The National Basketball Association's Philadelphia 76ers on Monday became the first organization among the four major U.S. sports leagues to invest in teams that compete at videogames, a hot area attracting major advertisers and talent with ties to traditional sports.

The 76ers acquired a controlling stake in two so-called eSports squads, the latest in a number of high-profile moves in the space that include investments by professional athletes and live coverage of tournaments on Time Warner Inc.'s TBS and Walt Disney Co.'s ESPN networks.

Global revenue from ticket and merchandise sales, ads and other areas of eSports is on track to more than double to $1.13 billion by 2019, according to research firm Newzoo BV.

Terms of the deal weren't disclosed.

The eSports teams—Dignitas and Apex—were represented by talent and sports agency WME/IMG. Greg Richardson, a venture capitalist who is being brought in to oversee the combined entities, said such teams typically are valued at between $5 million and $12 million.

76ers Chief Executive Scott O'Neil confirmed the price was in that range. The franchise will share the investment with NextEquity Partners, which counts former senior members at Apple Inc. and Elevation Partners among its founders.

Traditional sports and eSports have crossed paths before.

European soccer clubs including Valencia CF, Manchester City FC and West Ham FC have built up eSports teams or signed players.

The NBA's Jeremy Lin and Jonas Jerebko, Major League Baseball's Jimmy Rollins and Alex Rodriguez, and retired basketball star Shaquille O'Neal, among others, all have ties to eSports teams.

Brazilian soccer's Wendell Lira in July said he was hanging up his cleats to pursue a career in competitive gaming.

"If you look at the power and numbers of eSports, it's intoxicating," said Mr. O'Neil, who also is CEO of the National Hockey League's New Jersey Devils.

Competitive-gaming athletes, like their traditional sports counterparts, use high-end gaming gear and wear jerseys with sponsor logos.

Major competitions for games such as "League of Legends" and "Dota 2" fill stadiums around the world, attracting millions of additional viewers online. In some tournaments, the prize pools stretch into the millions of dollars.

"We think there's a huge market opportunity," said Adam Hopkins, co-founder and managing partner of NextEquity. "It's an attractive demographic—young, above-average income and high-spend propensity. It will be a multibillion dollar market within a few years."

Over the summer, TBS aired a Friday night eSports competition that drew major advertisers including Arby's Restaurant Group Inc. and Buffalo Wild Wings Inc.

Dignitas and Apex will merge and go by the name Team Dignitas, gaining access to the 76ers' nutritionists, psychologists and trainers.

The 76ers plan to help the team strike sponsorships and may promote it at its NBA games.

"We have relationships throughout Corporate America," Mr. O'Neil said. "We will talk with them about the incredible upside of eSports and see if there's a way we can work together."

 

(END) Dow Jones Newswires

September 26, 2016 17:35 ET (21:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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