Chachi @ STL · @NMEChachi

23rd Aug 2016 from TwitLonger

On the Riot Comment

Couldn't decide whether I'd do a TL or a vlog on this. Think I'll stick with the written version here and do a vlog later if people ask for one. Anyway. I'm not tied to the LoL scene anymore and won't be returning to it until I have more money to play with, so I've been trying to limit posts on topics I'm not really involved in. This is not one of those topics. Despite being only a FORMER owner, I'm almost certainly one of those lovely "lower-end" owners that Tryndamere's post is dripping with disdain for. I'm basically Enemy's finances. So a bunch about the LCS and financial history of Enemy compared to other games (specifically CS:GO and Smite), and then a perspective on the comments that I don't think people are considering, or, being alarmed enough with.

Regi just posted a perspective from the top end of the LCS, I'd recommend you go read that as well ( https://twitter.com/TSMReginald/status/768147953076805632 ). This is a perspective from the bottom and parts of it have also been addressed by Montecristo ( https://www.youtube.com/watch?v=AjFCS0WxJO4 ), but the key one is on teams and revenue sources, which his previous video is a good primer for. It's annotated in the video on that link. My post is going to assume as a given a few of the things they've said that I've confirmed as my experience before, so watch those, because I won't detail all that.

If you want to skip to the perspective part, that's at the bottom. Just scroll, you'll clearly see when it starts. Everything between here and there is about how Tryndamere's accusations relate to Enemy in particular; Enemy as an example of the LCS revenue system.

As Regi points out, Tryndamere had two main points. The one on patch timing I have strong opinions on in principle, but I'm not going to talk about it unless I wind up back in the LCS one day and it's still a problem. That's a conversation for the current scene's gameplay experts, of which I am not one. I'm in general agreement with the prevailing opinion on the issue among the people talking about it. I'm going to talk entirely about the other point, about owners not doing enough. Not going to be particularly flowery on it either. Suffice to say the reason I've waited almost a full day to post this is I was so livid when the comment was made that I was afraid to post anything at that point in time.

Enemy was officially founded by me and Clerkie in July 2014, about a month after my first E3 trip, where I met briefly with Steve of Liquid and got some basic esports startup advice. Suffice to say we've learned a lot more by doing since then, and especially the hard lessons that only the LCS can teach. Our first League team was a cheap expansion tournament team for November 2014 built by Otter, who we were connected to by our first manager, Angel Vigil -- we came up against a hot Fusion and lost with a roster of Cackgod, Inori, Wolfe, Otter and Bodydrop. We didn't have to spend much for that. Salary was conditional on making the LCS, and they were crammed in a tiny little apartment in San Diego being rented by Otter and Hadaka, our second manager. Working conditions there were probably worse than the old Starcraft 2 living arrangements in Korea; the entire team slept on air mattresses in a single room and received nothing but food in compensation. One of our players actually had to return to Canada because it was so claustrophobic. Needless to say, for a full challenger run, this wasn't acceptable. We invested much more, in a house in Corona, CA with more room, and gave small salary to a couple players -- as harsh as that may still seem, massive challenger salaries are a fairly recent development and I don't pretend to be a philanthropist. Our roster was Flaresz, Trashy, Innox, Otter and Bodydrop. We convincingly crushed the challenger scene, losing a total of two very close games including one in the best of 5 playoff finals, and made LCS on a grand total challenger investment of $60,000, which undercut our primary competition's expense by almost 7 digits. This was the first glimpse of the company's M.O., which is being skilled at the job and the industry. Knowing where to find the experts who can put together a dominant team without the driving typhoons of money our competition usually has access to that we don't, by keeping expenses low. That's an important strategy to hold for context in this conversation.

That's a history crash course for our League team pre-LCS. Everyone knows how LCS went. Now let's talk about some of the root behind many of these gameplay problems, and then Tryndamere's ridiculous notion that owners, particularly low end ones, "don't want to shell out for top talent" and are exploiting players.

The biggest problems with our team were fairly obvious and analysts correctly noted them. We could not close games. This is exceedingly common among new teams and could be reduced largely to stage nerves and experience, but it's a bit more complex in our case. We also had some of the bloodiest early games in the LCS. This occasionally worked out and bought us leads -- we were something like 2nd in pre-15 kills -- but was stacked far more heavily against us. Halfway through the season, after our BETTER half of the season, Flaresz led the league by himself in pre-15 deaths and Bodydrop was in sole possession of number 2. Most of Bodydrop's deaths could be reduced to poor timings warding -- a death as Annie against Ashe comes to mind as a good example of this, but I don't remember which game. The Flaresz deaths, though, are at the root of our problems. Both the early and late game struggles come down to two things.

