New Sale of Sponsorships Rule

Riot·11/21/2014, 9:03:23 PM·0 votes·92,197 views

TL;DR:

We’re instituting a new policy to better distinguish between LCS team owners, brand owners, and those who sell sponsorships for LCS teams to uphold competitive integrity and prevent conflicts of interest.
Those selling sponsorships on behalf of LCS teams will no longer be able to also own LCS team branding.
2014 LCS teams Evil Geniuses and Alliance will be playing under different brands (names, logos, etc.) next season.
GoodGame Agency, which currently sells sponsorships on behalf of both teams, will continue to do so.

Why We’re Instituting New Rules on Sales of Sponsorships

We’re constantly striving to preserve competitive integrity in the LCS. Part of those efforts include LCS rules, which already prohibit any one person, organization, or legal entity from owning more than one LCS team. Allowing multiple teams to share the same owner risks major conflicts of interest such as soft play between teams sharing an owner in common, which is why multi-team ownership is prohibited in the LCS and we are in the process of moving away from it globally. There’s been a great deal of ambiguity this past season stemming from the fact that one individual, Alexander Garfield, owns the brands (including names and logos) that two LCS teams, Evil Geniuses (EG) and Alliance, play under. Alex also owns a company, GoodGame Agency, which sells sponsorships on behalf of both teams. Though Garfield does not own the two teams or have control over their operations (e.g. roster decisions), the fact that he owns their brands as well as the agency selling their sponsorships has understandably generated some confusion about his relationship with these two teams. After observing EG, Alliance, and Alex this past year, we’ve come to the conclusion that, while none of the parties have acted in an inappropriate fashion, the blurring of roles between a team owner, brand owner, and sponsorship salesperson is at odds with the autonomy of LCS teams.

The Trouble With The Status Quo

Selling sponsorships on behalf of an LCS organization can give a third party some degree of influence over a team, but we think that is much less impactful than owning the rights to the branding that a team competes under. Having one party able to control both a team’s relationship with its sponsors and have the leverage to cut a team off from the brand it plays under is where we draw the line. We’re also concerned that a single individual, organization, or legal entity owning multiple team brands creates conflicts of interest for reasons similar to why owning multiple LCS teams does. None of these trends are good for competitive integrity or the long-term health of the league. As a result, we’re instituting a new policy to better distinguish between owners and those who sell sponsorships for LCS teams.

Sale of Sponsorships Rule (SoS)

Multiple Team Restriction No Team Owner or Team Manager 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 e-sports league. Any buyback provision, right of first purchase, or similar interest in a Team shall be treated as a controlling interest in such Team for the purposes of enforcing ownership restrictions. For purpose of clarification, the League Championship Series in North America, the League Championship Series in Europe, the Garena Premier League/League of Legends Master Series, the OnGameNet Champions League, and the Tencent LoL Professional League, and any other league that is eligible to qualify a Team to the League of Legends World Championships, are considered professional e-sports leagues. The League shall have the right to make final and binding determinations regarding Team ownership, issues relating to the multiple team restriction and other relationships that may otherwise have an adverse impact on the competitive integrity of the LCS. Team Owner agrees that it will not contest any final determination of the League in connection therewith. Sale of Sponsorships and Related Issues Any Team Manager may only sell or manage sponsorships or brand elements for the Team with which he or she is affiliated. The Team Owner may not provide any ownership interests in the Team Owner or Team or any brand elements thereof to any third party person or entity who engages in the business of selling or managing of LCS or “Challenger Series” eSports teams. No person or entity may hold the naming rights to more than one LCS team at a time. Sale of Sponsorships Cooldown Provision Any person or entity who engages in the sale or management of sponsorships for multiple LCS teams during the course of an LCS split may not hold a controlling interest in any LCS or Challenger Series team for a period of no less than two years following the last day of the LCS split during which he/she represented multiple teams.

What This Means for Next Season

There are a number of options available to Alex to become compliant with these new rules. Alex has chosen to do so by terminating his licensing agreements with owners Brian Cordry and Jacob Toft-Andersen, opting to instead have his GoodGame Agency sell sponsorships directly on behalf of numerous LCS teams in both NA and EU, including Cordry’s and Toft-Andersen’s teams. The first and most visible effect of this decision is that the 2014 LCS teams Evil Geniuses and Alliance will be playing under different banners in 2015. Jacob Toft-Andersen, owner of 2014 LCS team Alliance, has expressed optimism about the team’s future and new branding:

"It is with mixed emotions that we say goodbye to the name that we have fought under for the past year. Alliance is a great organization and both myself as well as all of the players are thankful for the opportunity of playing under the Alliance-banner. It has brought with it an air of respect and professionalism, qualities we hope and plan to bring to our new brand as well. I am pleased with the new structure that Riot has put in place, because it allows me and the players to continue to reap the benefits of being represented by GoodGame Agency, while also independently running our own team and brand. It is of the utmost importance to us, when thinking about our plans and goals for 2015, that we can fully focus on improving and being on top of our game, as to make our fans proud, while still maintaining high operating standards. These changes to the Riot LCS structure essentially allow us to have the best of both worlds."

Brian Cordry, owner of the 2014 LCS team Evil Geniuses, has this to say:

It's most unfortunate that the Evil Geniuses brand will no longer be participating in the LCS. Team EG is one of the most storied and successful organizations in all of esports, and it was a joy to get the opportunity to represent them on the LCS stage. There are so many great people behind the scenes of EG that go the extra mile to ensure that every game they represent, every player they train, every piece of content they produce has an added sheen to it. So it is with resignation that the players and I leave the brand behind and move onto the next chapter of our LCS story. Fortunately, we'll be continuing in the 2015 season with a new business operations relationship with GoodGame Agency, so we'll continue to reap the benefits of having such a polished organization behind us, while growing our own, new brand. And a change in colors doesn't mean the players have lost their step – the players have been busy dominating the solo queue ladder and preparing for the 2015 LCS season. We'll be looking to fill the vacancy left behind by Krepo's departure and there will be some new faces on the team, but we'll be back in 2015, carrying the momentum from our 2014 season-ending run, playing under a new flag, and striving to realize our potential as one of the best teams in North America. Thank you for your continued support during this time of change, and thanks again to Evil Geniuses and their sponsors for an incredible 2014 season.

The other main effect of this decision is that by opting to sell sponsorships on behalf of multiple LCS teams, Alex is willing to trigger the two-year cooldown provision regarding selling sponsorships for multiple LCS teams during the same split. Alex has more thoughts on the change:

"Deciding to withdraw Evil Geniuses and Alliance from the LCS wasn't easy. These are brands that I've spent more than a third of my life building - brands with history, and gravity. I'm very proud of everything that's been accomplished underneath them. To say the least, it'll be strange not seeing them in the LCS. That being said, there's no doubt in my mind that this is the right thing to do. The eSports world is evolving rapidly, and we all have to adapt to the changing landscape. Throughout my entire career in eSports, my primary motivation has been to help support players. That's why you've seen GoodGame do what we've done - whether it's with EG, or Alliance, or any of our other projects. That's why, last year, when we had to decide between owning one team and supporting two (but not owning either), we chose the latter. And that's why, right now, we're making the decision to not own any LCS teams or brands going forward. We've decided to waive that right in order to help support an uncapped number teams and players - it's a compromise we're happy to make, and we think it'll be better for the overall scene. We'll be able to contribute far more to the League of Legends community this way than we would by simply owning a single team. Our goal with GoodGame is to help support as many teams and players as possible, and that's how we think we can best contribute to the growth of eSports going forward as we all look to secure sustainability and longevity for the industry as a whole."