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Volume 24 No. 156

Leagues and Governing Bodies

The NFL compensation committee yesterday denied Cowboys Owner Jerry Jones' "request for another vote on a contract extension" for Commissioner Roger Goodell, according to Andrew Beaton of the WALL STREET JOURNAL. The committee also again "advised Jones to drop the issue, saying that his unwillingness to do so 'reflects conduct unbefitting an owner and is damaging to the League.'" The exchange marked the "latest escalation of the unusual epistolary battle between Jones and his fellow owners over the league’s leadership." Jones over the weekend wrote to Falcons Owner and compensation committee Chair Arthur Blank, "We can’t possibly have authorized the terms of Commissioner’s contract extension yet, since we still have no idea what those proposed terms will be." Blank wrote back saying Jones was ignoring the facts "to satisfy your personal agenda" (WALL STREET JOURNAL, 11/21). Meanwhile, PRO FOOTBALL TALK's Mike Florio cited sources as saying that Jones "intends to seek a secret ballot of owners for a vote to be conducted in connection with the Goodell contract" during the Dec. 13 owners meeting. It is not known what the "specific purpose" of the secret ballot is. A majority of 17 owners is "required to trigger the process of secret balloting" (PROFOOTBALLTALK.com, 11/20).

THE AWARD FOR BEST DRAMA GOES TO...: The WALL STREET JOURNAL's Jason Gay writes Jones vs. Goodell is "just the zesty matchup this NFL season needs." Gay: "Dirty laundry’s getting out. Insults are flying. Angry letters are being exchanged. ... We live in such crazy, tantrum-o-rama times that sometimes we don’t appreciate how bizarre a situation actually is. And this Jones v. NFL throwdown is truly bizarre." The NFL "prides itself on discipline and control." However, this scuffle is a "style war between a maverick and the company’s company man" and has become the "most delicious battle in sports" (WALL STREET JOURNAL, 11/21). ESPN’s Jon Weiner said, “I don’t want this feud with Goodell and with Jerry Jones to ever stop. I don’t care if it affects the team or if it doesn’t affect the team. I want this thing to go on forever.” Dan Le Batard: “We all want that, don’t we? We want Jerry to have no distractions, being bothered by winning and other things, and be just dedicated to the cause of fighting Roger Goodell. Now he can clear his plate and just fight Goodell” (“Highly Questionable,” ESPN, 11/20).

Riot Games invited traditional sports figures into its new North America League of Legends Championship Series at a level that exceeded industry expectations, experts and observers said. Riot has built the world’s most successful esports property largely through the work of its own employees, fans and endemic team organizers. However, with pressure building to better monetize its millions of fans and pay players more, it enthusiastically tapped into stick-and-ball sports, especially the NBA, to run its newly franchised team spots announced yesterday. Riot knew it needed help, said Senior Manager of Esports League Operations Chris Greeley. “We’re good at some aspects of (league development),” Greeley said. “There are portions of it we do better than anyone else in esports. And there’s a lot of stuff we don’t do well, or don’t do efficiently, or don’t do at all, and those are things we need to be able to do to grow.” Most industry insiders expected Riot to give a major advantage to the 10 teams currently in the NA LCS as it evaluated more than 100 applications, and perhaps select a couple of new investment groups. It actually ended up with just six endemic teams and took four newcomers: teams run by the Warriors, Cavaliers and Rockets, along with OpTic Gaming, an organization that had never competed in League of Legends before but has one of the largest fan bases of any team globally. Riot has refused to comment on specific decisions, but NA LCS co-heads Whalen Rozelle and Jarred Kennedy said they prioritized an ability to execute into the long term -- a standard that suggests institutional stability, existing expertise and deep pockets trumped prior results. “We really tried to go in with fresh slate, and try to evaluate each of these organizations and ownership groups for what they bring to the table,” Rozelle said. “But more importantly what we think they’ll bring to the table five years from now, 10 years from now.”

