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With the Rise of Esports, Cities Are Beginning To See Economic Payoffs

By

Jake Kring-Schreifels
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June 26, 2024 4:20PM EST
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Image courtesy of Devin LaPlume of All Systems Go

When All Systems Go opened its doors in 2021, it immediately became a magnet for its gamer community. Nestled in the heart of Worcester, Mass., the electronic sports facility established itself as a one-stop shop, catering to hardcore video game leagues and PC players while luring in casual residents with brick oven pizzas, custom cocktails, and craft beers. As it’s grown over the last three years, the multi-purpose 6,200 square-foot space has remained versatile, hosting Super Smash Bros. tournaments, keyboard meetups, and live Twitch events utilizing its big screens and speaker systems.

“It’s a totally different vibe all the time,” says founder and owner Devin LaPlume. “That’s what’s so special about the venue.”

At first, the decision to open doors in Worcester came out of geographical convenience (LaPlume had grown up 45 minutes south in Providence, R.I.), but he’d also observed the city’s growth as an esports hotspot. Over the last few decades, Worcester had reinvented its economic base, pivoting from its industrial heyday in the middle of the century to cultivating industries like bio-manufacturing, robotics, clean tech, and esports, all of which were “fueled by higher education institutions and intellectual capital,” says Peter Dunn, the city’s chief development officer.

Most recently and prominently, that centered around Becker College, which launched the successful statewide Mass Digital Games Institute (MassDiGi), a center for entrepreneurship and economic development. The college, now absorbed into Clark University, also became one of the first to offer a video game design program and esports management degree. The high-tech foundation made establishing a facility a no-brainer and prompted LaPlume to see the reciprocal value in providing space—and consultation—for a buzzing gaming infrastructure.

“You have a local facility driving community growth and activations on a week-to-week basis. You have college programs that are building out esports programs,” La Plume says. “The ecosystem’s here.”

All Systems Go is one of countless esports facilities and arenas that have cropped up throughout the country in recent years. The surge has paralleled the industry’s exponential growth, now valued at $2 billion and projected to exceed $5 billion by 2029. Major cities have started following its progression, adding high-tech components to arenas for events and tournaments that have drawn millions of online and in-person viewers. Media rights, publisher fees, and sponsorships have contributed almost a billion dollars in revenue.

The boom has a strong base. According to the National Association of Collegiate Esports, there are currently 170 member schools (and nearly as many high school esports programs) with over 5,000 student-athletes enrolled in varsity esports—competing in games like Call of Duty, League of Legends, and Overwatch—throughout the United States.

The rapid growth has become an opportunity for cities and municipalities—especially ones surrounded by schools with esports programs—to invest in the industry. That might mean developing a state-of-the-art arena or implementing high-tech functionality in a multi-purpose community center. As long as it serves and works for the community, says Scott Norcross of Brennan Manna Diamond, formerly a partner at Kohrman Jackson & Krantz, esports facilities can attract tourists, restaurants, and other local businesses to sprout around them and provide big economic potential.

“They’re the perfect projects from a community standpoint,” Norcross says. “You have architects, engineers, lawyers, esports professionals, schools. All of a sudden, you look at it, and you have 20 stakeholders involved in one project.”

Image courtesy of Devin LaPlume of All Systems Go

Mark Deppe was on top of the esports revolution from the beginning. When he helped create the first public university esports program at UC Irvine in 2016, organized competitive video gaming wasn’t a very popular concept within higher education. But UCI’s campus leaders ran with the idea, believing in Deppe’s cost-neutral business plan and recognizing its value in today’s digital world.

Eight years after he turned UCI into one of the leading schools to field esports teams, “it certainly isn’t an uphill battle to justify and describe and define what esports are,” Deppe says. “Now it’s trying to position it into a strategic initiative for the university and make sure it’s adding value in the way that campus leaders want it to add value.”

Like LaPlume’s gambit, Deppe’s impetus to create a program and facility made sense with the location’s appetite for gaming. Irvine is host to several major leagues, game companies, and developers—Blizzard Entertainment, which publishes StarCraft and Overwatch, sits five miles from UCI’s campus—and has become a useful hub for graduating students (many of whom have been plucked to work for esports companies) looking for their next move within the workforce.

“Schools are investing millions of dollars into building out facilities, building up their programs, and now creating this whole pathway from high school to college and into the pros or to help supply companies with top candidates that actually have a background of being in this industry,” says LaPlume, who also offers esports consulting. “There are enough school programs that are investing tons of money in opening up facilities that could help in doing so.”

As the ground floor has continued to strengthen, more cities have begun to see the benefits of building a gaming infrastructure for their Millennial and Gen-Z populations. In 2018, Esports Stadium Arlington, a $10.5 million, 100,000-square-foot venue, became the largest dedicated esports venue in North America and repeatedly hosts all kinds of major gaming events. Other facilities in Atlantic City, Birmingham, Alabama, and South Bend, Indiana, have developed smaller venues capable of hosting high school and collegiate tournaments and large livestream gatherings, attracting visitors from nearby states.

Raleigh, N.C., might be leveraging esports the best right now. Ahead of hosting this year’s EsportsTravel Summit, the city saw North Carolina legislators recently pass the Esports Incentive Grant Fund, which offers tax rebates on production expenses for all kinds of esports events. The results have shown up. Last year, the League Championship Series generated $2.74 million in direct economic impact for Wake County and supported 1,178 jobs during its Spring Finals at PNC Arena.

“They are a destination for esports right now,” LaPlume says of Raleigh. “And they’re carving themselves out to be that.”

For cities looking to tap into the esports market, Norcross believes officials should start by understanding their demographics and the goals they have for the community. Instead of building a high-tech space, maybe it makes more sense to introduce esports through an established recreation center first. “What are you looking to offer with that facility? Are we going to build out a rec program? Are we going to build out our leagues? Do we want a club?” he says. “That will impact what you build and how you build it.”

Those kinds of questions are still being considered by Worcester, which is hoping to build on the success of All Systems Go with an ambitious revitalization project of its Memorial Auditorium. The building, which opened in 1932, used to be a primary civic center. Now, the Architectural Heritage Foundation is hoping to modernize its unutilized 110,668 square feet with “emerging events” that include augmented and virtual reality programming, robotics competitions, and esports events.

“To cover the operational costs of this building on an annual basis is around $3 million,” says Jake Sanders, a project executive at the Heritage Foundation. “So you need to have activities going on in the building that will actually generate revenue.”

At least for now, the city hopes its tech foundation will eventually sustain those demands and make good on its investment. The Auditorium’s re-opening does not have a specific date attached, but the dedication to refurbishing it into a venue capable of hosting esports only explains how quickly the landscape has changed.

“This particular model works because of the size of the space, the industry growth, and the demands in the region,” Sanders says. “And then, naturally, people like me are there to be ready to build on it.”

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