The Chairman's Office

Welcome back to my office…

First of all, I just want to thank everyone who read my first blog and especially everyone who left a comment or question. Please keep them coming!

Of course I can’t answer every question individually, but I’ll try to at least touch on every subject raised across all the questions. I also will be calling out my favorite comments from every installment just to give a shout out to the poster that strikes me with the most originality, insight or just plain old pandering to my ego! And the winners for Episode 1 of TCO:

Fade7oBlacK, tocom and -Ender-

I literally LOL’d at each of your posts, so thank you!

And a special shout out to my boy Skins Man! See you in San Diego bro!

Ok - full disclosure - all of those posts were pure ego boosters, but there were a lot of great questions too and I will try to get to them all over the next few weeks.

The key topic of the day is the 2008 Pro Circuit Season Opener at the Meadowlands! For me, for the past five years, the season opener has been like opening day at Yankee Stadium – every year there is so much excitement, build-up and nervous energy around the start of the season. I’m sure many of you feel the same way. These days I actually get more excited seeing top MLG pros walk onto the Mainstage than I do seeing Jeter and Mariano running onto the field.

Today though, I want to clue you all in to what happens at MLG Headquarters (as well as our satellites in Ohio, Seattle, Phoenix, Long Island and France) and behind the scenes look at what it takes to create a Pro Circuit event.

Let me just summarize by saying I started MLG (and I watched poor Clap lug TVs around for two years in the early days) but I’m completely and totally overwhelmed by the herculean effort our management team, staff and partners put forth to get the Pro Circuit off the ground every year.

By my rough estimation the Meadowlands event will be the result of about 15,000 man-hours of work by over 100 people and all-in will cost well over $1,000,000 to produce. Multiply that by the number of Pro Circuit events each year and you start to get a picture of how big MLG has become.

Why so much work? We break it down into a few key groups: physical production (the actual event production), content production (live and archival coverage, broadcast and editorial and media relations) and league operations (the actual tournament operation).

The people sitting on top of the bulk of this effort are the League Ops group Catherine Cory (MadCat), EVP League Operations and Production; Adam Apicella (Clap), VP League Operations and John Nelson (Anakin), League Commissioner. Again, there are still over 100 other people involved in all the moving parts of running the Pro Circuit and they all work their asses off, but these three are the keystones of the operation and if you’re at Meadowlands having a great time, please give these three a high-five.

There are 40 people working in the League Ops group this weekend, from referees to on-air talent. They coordinate with our online content team (25 people) and sponsor management (8 people) to make sure coverage, media and sponsors are all taken care of, set-up and supporter for almost 5 full days.

And I would be remiss if I didn’t mention that throughout all this, the MLG pro players need to be in the right place at the right times for sponsor obligations, interviews, fan sessions and… oh yeah… to play in the tournament! And there’s one, very unique individual who I believe is the only person in the world who could pull that off – Mr. Ray Lau (MLG Sparrow), director of player relations – who can do everything, even use chopsticks (although I had to personally teach him that last year).

For a quick sneak peak behind the scenes, here’s a little video blog for ya’ll. Adam Contini, one of our camera/editor geniuses followed me around during Thursday set-up to give you a first hand look! Check it out.



League Ops also oversees all live event production (another 20 people plus venue laborers and 10 security detail) and the live broadcasts – ESPN Saturday Night and MLG Championship Sunday (10 person TV crew and talent).

The live broadcasts and full-time event VOD require not only a lot of equipment and some advanced technology (if you get a chance, take a look at the VT-5 that powers the live broadcasts) but they also require a rare expertise driven by an unparalleled passion to broadcast everything at MLG. The guy that possesses those traits is the one and only Ryan Thompson (Synide), director of video content. I’d tell you to high-five Ryan, but you won’t see him and if you do he’ll be running from one place to another with two headsets and 3 mics on so he won’t hear you. But rest assured, Ryan is helping MLG completely disrupt the media establishment by making a history-making live online broadcast possible.

Which brings me to a truly exciting topic… This year, we are actually pulling something off that Sundance and I have been dying to do for five years. We’re broadcasting the premier matches live, using the same production team that delivered our breakthrough series on USA Network in 2006. That was a HUGE first for pro gaming and MLG, but I believe the live broadcasts this year are an even bigger breakthrough and here’s why:

1. Sports coverage is traditionally live – that’s what makes it exciting to watch.
2. ESPN – the worldwide leader in sports – has determined that our live Pro Circuit broadcasts are important enough that they need to cover them as they would any other live sports event.
3. The world, but most importantly, our audience of 16-34 year old men, has stopped watching TV the way most people do – instead we use the Internet as our primary video consumption platform.
4. The Internet provides properties (like pro sports leagues) the ability to control their own production and distribution and, basically, keep it real for the fans by serving it up to fans directly. (I recommend everyone check out the recent moves the NHL has made as well as MLB to provide on-demand games all the time to anyone through their websites).
5. Direct-to-fans live coverage over the web is the future of pro sports in America and MLG wants to lead the way.

I couldn’t be prouder of what we’re doing with these live broadcasts. If you are a fan of MLG and you will not be at Meadowlands, YOU MUST WATCH HISTORY BEING MADE!!! And please, please, please, tell your friends, your family, hell, make your little sister watch. I promise you will love it and so will they!

