Should clubs that develop players benefit?

For esports to truly grow, clubs that develop players at grass-root level must find revenue streams.

We have all seen it.

There are those clubs that take the raw talent, spend hours on developing such talent to become truly good, if not great players, to see a wealthier club swoop in and, in the view of the club that has developed the talent, poach the player with promises of greater rewards and benefits.

This can be quite disheartening for the club that has developed, nutured, and coached the player from foundation phases. Sometimes those very clubs that have spent such efforts in developing players fail as such clubs not only lose heart, but also lose the ability to become financially viable.

However, this is not a problem that only occurs in esports. Such problem is found across the board in all sports where amateur and rofessional entities exist.

So, what is to be done?

In some sports there is a 'trickle down' effect, for example, where a player is 'bought' by a club, a portion of the price is allocated to the club that first developed such player.

In South Africa, in esports anyway, since there are, as yet, few, if any, true professional esports athletes, perhaps a portion of prize money won by teams using players who they themselves have taken from other clubs should be paid across to such clubs?

This in itself will reward those clubs for having taken the time, effort, and patience in developing the talent and thus ensure the continual growth and sustainability of top-of-the-line competition.

While the top clubs may well see it as a tax of sorts upon their own success, such monies would then be able to help the sustainability of those clubs actively involved in producing new esports athletes.

Of course, with Mind Sports South Africa (MSSA) having over 68 school clubs affiliated, it is more than likely that many of the future top players will have emerged from a school club. This means that such 'trickle-down' effect will directly benefit esports at school level. This in turn will further encourage more schools to enter esports, and with more money going into educational institutions, all of esports will benefit.

Well, that is my personal opinion, I am sure that some will disagree, but I too believe that the majority will see the benefits.

Winning prize-money as a professional gamer.

There is a specific inclusion in the gross income definition (the definition used as the starting point to determine an individual’s taxable income) which states that amounts received in relation to services rendered – even if it is a voluntary award – will be included in gross income and subject to tax.

Since a professional gamer would be considered to be an employee of the company for which he plays (see Contracts for eSports players: the basics) if such employee receives a reward related to his job function, it will be considered gross income as it is linked to services rendered.

Thus winning prize money in a competition if you are a professional gamer would  be seen by revenue authorities as being related to a job function.

Whether the prize could be cash or otherwise, the prize will still be subject to tax.

If it is a non-cash prize, the monetary worth of that specific item will be included in gross income and subject to tax.

Thus it stands to reason that all companies running professional teams need to register with the revenue authorities in regard to declaring their winnings and the withholding of tax on their athletes.