Firstly, Flaresz is an extremely feast or famine player. If he gets a solo kill, he'll dominate the game. In our first match against TSM, he solokilled Dyrus 7 times and TSM wisely just hung Dyrus out there to die and won the 4v4. But if he dies -- well. Take a look at the game where we finally allowed him to play the Riven he was begging to play all season. When you have a player like that, he needs strong jungle support to swing that heavily important matchup in your favor. But that brings us to our second problem. Innox; our star player who smashed challenger records, while being fearsome in teamfights and pretty damn respectable in 1v1 laning, could be absolutely crippled by ganks. For whatever reason, when Trashy was not close enough to come in and help, a gank mid was a kill against us. Our first coach was also close personal friends with Innox (that's on us to resolve). As a combination of these factors, Trashy's early game was almost entirely centered around being near mid lane. When he never showed up to help top, it wasn't because Trashy sucks, which a less knowledgeable fan might have assumed -- look at Splyce now in the EULCS. His hands were effectively tied behind his back when it came to the Flaresz matchup. In challenger, he was allowed to help the side lanes because teams weren't so good at exploiting our weakness to mid ganks. You can see what happened there.

Now, a top of LCS star player might adapt to this difficult situation, since by the nature of a team, very rarely does every player get exactly what they want in the team's strategy. We knew Flaresz was going to get less jungle support than he needed. So, why not play more tanky and supportive champions? Maokai. Nautilus. He wasn't great at them, so he needed to practice them in solo queue. Only, he didn't. Riven, Rumble, Riven, Hecarim, Riven. Even after being told by coaches to play specific champions in solo queue, he would play a game and then revert to only-damage. Is it any surprise, then, how those tanky champions always ended up being played in our LCS matches? In our second CLG game, he attempted to dive Darshan's Fizz with an almost-dead-Nautilus. It wasn't even close to succeeding. Casters were stunned. We were stunned. But if he won't play the tanky style in solo queue, how is he going to play it on stage when it matters? We had reports from players during a match against Team 8 -- his Nautilus game that we lost despite 5th dragon AND Baron almost entirely on him getting caught in 2 or 3 very inopportune moments -- that he had gone top while we were vastly ahead, giggling in the team comms, to full clear a double wave as Nautilus which Otter had specifically requested for his Last Whisper. We have clear, visible evidence of a player playing solo queue on stage during the LCS. His talent, at that point, doesn't matter. Benching is the ONLY option. Which brings us to finances.

How do we bench this player? We aren't allowed to stop paying him if he's on the bench. Dropping doesn't help much, either -- he's owed something for severance. What other top lane options are available? Anyone who doesn't live in the US, even Canada, add $4000 and a month of waiting for a visa before being allowed to play in the LCS onto that severance / bench pay, along with the travel and additional housing expenses for bringing them down. Who's the best available American top laner? Is he LCS quality? Will he fix the maturity and motivation problems we're having with Flaresz without turning our individual carry potential top into a weakness? Well, it's fairly simple, if you ask Marc Merrill. I just don't want to shell out for top talent. All I have to do is bench Flaresz, pick up a star European toplaner. Maybe Zorozero will return! I offer him something reasonable like 5 point 5 fucking k a month, add to that a 4k visa fee and a month of waiting, and Flaresz's continued $3100 a month, for the remaining 3 months of LCS. Now it's 8 point 6 fucking k a month. No big deal. A modest $30,400 expense on top lane, not including travel and housing, for the remainder of the split. If only I'd known it was that simple at the time. Everything would've been resolved. All I have to do is pay more money!

Where does that money come from? You know our LCS income? A $130kish stipend. A one time $3125 on icon sales (I'm pretty sure that's a ridiculously low team share -- we receive more than that MONTHLY on skin royalties for our team skin in Hi-Rez's Smite, which does not even remotely compare to LCS in viewership, even if we are in the conversation for best team in the world). A highly impressive $0 in monthly sponsorship revenue for our LCS team. Can we improve that? Yeah, certainly. But relegation's a thing, and we're negotiating in summer, not winter. Endemic budgets are already committed, so we're getting the absolute dregs if anything. "Just get sponsors." We hired a firm that C9 and TL use to negotiate those sponsorships for us. There was nothing. It's not about our inability to negotiate. It's about the actual value of an LCS team. A logo on a jersey in front of 200,000 people is nice, but how valuable to a sponsor when we might not even be there the next split? How can we do activations for them while we have to scrim constantly to keep up with old-boy teams that are more financially stable with better talent and experience?

Let's compare it to some OTHER esports, since apparently League owners just take League money to lose money elsewhere. Maybe Dan and I aren't that great at winning. Perhaps I'd flop like Echo Fox or NRG even with an NBA star's money. But there's no result in ANY of our other titles that suggests that to be the case. Smite? We placed second at worlds last year with a team of 5 players that were predicted to finish dead last in America. We placed second against the same team, 3-2 this time instead of 3-0, at this season's MSI-equivalent, with a rookie roster replacing 3 of the 5 worlds players, who left when we wouldn't kick our support and extremely valuable team captain for them. We were predicted to finish dead last this time too. CS:GO? We picked up a hot challenger team, similar to our LoL team right before LCS occurred, and, taking some of the lessons from LCS, did a better job of steadily developing them, pushing them towards top 4 in America. We were knocking on the door of majors when they left because we wouldn't pay enough for them after our star AWPer Koosta left for Liquid. We've BARELY lost money on CS:GO, and would in fact be profiting, like we are on Smite, if our team manager wasn't still holding onto the org's $7.5k cut of MLG Columbus winnings. We just picked up the top Gears team for a single event -- MLG Columbus again -- and won that one. Frank and Hadaka, our chief partners at Enemy, spun off into a new org called Rogue and just won a huge Overwatch tournament in Europe, breaking Envy's 57 win streak. Very rarely do we pick a poor option. LoL is the ONE esport where the Enemy M.O. has failed, and even there, Enemy alumni have gone on to success. We spotted Youngbuck as a quality coaching option and Trashy as a quality jungler. Where are they now? We have three Smash players and pay their rent, losing money, because we like Smash -- for perspective, in order to lose as much as LCS cost us in three months, we would need to fund those players with no income for 25 years.

