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H2K Threatens to Leave LCS Over Riot Corruption

by | Sep 5, 2017 | Esports section, Videogames

H2K Threatens to Leave LCS Over Riot Corruption

by | Sep 5, 2017 | Esports section, Videogames

Just four days ago, H2K-Gaming released an open letter to fans and Riot alike. The letter stated that H2K may be forced to leave the EU LCS if Riot does not drastically change financial models or offer some form of subsidies and revenue sharing.

H2K, who currently sit in fourth place in the EU LCS, argued that not only could they not maintain a successful business model, but no team could in NA or EU.

“We incur annual losses of over €1,000,000… The fact is that most League of Legends teams lose money.”

The letter goes on to denounce Riot’s current methods of payment and compensation to teams, repeatedly calling out Riot as a “multi-billion dollar company” that will “exceed $50 million annually” from the League of Legends professional league yet is unwilling to give any back to the teams.

In an interview with esports observer, H2K Co-Chairmain Richard Lippe went on to say that NA LCS teams had also confided that without injections of nearly $700,000, they would not be able to survive and quoted Phoenix 1 as having lost $500,000 from the summer split alone.

LCS Letter to Riot

Before we fully dive into this, a few points should be clarified. EKGaming could find no validation of Lippe’s $700,000 claim; however, last November an unconfirmed letter to Riot supposedly from the LCS teams requested this amount as a stipend for continued existence. The authenticity of the letter was never verified, and no team ever confirmed it.

The $500,000 loss from Phoenix 1 was also a projection that was never followed up on by co-owner Michael Moore. Additionally, Moore pointed out that their rookie status and relegation, more than anything else, was the primary cause for lack of funding. If their status as a team was more permanent, he said this would not have been so difficult.

H2K logo

All of this is to say that financial negotiations have indeed been fierce, but at no point has the public been given solid evidence of much of anything. Although H2K claims inoperable costs, no other teams have yet rallied to their cry. Although Moore predicted huge losses, he did not elaborate on the point after the split. Furthermore, H2K’s conjectures of Riot profits are just that.

According to an insider at Riot, the vast majority of revenue for the company comes from the game and parent company Tencent. The eSport side of Riot has, we were told, always run at a loss and continues to do so. This is partially due to the cost to stage Riot events – moving servers and hiring outside vendors is exorbitantly expensive, but Riot has not yet found a better method – but also due to the fact that LoL is broadcast for free, unlike traditional sports games. The level of profit-sharing and advertising for an eSport is simply not there when the majority of fans watch from home on a free streaming service.

League of Legends Financial Model.

Our takeaway? Teams do need better financial restitution. LoL still can’t match Dota 2 in player compensation, but many of the NA LCS’s concerns will be alleviated by enfranchisement, which will give sponsors solid teams to support instead of teams that may fall to relegation. As for H2K and EU, that’s messier.

Riot has made no announcements towards enfranchisement for the EU, and if we had to guess, they are reluctant to change a system that has such popularity in the physical sports of the country. If there really is a problem with the EU financially – and there may be – H2K will only find success if other teams join their cause. Until then, all we have is hearsay.

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