Sundance and I are planning to attend the final game this year at Yankee Stadium to witness the final game in the “house that Ruth built” before the team moves across the street to the new, bright, shiny stadium. That will be sports history– the end of an 85-year era in professional sports – this weekend will usher in a new era in sports history – LIVE FROM THE MEADOWLANDS!

This post will be the first of a new series of blogs on mlgpro.com. The point of "The Chairman's Office" is for me to provide the MLG community with a background on the business side of MLG - how things really work on the inside, my take on MLG in the news, where things are headed and occasionally, to answer questions from the community about almost anything.

Let me start by making sure everyone knows who I really am! I'm Mike Sepso - Sundance and I are the co-founders of MLG. We started the company in 2002 and have been here ever since working and watching as this cool idea from way back started to materialize into what MLG is today.

Most of you know what Sundance does because you get to see his great work on our TV and online video (and if you're old school, you know I can kick his ass at Halo:CE). My end of things is the more nuts-and-bolts part of the business. Officially, I'm the Chairman of MLG Inc. and basically that makes me responsible to our Board of Directors for turning this big crazy ass thing we call MLG into a successful business.

Enough background - let's get to the point of the first installment of The Chairman's Office: "Basic Business Facts of MLG Inc."

I see a lot of confusion on our forums about how MLG actually works as a business. For most pro sports leagues, this wouldn't really be an issue because their fans don't care. However MLG's got a crazy, passionate, opinionated community and I'm really proud of that.

Unfortunately without a good understanding of the way things really work, sometimes our biggest fans get it twisted. So here's a start at explaining some of the biggest points. Feel free to hit me up with questions and comments below and I'll try to answer them in the next installment.

Q.: How does MLG make money?

I get this one a lot and I see it misunderstood everywhere.

MLG makes most of its money from advertising. Our Sponsors are advertisers that commit a year or more of advertising across everything we do - events, the website, TV, player or team endorsement deals and anything else. Sponsors typically come on at the beginning of a new season and stay with us for several years (like GameStop). This year we've added some great ones like Dr. Pepper, Stride Gum, Old Spice, Panasonic and HP. In exchange for their big commitment, we agree not to allow any of their competitors to advertise within MLG. These are the best relationships because these companies really dig in and get to understand our community and support MLG's growth (so please continue to support them!).

Some advertisers are shorter term and only buy advertising on MLG's websites. Lately as our websites have started to get very large and we have started to hire a full team of online sales specialists, there are more and more online-only advertisers (such as the Army and Navy).

The rest - a pretty small portion - comes from licensing (selling the rights to our brand or media - like the Astro Headsets or ESPN distribution of MLG content) and selling things directly to the community (everything including event registrations, online tournament fees, t-shirts and whatever else we can think of). That's it.

Q.: Does MLG make money or lose a ton on Pro Circuit events?

Pro Circuit events are not profitable on their own - and they're not really meant to be. Registration fees don't even come close to covering the prize money we pay out, let alone the millions of dollars in production staffing (there are now over 100 people working at MLG Pro Circuit Events), etc. However, without live competitions, there is no league. So we have to create as much media as possible out of the Pro Circuit and use them to make sure the top MLG Pros get as much exposure as possible.

Q.: Why doesn't prize money go up a lot every year? Who pays the prize money?

Prize money is just like any other expense at MLG. As much as we want to keep increasing prize money, we can't always do that, just like we can't keep buying Sundance gold-lined, purple velour track suits every month. More than anything else, we are focused on running MLG like the successful business it is to ensure that we will be around for many years. Unfortunately that means we have to make tough decisions about where and what and how much to spend on different things and prize money is one of those.

Q.: I heard MLG got investors, how does that work and when does that money have to be paid back?

In 2006, MLG took investment money from two venture capital firms - once in January and once in October. We received a total investment of $35 million. This money was an investment in the company, not a loan, so it doesn't have to be paid back. The firms bought a piece of the company in exchange for the investment, so they will only make money when at some point in the future MLG is sold to a bigger company or goes public.

The basic idea for a company like MLG is that you need to invest a lot of money up front to build something very big before you can start making money. We're just starting to get to that tipping point. The good news is we have put together a great team of people and the company is run extremely well. A lot of other companies have tried to compete with MLG over the years, but none have had the capital, the history, the strong community or the team we have here, so they're all pretty much gone at this point, or on their way out.

Many of these companies still owe prize money - unfortunately when other leagues get desperate, they stop paying prize money first. This is one of the reasons it is so important to me and everyone at MLG that we run the company with serious financial discipline so that we grow over time and don't make bad decisions that would make us flame out and hurt the entire community.

Q.: How much do MLG Pros make? Does MLG pay MLG Pros a salary?

The very top earning MLG Pros make over six figures annually when you count prize money, endorsements, sponsors and appearance fees. MLG does not pay a salary. In some cases, we act as manager to top Pros and guarantee them a base amount of money from sponsors over time and we sometimes pay the pros promotional fees for the time they spend blogging, doing appearances, etc. for the league.

The amount pros earn goes up slowly every year and we work very hard to get as many of our Pros as possible into the top ranks of earners. Our objective from the very beginning was to make MLG a league where the very best could become rich doing what they love. We believe that to do that, we must have a financially strong and stable league and focus on developing long, stable careers for our MLG Pro Players. More on MLG management in future installments.

That's it for now. I'll be back with another installment right before the Meadowlands. Until then, play hard!

-Sepso