NEW TO THE SPACE: Including the endemic teams that took on new investors, seven of the 10 new NA LCS teams are controlled by owners who hail from traditional sports. They include MLB Rangers co-Owner Neil Leibman, who acquired OpTic; MSG, which acquired Counter Logic Gaming; FlyQuest, owned by Bucks co-Owner Wes Edens; and Team Liquid, which sold a majority interest to aXiomatic, a group led by Lightning Owner Jeff Vinik, Monumental Sports & Entertainment ChairTed Leonsis and Warriors co-Owner Peter Guber. Even two teams that retain original ownership, Cloud9 and Echo Fox, have extensive sports pedigrees. The fund that owns Echo Fox, originally founded by former NBAer Rick Fox, added the Yankees as a limited partner in October. Cloud9 also recently took investment from WWE and others. “We have our own business development people,” Greeley said. “But they’ve never sold for a professional sports league. So being able to bring to the table owners who have done that in the past, whether they are endemic teams who had professional sports backing, or new teams that had sports backing, we wanted to make sure we had those folks in the room as well." That does not explain everything, though. Harris Blizter-owned Team Dignitas and Immortals, backed by AEG and Grizzlies co-Exec Chair Steve Kaplan, were not invited back to the league despite the sports backing. Immortals CEO Noah Whinston said he was “disappointed” in the decision and did not fully understand it. Only TSM -- the dominant six-time NA LCS champion -- remains in the league without major outside capital investment.

SETTLING CONFLICTS OF INTEREST: With 10 teams who are collectively owned by dozens of different sports investors through one vehicle or another, there are at least three cross-ownership issues to be resolved. Riot prohibits any individual from owning stakes in multiple League of Legends teams. The Warriors own Golden Guardians, but Guber serves as Chair of aXiomatic. Also, Warriors assistant GM Kirk Lacob is an aXiomatic investor and Warriors Exec Board member Chamath Palihapitiy is an investor in Cloud9. Riot has given the parties 12 months to fix the conflicts, either through divestment or the creation of new operating entities with a separate cap table.

For more coverage of the business of esports, visit our partners, esportsobserver.com.

Esports organization Immortals bemoaned Riot Games’ decision to exclude them from the new North American League of Legends Championship Series, but promises the organization will continue growing. “I’m as disappointed as I’m sure all of you are, and to be frank, I don’t fully understand or agree with the reasons behind that decision,” Immortals CEO Noah Whinston said in a video to fans. Riot declined to address individual decisions. Immortals was one of four current NA LCS teams to not be invited back, instead being replaced in the new league by OpTic Gaming and new teams developed by the NBA’s Warriors, Cavaliers and Rockets and their owners. Only Immortals spoke after the Riot announcements. Harris Blitzer Sports & Entertainment-owned Team Dignitas, Team EnVyUs and Phoenix1 did not comment. The loss of a team in League of Legends, by far the most popular esports title worldwide, is a major blow to the organizations, and their ability to keep diversifying into other games and side businesses will be crucial. Immortals and Envy both field teams in Activision Blizzard’s upcoming Overwatch League. Whinston said Immortals will look for new opportunities in other titles, and also build out tech platforms, an event business and content related to its teams. Immortals also runs teams in Counter-Strike: Global Offensive, DOTA 2 and Super Smash Bros. AEG invested in Immortals in June, before the Riot selection process was underway, joining Grizzlies co-Exec Chair Steve Kaplan, Lionsgate and others. Steven Cohen, AEG's Chief Strategic Officer and Immortals board member, issued a statement yesterday that stated the “management team, the board of directors and our investors are in complete alignment with respect to the business plan and vision for Immortals, its role in esports and the prospects of esports generally going forward.”

For more coverage of the business of esports, visit our partners, esportsobserver.com.

NHL Commissioner Gary Bettman said the league would "like to" stage the World Cup of Hockey every four years, but because players or owners can opt out of the current CBA in September '19, that serves as a potential "problem" with holding the event in '20, according to Eric Duhatschek of THE ATHLETIC. Bettman: "I said to the union last fall ‘we have a choice.’ If we each give up our reopeners, we can do a World Cup in 2020. Otherwise, we need to pick a different year." Bettman said he does not "like work stoppages." He said, "The system we have now has worked well for the game and for our fans. ... It's the reason our game is as compelling as it is now." Meanwhile, Bettman said the Golden Knights were "never about tourism" in Las Vegas. Bettman: "That was the reason not to go there. When we were talking with (owner) Bill Foley about possibilities, the decision was made to do the season-ticket drive and he was told: Do not go to major corporations. Do not go to the casinos." He added, "This team was designed to have a local fan base -- and unless we were convinced they were going to have a local fan base, we weren’t going to do this." Bettman also talked about the current media landscape, saying he recently "was in Silicon Valley for two days at Apple and Google and Facebook and I met with Amazon." Bettman: "You need to understand what’s available and what’s coming and you need to be adaptable -- particularly for millennials and GenZs because they are consuming content, and especially sports, differently." He said more than 50% of the connection to the NHL "is on mobile as opposed to" computer screens (THEATHLETIC.com, 11/19).

