After claims of racism and a failed $30 million deal, an esports team will forfeit its place in one of the world's most popular leagues
"League of Legends" is one of the most popular games in the world, and the League Championship Series organizes professional competitions in North America.
The LCS is a North American esports league run by Riot Games, the creator of "League of Legends." "League of Legends" has more than 10 million players worldwide and an active competitive circuit. In addition to the LCS, "League of Legends" has professional leagues in China, Korea, Europe, and East Asia.
The LCS adopted a franchise model in 2017 and 10 teams paid $10 million to participate in 2018 LCS season. Franchised teams are entitled to a 32.5% share of the league's revenue, while players are entitled to 35% of the revenue. Additionally, the minimum player salary increased from $25,000 to $75,000.
Echo Fox reportedly reached a $30 million deal to sell its LCS spot to Kroenke Sports and Entertainment. But the deal fell through after Kroenke was sued by another esports organization.
Despite being given 60 days to remove anyone found to have had violated the company's hate speech policies from the team's ownership group, Echo Fox was unable to reach an internal resolution.
In July, Rick Fox said that Echo Fox had reached an agreement with Kroenke Sports and Entertainment to sell their spot in the LCS for $30.25 million, more than three times the original LCS buy-in fee. Riot offered Echo Fox a one-week extension on the 60-day mediation period to complete the deal, but it ultimately fell through one week after being reported by ESPN.
Shortly after ESPN reported Kroenke's deal with Echo Fox, a Kroenke business partner working in another franchised esports league, the Overwatch League, filed a lawsuit against Kroenke. The plaintiff in the case is Robert Moore, the CEO of a separate esports entity named Sentinels that operates Kroenke's Overwatch League team, the Los Angeles Gladiators.
Moore's lawsuit claimed that Kroenke had failed to cover expenses for the Gladiators and had not informed Sentinels about the Echo Fox acquisition before agreeing to a deal. According to ESPN, Moore wants a majority stake in the Gladiators and repayment for the unpaid expenses.
After the failed deal between Echo Fox and Kroenke, the LCS will accept applications for a new franchise.
Kroenke ultimately withdrew from its agreement with Echo Fox, leading Riot to open a bidding process for Echo Fox's position in the LCS.
"We'll be opening a 30-day application process to select our new long term partner for the open slot in the LCS," Greeley said in a statement."We'll be using an expedited process similar to the 2017 system that we used to select our initial long-term partners."
"We will focus on evaluating each applicant's ownership profile, brand strategy, business plan, and team operational plan. Our goal remains to have an orderly transition as we add a new LCS team ahead of the 2020 season," Greeley said.
Echo Fox's management issues should raise concerns about the rapidly growing esports industry.
The messy situation with Echo Fox highlights concerns with race, diversity, and management experience in the rapidly growing esports industry. While Echo Fox was able to secure a franchise spot with a mix of star power and success in competition, the team's LCS future was undone by the ownership's inability to secure sound investments and effectively remedy the controversy surrounding Raizada's alleged remark.
In an interview with Newsweek, Raizada, the same co-owner Fox originally accused of using a racial slur, said that Echo Fox is nearly bankrupt and will terminate both player and employee contracts in an effort to stay afloat. Echo Fox sponsors several other players in games besides League of Legends, but it seems as though their remaining time with Echo Fox could be short.
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