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.
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