OPEN LETTER TO THE EU LCS COMMUNITY (NUMBER 2)

When the current owners and management of H2K acquired a controlling interest in December of 2015, the objectives were to build a successful esports franchise while, together with RIOT and the other teams, also helping to shape the values and emotional growth of young players and making a positive impact in the European community. We believe H2K has made a good start in achieving its objectives by consistently fielding a competitive team while nurturing players who understand and respect H2K’s values. We have also produced high-quality community engaging content which favourably impacts the image of H2K, RIOT, and the EU LCS.  However, for this effort to broaden and become inclusive, we believe the EU LCS requires an open and transparent collaborative effort among RIOT, the teams and the players based on their mutual best interests.

Today, that doesn’t exist with four of the major teams seeking to leave Europe and H2K concluding that the financial and operating structure of the EU LCS requires it to withdraw from the League. Clearly, something is wrong with this picture; the reset button must be hit. Rather than an open and transparent ecosystem, we have confidentiality and lack of information. Rather than having a collaborative effort, we have RIOT making all significant decisions, while largely ignoring the informed views of the teams and players. Rather than the ecosystem providing for the mutual best interests of all the participants, the teams are forced into financially weak positions while creating player instability and uncertainty.

By contrast, were RIOT to shift direction, a strong and vibrant EU LCS ecosystem would emerge for the benefit of RIOT, the teams, the players and the European community. With European teams able to compete for top talent and enthusiastically engage in significant branding activities on behalf of themselves, the players and RIOT, fan interest in the European community would blossom. Based on a relatively level playing field, a natural and strong rivalry between Europe and the NA would drive significant broadcasting, advertising, sponsorship, and other revenues. Working together – RIOT, the team owners and player representatives – would develop cooperative strategic approaches to generate excitement and success throughout Europe.

Sound familiar? It’s the NA franchising system without franchising. A unique regional model designed for Europe. To make it succeed, with the existing teams (“legacy teams”) no longer subsidizing RIOT, and to have their committed involvement in Europe, it merely requires RIOT to provide the legacy teams collectively with a guaranteed yearly increase of approximately €6.5 million. The legacy teams should be the beneficiaries of such guaranteed support because of their prior multi-million dollar investments in the EU LCS, their continuing branding and promotion of League of Legends, and the commitment of many thousands of hours of management and owner time to the success of the teams, players and the EU LCS. Of course, should it occur, all 24 teams in the restructured league will participate in revenue sharing.

A small price to pay for future harmony, cooperation, and EU LCS prosperity when the sale of 1 skin and 1 icon during Worlds for only 6 weeks generates revenues of approximately €18 – €20 million. These funds can be generated yearly by RIOT permitting the European fans to design and purchase one skin for each Spring and Summer split. The support of European fans will determine the success of this program. This funding approach has the benefit of leaving untouched the approximate $2 billion in annual in – game sales made by RIOT while allowing European fans to directly support the EU LCS. So let’s hit the reset button and move ahead with a clear and sensible plan!

 

Richard Lippe, Board Co-Chairman, H2K

Susan Tully, CEO, H2K

 

September 28, 2017