for Sky 1 flew out to attend the shoots. What looked from the outside to be a step upwards, having the European teams shoot their finals in Los Angeles, may well have been flashing warning light of how much BSkyB really cared about the league.

News Corporation, therefore, were in a position of having set aside a decent budget for this new project, and then lost the incentives to look far into the future – the Championship Gaming Series was going to have to either get far higher ratings than expected or make a profit itself, neither of which would be easy to achieve.

The show’s ratings were actually far higher than most gamers would guess at, though clearly not high enough for survival. A source close to DirecTV has revealed to me that season 1 aired to around fifty million viewers worldwide, however around 90% of these were based in Asia, a continent in which forty-five million viewers is little more than a ripple in the ocean.

The first week of Season 2 on DirecTV in America saw the CGS as the most popular show on the whole of DirecTV’s network

Viewing figures were not all bad in Europe and America however, the season one shows on Sky 2 were the most watched programs for that timeslot, at 10pm, that any program had ever had on that channel, and the first week of Season 2 on DirecTV in America saw the CGS as the most popular show on the whole of DirecTV’s network. Eurosport also managed to pull in an estimated one million viewers according to a source close to Eurosport, but on the bigger scale of things, these figures were not enough to justify the cost of the league, which was haemorrhaging money.

Back in 2006 when the league was conceived, on the recommendation of David Hill, News Corporation had set aside approximately fifty million dollars, which was expected to last for five years, after which the CGS was expected to be self-sufficient.

It is alleged that roughly twenty-five million dollars, however, were spent in the first year alone, and while cutbacks, and lack of start-up costs, allowed the second season to reduce its cost to a reputed ten million dollars, the damage had already been done, and there was little chance of recovery.

There are two key reasons as to why the budget was being used up so fast in season one. Firstly, the Championship Gaming Series was only ever planned as being a North American league in the first season, which could expand into the rest of the world in future seasons, but when the new plan was sprung upon the CEO, Andy Reif, he had to do the best with the resources he had, which explains why Europeans always felt that they received too little attention when compared to North America, despite spending over two million dollars on European salaries over the two seasons.

The second was that News Corp did not fully understand esports. They had, or at least David Hill had, seen that it had a huge potential, but they did not realise exactly how developed it already was, and this lack of understanding caused them to pay out far too much in all areas of the league. The most obvious example of this would have to be player salaries. With the prizes on offer, and greater prizes could have been introduced, the CGS would have been a huge boost for esports even without offering 160 players worldwide fully paid jobs (130 in season 2).

Johnathan "Fatal1ty" Wendel is another prime example of both overspending and misspending. Wendel is, and can be, a lot of things, but he is not an experienced commentator, and yet he was paid, wait for it, an alleged $300,000 per season according to one source inside the CGS, for his services.

Johnathan "Fatal1ty" Wendel taking a break from work

And what about their income? They were sponsored by some pretty big names; surely they were making a lot of money back. Certainly you would think so, but it seems the only sponsor ever to pay anything for the deal was Creative, who paid an alleged 7 figure sum, pulling themselves out of sponsoring anyone else in esports, with the exception of Team Dignitas. Dell, EA and Pepsi (branded as Mountain Dew) all agreed deals before the seven-figure minimum was put in place, which makes it seem like CGS hoped their product offerings were seen as good enough as they would help entice new sponsors to support the league.

Franchises were planned to have a market price of ten million dollars each according to a source inside CGS, and selling even one would have certainly given the league a new lease on life, yet this was not to happen.

There were also rumours surfacing about improper practice regards missing money too and this may also have contributed to the leagues downfall.

News Corporation, therefore, having lost thirty-five of their original fifty million dollars, had the option of almost certainly wasting the last fifteen, or cutting their losses, and making the best of the bad thing. It is not entirely clear that they would have even left the remaining $15million anyway and instead asked DirecTV to pay it. There were also rumours surfacing about improper practice regards missing money too and this may also have contributed to the leagues downfall.

It is also quite possible that News Corporation’s financial status did not help the league. In 2005 and 2006 they posted large profit increases (BBC reported a 67% rise in quarterly profits in August 2005, for example), whereas at the start of this month, only weeks before the death of the CGS, News Corporation posted a 30 percent drop in quarterly profit – in good financial times a little loss here and there can help out such a large company, but with the current economic climate, and in particular News Corporation’s current profits, belts had to be tightened, and it’s no surprise that a company as financially unsuccessful as the CGS was one of the victims of the cutbacks.