Riot Games has reportedly handed a one-year ultimatum for three teams caught in an ownership conflict. Cloud9, Team Liquid, and the Golden State Warriors – the NBA giants behind the new organisation Golden Guardians – have been asked to resolve certain conflicts of interest by next November, according to SportsBusiness Journal and ESPN.
Riot’s ruleset in place for the North American League of Legends Championship Series prevents multiple teams in the league from sharing the same owners.
“No team owner or team manager or affiliate of an owner may own or control, directly or indirectly, or have a direct (e.g., ownership) or indirect (e.g., a contractual arrangement) financial interest, or be an employee or contractor of, more than one League of Legends team in a professional esports league.”
The dispute arose when GSW Esports LLC, the company behind the Warriors, was granted a franchise spot in the NA LCS for future splits. The company is a subsidiary of GSW Sports Ventures LLC, which reportedly includes ‘several owners’ who are also invested in fellow franchise holders Team Liquid and Cloud9. The result is a direct infringement on Riot’s official rules.
Two of those currently on the wrong side of the ruling are Peter Guber and Kirk Lacob, who act as co-managing partner and assistant GM of the Warriors respectively. The pair are both a part of aXiomatic, who acquired a controlling interest in Team Liquid in September 2016.
Chamath Palihapitiya is another investor in the wrong spot, as he currently acts as a minority owner in both Cloud9 and the Warriors.
It is understood that Riot had accepted the Warriors’ application on the basis of potential solutions to the quandary. Both Kirk Lacob and his father Joe, majority owner of the Warriors, have reportedly been discussing the conflict with Riot over the past month.
Kirk explained to ESPN that his investment in aXiomatic was merely a means of getting a taste of the esports industry. “I saw that [aXiomatic] as an opportunity to get a foot in the door,” he said. “I will obviously be removing myself from aXiomatic and Team Liquid. I’m obviously not an important piece of what they’re doing, but I still need to remove myself to make sure things are on the up-and-up.”
Esports Insider says: It’s understandable that these conflicts of interest have arisen. It would be unreasonable to have investors pull out of other projects before knowing that their teams would be granted spots in the LCS. A year is a long time in esports, but now that big money is involved it seems Riot is playing safe.