So, no, Marc. We do not "take LCS money to invest in other esports we lose money on." Right now, we are doing the reverse, and repairing the damage LoL has done to our company using money from OTHER games. They're not complaining about it either. The only thing LCS has provided us is name recognition. I could've been the Slans (they're making more money on League than anyone right now at the expense of ethics) and sold our LCS spot, but I wanted to attempt to be the good guy owner -- I failed. We had so little money we had to pay our team ridiculously late. No player on the team got more than HALF his split's salary until a month after relegation as we struggled to pull in funding from outside to cover what SHOULD be our primary moneymaker under any reasonable revenue system. I thoroughly resent the notion that it's so simple as calling me a "bad org / owner" for that. You think I WANT to pay them that late? You think I'm rolling in bathtubs of cash just going "hmmm, guess I'll finally pay them today?" Now I question even the value of being the good guy owner, looking at Riot's disdain for a demonstrable one in Reginald, as evidenced by Tryndamere's thoughts.

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This brings us to the thing I mentioned about people not seeing this quite the same way I do. I don't claim to be all-knowing, but I'm going to put it out there anyway, add it to your perspective as you will.

People seem to be under the impression that Riot and Tryndamere are simply totally disconnected from the reality of esports. I don't buy that for a second. There is plenty of material about the financial situation of LCS relative to other esports all around the web. I'm not viewing "well they just didn't know" as a valid defense here. What this looks much more like to me is a transparent attempt, in light of the recent flurry of posts about revenue and "franchising," to shift the spotlight onto owners and put them on the defensive as opposed to Riot. And I think that's a MASSIVE red flag about Riot's future intentions for this title.

When Marc references player-owner power dynamics around the bottom of the LCS, he is almost certainly, given his "cheap owner" tone in the whole post, talking about owners having an excessive degree of power over players. Barring a few extreme circumstances (Winterfox ownership of Pobelter etc.) I find the reverse to be true in the real world. Players know that a downgrade from them makes a bottom team much more likely to be relegated. One of our players had an outside negotiator come in and get him an utterly ridiculous salary for the time, partially by forcing our hand during the short offseason, partially by giving us expectations of ending up with much more sponsorship money than we were able to achieve. Players have gotten quite good at negotiating their salaries, as long as they care about it. It's owners that rarely have the capacity to respond, unless they're VC investors, in which case they pay well enough anyway for power dynamics not to raise an ethical issue.

In that context, I see no reason to assume Riot has any imminent intention of providing permanent slots to teams. A permanent slot removes the threat of relegation on picking up a lower quality player, which is one of the prime bargaining chips players have with owners. Additionally, no one will create challenger teams if promotion is abandoned. Challenger will instead be a farm team system for LCS organizations, who will focus more on developing talent than flash-in-the-pan qualification with LCS veterans followed by sale. This means ready replacements will always be available, INCREASING player accountability in the LCS, DECREASING player negotiating power. Not to mention the added control over a player's career that will come about as a result of a single team developing a player all the way from solo queue to LCS reserve. That's VERY good for owners. And the tone of Tryndamere's post is that what's good for owners is bad for players. Riot knows the fans like the players, not the owners. Consequently, nothing in this post suggests to me that "franchising" is in the near future. Before that happens, it will take Riot arbitrarily deciding who's a "good guy" owner, and declaring that everyone in the LCS currently is one. But they've decided Regi is one. Does Marc's post give you the feeling that he's interested in rewarding even the "good guy" owner with something that increases his power over players? It doesn't for me. Maybe when it's just the old boys and 6 VC orgs they'll lock it, but if they don't have a stable enough revenue stream for those VC orgs guaranteed by shortly afterwards, what's to stop those "good guy" VCs from leaving? Promotion's already gone. Challenger's already been restructured. That could be a death sentence for the game or for player salaries. Certainly for my interest as a potential investor.

In my mind, some form of revenue sharing is THE ONLY option that can maintain this esport. And that's not looking good. If Riot was planning to boost org income in the LCS, why would they post a long rant effectively denying the notion that financial problems even exist? Why would they attempt to insinuate that owners are already profiting too much and paying too little?

I don't see the light at the end of the tunnel in this post. I can't see how LoL is going to keep up with other esports rapidly enhancing their attractiveness to investors when playerbase is no longer enough to drive them forward.

If you read all the way to the end of this, thanks very much. I hope it doesn't feel like a waste of your time.

- Chachi

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