CHANGE FOR THE BETTER: Maple Leafs GM Lou Lamoriello said "without question the game is going in the right direction" with the NHL's recent rules changes. Lamoriello: "How much more has to be done is an unknown because right now I think we’ve got a great game." He added, "The [replay] review is extremely positive. What (the changes have) done is improve the game. We’ve (cracked down) on slashing to allow the skilled players to feel comfortable in doing what they do best. We’ve taken certain parts of the game out to prevent injuries to keep our players playing" (TORONTO STAR, 11/18).

Rockets Owner Tilman Fertitta and the NHL reportedly have discussed the viability of a franchise there, and the city "passes, with flying colors, the three-pronged test that the NHL applies to new markets," according to Greg Wyshynski of ESPN.com. Houston has "strong local ownership, a modern hockey-friendly building (Toyota Center) and a fertile market." Logistically, this "makes sense for the NHL." It "balances the conferences, adding an additional team in the Western Conference and, more specifically, to the Central Division." That is where a "natural rivalry" with the Stars "will live, benefiting both clubs." The NHL has been "interested in Houston for years but could never justify the interest because the previous owner of the Rockets and the arena wasn't interested in having a team there." With those issues "seemingly solved by an owner aggressively courting an expansion team, the interest in Houston seems warranted" (ESPN.com, 11/20). In N.Y., Larry Brooks wrote Houston is the current expansion city of "prominence the NHL has to leverage against cities such as Ottawa and Calgary, whose club owners are seeking new arenas." Houston "makes sense as a U.S. port if accompanied by a viable hockey infrastructure" (N.Y. POST, 11/19). In Houston, Brian Smith noted if the city "finally gets its long delayed Big Four, it could happen much sooner than later." Smith: "Will Houston's civic and business leaders proudly back hockey? Will casual sports fans in the suburbs show up for a losing team? Right now, only the Texans are afforded that latter luxury" (HOUSTON CHRONICLE, 11/18).

SEATTLE STILL VIABLE? ESPN.com's Emily Kaplan wrote Seattle "makes the most sense" for NHL expansion. It is "glaring that the NHL is at an uneven 31 teams, with an imbalance in the West." Seattle fits "snugly geographically -- and demographically -- in what the NHL would covet in its 32nd franchise." Advertisers "love it when the league attracts young, tech-savvy fans." Kaplan: "So why not target that audience directly in a metropolitan area that is home to six Fortune 500 companies, including Amazon, Expedia, Microsoft, Nordstrom and Starbucks?" (ESPN.com, 11/20).

In DC, Steven Goff cites sources as saying that the U.S. Soccer Federation is "not planning to hire" a men's national team coach "before the organization’s presidential election in February, and with no major competitions in the near future, it might wait until the pool of potential candidates grows" after the '18 FIFA World Cup. The position "has been vacant since Bruce Arena stepped down last month in the wake" of failing to qualify for the World Cup. Arena's assistants, headed by interim-coach Dave Sarachan, "oversaw last week’s friendly at Portugal and likely would return for a three-week training camp and friendly against Bosnia in January" (WASHINGTON POST, 11/21).

NBA BUYING IN? In Boston, Gary Washburn noted the NBA has "not considered expansion for more than a decade," but the WNBA San Antonio Stars moving to Las Vegas should not be taken "lightly." Las Vegas "would love an NBA team" to join the Golden Knights and Raiders, and the league "will be closely monitoring the situation." There also are "other cities that would love to be considered for an expansion team," such as Seattle, Louisville and K.C. (BOSTON GLOBE, 11/19).

SPREADING THE WEALTH: In N.Y., Karen Crouse notes this past weekend's CME Group Tour Championship "marked the conclusion of one of the most rousing LPGA seasons." There were 22 "different winners" and 17 players who earned at least $1M in prize money. Nine of those 17 "were 24 or younger" (N.Y. TIMES, 11/21).