Mentioned in this article Teams: Cloud9, Echo Fox

Update (11:17am PST): Another source has come forward claiming that Echo Fox has already attempted to poach at least one player contracted to another team. This poaching attempt was apparently done with Riot’s “encouragement.” This player’s team has in turn gone to Riot and asked them to enforce LCS’ poaching rules. We have contacted Riot further for more clarification on the matter.

Update (8:47am PST): A Riot NA LCS spokesperson has responded with the following statement: “We’ve been fully committed to talks with the NA LCS owners regarding their participation in the 2017 season – as such, 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.”

Original article below.

The Esports Observer has learned from a number of anonymous sources close to LCS teams that all ten NA LCS teams have signed Riot’s new LCS agreement, which follows closely to a September announcement regarding future monetization for the LCS. Numerous concerns by many NA LCS team owners, leaked by Slingshot Esports earlier this month and primarily focused on the elimination of the relegation system, were outweighed by alleged threats made by Riot to allow teams that had signed to poach from teams that had not, coupled with the possibility of rejecting challenger team sales for those that had not.

Background

Discussion about the monetization of Riot Games’ League of Legends Championship Series exploded this summer when Riot co-founder and co-CEO Marc Merrill accused LCS team owners of using the LCS to prop up their teams in other titles from other developers. However, many team owners fired back, stating that the LCS was actually not as profitable as many believed—and in fact, for most was serving as a loss leader.

[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]Due to the incredible restrictions Riot has placed on its teams, many in turn struggle to make ends meet.[/perfectpullquote]

Our take? The LCS is a marketing tool for Riot and as such isn’t designed to be revenue positive. However, due to the incredible restrictions Riot has placed on its teams, many in turn struggle to make ends meet. In one case, a major team sponsor threatened to pull out of LCS entirely due to these restrictions.

The outcome of the dispute appeared to be meeting in the middle—Riot announced in September a number of changes for the coming year, including increased funding for teams and more merchandizing opportunities, both within and outside of League of Legends.

However, many teams still weren’t satisfied. A leaked letter in November detailed back-and-forth between Riot and LCS team owners about further issues, including eliminating team relegation and franchising.

Riot pushed back with threats

Per sources, those discussions have now ended, and all NA LCS team owners have signed on for the 2017 season, with few changes if any from the September proposal. The reasons given by our sources on why these team owners have backed down is concerning—Riot appears to have used threats to force teams to sign.

[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]Riot stated that unless Cloud9 signed the new agreement, the developer would reject any effort by Cloud9 to sell its second LCS spot.[/perfectpullquote]

One thing we’re hearing, for example, regards North American powerhouse Cloud9, whose challenger team won a spot in next year’s LCS. Cloud9 already has a spot in LCS (and you can only have one spot per company), so its “B team” winning means that it can safely sell off one LCS slot, which in the past has sold for around $1 million.

However, according to sources, Riot stated that unless Cloud9 signed the new agreement, the developer would reject any effort by Cloud9 to sell its second LCS spot—a $1 million loss for the team.

It gets worse from there. The other form of pressure from Riot upon NA LCS teams is much more severe. Per a source, Riot told team owners that it would ensure the right of Echo Fox—the only team that didn’t challenge Riot on the upcoming changes in the leaked November letter—to poach from any other team, should those other teams not sign the new agreement. Echo Fox was apparently the only team eager to sign the new agreement without further negotiation.

[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]Riot told team owners that it would ensure the right of Echo Fox to poach from any other team.[/perfectpullquote]

It stands to reason that if Echo Fox was the only LCS team to sign the new agreement by the start of the next season, every other NA LCS team would forfeit its spot, freeing up their players, leading to an unreal and chaotic free agency grab bag. However, posing this as a threat to teams to force them to sign seems like a step-too-far for Riot, effectively shutting down any attempt at negotiation over the new agreement.

Whatever the case, it worked. The combined threat of Riot-approved poaching and the blocking of challenger team sales was apparently too much for NA LCS team owners to ignore—again, they are now all signed, per our sources.

Analysis

There are, of course, numerous reasons for Riot to push back against the teams’ wishes for the direction of the LCS. The LCS as a marketing tool is incredibly profitable for Riot, and weakening it from continuing as such would be a huge loss.

However, there’s also arguments that allowing LCS owners to profit would create an even more competitive environment, which in turn would increase the popularity of the LCS and cause both parties to thrive. If handled right, there’s no reason this couldn’t happen. And team owners will surely continue to advocate for this scenario, even if their opportunity for the coming season has apparently been slammed shut.

[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]These kinds of allegations should be taken very seriously.[/perfectpullquote]

That all said, though, Riot’s alleged decision to threaten its teams instead of negotiating is worrying, to say the least. Any league, in any sport, allowing a single team to poach the best players would immediately destroy any semblance of balance to the league. Furthermore, cancelling any potential LCS team sale is a remarkable intrusion of Riot into the business of a completely separate corporate entity.

These kinds of allegations should be taken very seriously. Using threats to forcing other entities to act in a certain way has a name—it’s called coercion, and depending on how it was done, could qualify as extortion.

We have reached out to Riot along with a number of LCS teams to verify these allegations. We will update this article, of course, with any responses.