Riot’s Alleged Threats of Poaching & Challenger Team Sale Restriction for Contract Push Back

NA & EU LCS teams push back on their 2017 contract with Riot Games, Riot Games gives their own push back, and a lot of money is on the line.

Let’s get into the details.

  • Vince Nairn publishes a leaked letter from 18 of the 20 NA & EU LCS teams written to Riot Games’ Brandon Beck, Marc Merrill, strikingly handsome Whalen Rozelle, and Jarred Kennedy, pointing out problems with job security, player compensation, long term investing, team sponsorships, and insufficient team compensation caused by non permanent league spots and insufficient compensation. Because of that the teams say most of them are operating at a loss.
  • The LCS team coalition suggests that Riot does away with relegation, provide revenue sharing through sales like team merchandise & digital items.
  • The team’s point out that yes, Riot Games has proposed potentially helpful changes but they would not take effect for at least another year.
  • The LCS Coalition is very smart. By moving their battle to a private well thought out and written correspondence with Riot they are able to publically take the high ground of the responsible party moving the fight off of social media and reddit into the appropriate path. But by intentionally leaking the correspondence they are very much keeping this fight very public in hopes they can use the League of Legends community to pressure Riot to give them what they want. Clever girl.
  • Riot may be dragging their feet on this because there are most likely team organization owners they don’t want in their league because they don’t want to work with them. Adrien Auxent points out that in the letter the coalition says Riot Games “is not sure that the current NA Teams are desirable long-term partners.” For instance Chris Badawi & Christopher Mykles’ LA Renegades team. They banned Chris Badawi for a year then forced Christopher Mykles to sell his team in a month after somewhat ignoring the ban and their financial ties with Team Dragon Knights. But that process was swift and without warning.
  • To be fair to Riot, every time they do release a statement or explain in detail their reasoning, the community tears them apart.
  • The most recent public “he said she said” with NA LCS teams suggests that Riot may indeed not want to work with certain teams as NA LCS teams told Slingshot Esports that because Echo Fox was the only team that didn’t push back on the NA LCS 2017 contract, they encouraged Echo Fox to poach their players and threatened them with rejecting the sale of their challenger series teams.
  • Given NRG, Nova, Eanix, and Team Liquid Academy are looking to sell, that’s some big leverage.
  • Riot says “We’ve been fully committed to talks with the NA LCS owners regarding their participation in the 2017 season, there was no discussion of the process of selling slots should teams not wish to participate or of contravening our rules to allow the poaching of players currently under contract.” Many of their players are not under contract at the moment.
  • But all of these public fights with team owners are hurting the value of the entire league. Jacob Wolf reports Tempo Storm bought up Dream Team and their NA Challenger spot for roughly six figures. But last year, most any Challenger team could fetch $1M easy.
  • That doesn’t matter much to Riot, but what does matter to Riot is their $90M a year deal with Major League Baseball Advanced Media.
  • Richard Lewis reports, there is in fact, money in the Banana Esports Broadcast stand as MLBAM is in negotiations to pay Riot Games $90M per year to develop a Riot Games video app for live streaming League of Legends content exclusive to MLBAM requiring users to pay a subscription fee to watch. The service will go into Beta in December, soft launch in February, and debut at the end of 2017. MLBAM’s platform supports Disney, NHL, WWE, Discovery, PGA, and HBO.
  • Given teams have been asking for a revenue share for things like broadcast rights will they see any of that money? How will viewers react to having to pay for something they’ve been getting for free for the last 5 years? How is Twitch going to react to this deal?
  • But let’s zoom out for a second. Riot Games will make $1.8B this year. If their entire Esports division fell off the face of the earth, they would take a hit but they would recoup and continue to go strong.
  • Riot was and is one of the key leaders in Esports. They can lose the battles but if they don’t win the war with the team coalition, that loss will stunt their growth while Blizzard & Valve overshadow them.

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