- Echo Fox will forfeit its position as one of 10 franchises in the League Championship Series (LCS) amid claims of racism.
- The LCS is the professional league for the popular computer game “League of Legends,” and franchise slots have recently sold for between $35 and $45 million.
- A deal to sell Echo Fox to Kroenke Entertainment and Sports Group fell through after a tentative agreement, leading the LCS to open an application process to replace Echo Fox.
- Despite the controversy, Echo Fox will receive the bulk of the revenue from the sale of its franchise slot.
- Visit Business Insider’s homepage for more stories.
Echo Fox, one of 10 franchises in one of the world’s most popular esports leagues, will forfeit its place in Riot Games’ League Championship Series amid ongoing controversy and accusations of racism within the Echo Fox’s ownership.
In 2017, Echo Fox paid $10 million to become one of the first franchises in the League Championship Series (LCS), North America’s professional league for the computer game “League of Legends.” Now, the LCS is holding an open bidding process to find a new long-term partner to replace Echo Fox after a $30 million deal to purchase the franchise slot fell through in early August.
Echo Fox was established in 2015 when actor and former NBA player Rick Fox and business partners Amit Raizada and Stratton Sclavos acquired Gravity, an existing esports organization competing in the LCS. The team rebranded as Echo Fox and Fox used his celebrity status to help promote the team for several years.
However, in April 2019, Fox publicly criticized Raizada for allegedly using a racial slur in an text message referring to Echo Fox CEO Jace Hall. Fox first said he intended to sell his stake in the team and move on, but later said he would remain with Echo Fox if Raizada was removed from the ownership group.
Rick Fox, Jace Hall, and Amit Raizada did not respond to Business Insider’s request for comment.
Here’s how the Echo Fox situation has played out over the past few months.
“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.
After investigating the Echo Fox situation, LCS Commissioner Chris Greeley announced that the team would be given a 60-day mediation period to remove anyone who had violated the league’s policy on hate speech beginning May 15.
If Echo Fox does not take action by removing any individuals whose actions violate League rules and agreements within the required time period, the League will take formal action that may adversely impact the future of Echo Fox in the LCS. -Chris Greeley, LCS Commissioner (2/2)
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.
Three of the 10 franchises that partnered with the League Championship Series in 2017 will be gone by 2020.
Three of these 10 franchises won’t be in the LCS from 2020. Shit got real, real quick. pic.twitter.com/FnzZjzdsmW
While Riot has reiterated a longterm commitment to a franchise model for the LCS in North America, three of the original 10 franchises will be replaced by next year. In addition to Echo Fox, OpTic Gaming was reportedly sold for between $35 and $45 million to Immortals Gaming Club, and Clutch Gaming will be replaced by Dignitas. Both Immortals and Dignitas were originally denied franchise slots in 2017.
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.