- The Jacob Wolf Report
- How the LCS Unraveled in Just Five Days
How the LCS Unraveled in Just Five Days
Riot Games shrunk the most-watched esports league in America in November. It's telling one story, while the teams tell another. Here's the real one.
Before we dive into it, earlier this week, I posted about how I might need to leave gaming and esports as a journalist due to the uncertain financial situation in the industry. What you’re about to read is why I don’t want to — a correcting of the record, that no one else had access to do for three weeks after this news broke.
If you appreciate my work and you’d like to help me stay in the industry, consider subscribing to the Patreon I run alongside former Washington Post games journalist Mikhail Klimentov.
On Nov. 20, Riot Games made a big announcement: The League Championship Series, the premier North American league for League of Legends, would reduce the number of its teams by two ahead of the 2024 season.
The reduction saw the exit of two of the league’s playoff teams: fifth-sixth place Evil Geniuses and league runner-up Golden Guardians. The news, announced on the first day of free agency—when players and coaches can officially sign new contracts with other teams—shocked many, including players committed to those teams for the 2024 season. Many players, coaches and staff have said publicly that the change severely constrains their ability to to find work for next year; they will likely not be able to re-enter the league until next April at the earliest.
Just seven days before the official opening of the free agency period, Riot initiated the process to contract the LCS. The process concluded just three days before players and coaches could sign new contracts, but weeks after most other teams had decided their rosters and most spots were spoken for. And the process did not include just the two organizations who ultimately left the LCS. Six teams heard Riot’s offer and four seriously considered it.
Riot executives previously said publicly that they became aware of problems with Evil Geniuses and Golden Guardians two weeks before they reached an agreement to shrink the LCS, and that the change was a way to head off problems relating to both organizations. They framed the process as reactive to two organizations that essentially forced their hand, a characterization that executives at multiple teams—and even sources at Riot—disputed.
Riot declined to comment for this article, but a dozen sources from inside multiple LCS organizations and Riot itself, some of whom were granted anonymity so they could speak freely, say the framing and timeline that Riot communicated is not accurate. What follows is the inside story of how the LCS went from 10 to eight teams.
On Nov. 13, Riot began the process of reducing the size of the LCS, sources familiar with the discussions said. Early that morning, Riot officials pinged team owners and executives, asking to speak with them. It informed them that it would reduce the number of teams in the league, though the specific number was not determined ahead of time.
To make such a change, Riot needed signoff from a supermajority—seven, or more—of the 10 organizations in the league to modify the team participation agreements.
The sentiment around reducing the league was mostly positive among the ownership groups. The scarcity of a slot in the LCS would boost valuations for the remaining organizations. The reduction of the number of organizations entitled to the league’s revenue pool would increase each team’s cut. And it would make the teams more competitive—as the remaining owners, in theory, would invest in top talent. It would also offer cash to the organizations who would opt to leave, unlike many open-market offers from other organizations outside of the league.
By late on Tuesday, Nov. 14, the majority of owners agreed and the league was authorized to make buyout offers. The next morning, Riot began doing so.
I’ve never seen Riot act so fast like this. That was shocking for me, in a good way.
It once again reached out to all the organizations in the league, asking if they would like to take individual calls to hear the buyout terms. Six teams said yes, and took those calls: 100 Thieves, NRG, Dignitas, Immortals, Golden Guardians and Evil Geniuses. Four others, Cloud9, Team Liquid, FlyQuest and Shopify Rebellion, declined.
Riot offered the interested organizations $6 million in cash, as well as debt forgiveness for any remaining franchise fees and the still-outstanding payment for each organization’s share of the league revenue pool, which sources estimated to be between $1 and $1.3 million.
At the end of Riot’s call with NRG’s leadership, the latter thanked Riot officials for the transparency and reaffirmed their commitment to the league, sources said.
Meanwhile, 100 Thieves listened to Riot’s pitch and took some time to consider it. That organization, which weeks earlier had spun off its energy drink and game development businesses to re-focus on esports, came back to Riot within 24 hours and said it wanted to stay in the league. That left four undecided.
Immortals and Dignitas thoroughly considered Riot’s offer, sources said. Both organizations have heard out open-market offers from other interested organizations over the past few years. But both have also invested tens of millions of dollars into esports; $6 million in cash would be nowhere close to covering their past losses. If they accepted Riot’s buyout, it would hurt their ability to monetize their organizations in the short term and lose them a potentially valuable asset to boost the sale in the long term.
Before Riot proposed a buyout, multiple other organizations outside the LCS had discussed acquiring either slots—or entire organizations—from many of the LCS teams.
Those interested organizations included Complexity Gaming and FaZe Clan owner GameSquare Esports, backed by the Dallas Cowboys; DarkZero, an esports team ran by former TSM management and backed by Texas natural gas billionaire heir Scott Duncan; and Enthusiast Gaming, a public Canadian company who own Luminosity Gaming and co-own the Seattle Surge. [Note: The Goff family, who are minority shareholders in GameSquare, are minor investors in my company, Overcome Media, through a separate entity, and have signed a letter waiving all editorial control.]
Most of those discussions centered on stock compensation, sources said, making the owners of the selling organizations shareholders in the acquirer. That would subject those shareholders to potential further market corrections in esports.
That’s why cash from Riot, even if below the value offered in stock, appealed to some of the LCS organizations.
By Thursday morning, Nov. 16, Riot, Golden Guardians and Evil Geniuses had come to a mutual decision. Those two teams would take the buyout and leave the league. Contracts took two days to finalize, and by Friday afternoon, paperwork had been signed. Golden Guardians and Evil Geniuses were no longer a part of the LCS.
When Riot publicly announced the league’s downsizing on Nov. 20, Tracy Parkes was shocked.
In an interview, Riot president John Needham characterized the situation much differently than did Parkes, the head of esports at Golden Guardians, based on what he had been told by his bosses at the Golden State Warriors, who own the team.
“We became aware of some issues a couple weeks ago and just really rallied the team, during Worlds, to try to help the teams out and the players out before free agency,” Needham said. “There really wasn’t an opportunity to do this earlier.”
Parkes said there were no issues with the Warriors. The NBA juggernaut had decided to cut its League of Legends roster budget a few weeks earlier, toward the end of October, but otherwise, Parkes and his general manager, Nick “Inero” Smith, intended to field a team in 2024.
Parkes found out Friday afternoon that Riot and the Warriors had signed an agreement terminating the Guardians’ spot in the league. He quickly reached out to his staff, players and coaches to let them know, encouraging them and helping to try to place them in other jobs.
League of Legends free agency may officially start on the third Monday or Tuesday of November each year, but progressively organizations have begun getting more aggressive with roster-building every year—wrapping up plans by as early as mid-October. So with just three days’ notice before the Nov. 20 free agency open date, Parkes said that his team and the players that Golden Guardians intended to sign were in an impossible position.
“We just had our best year and we were hopeful that, even with that spend on the LCS, there was a chance that us as an organization could break through to actual profitability for the first time in the org’s history,” Parkes said. “So I was excited. Our whole leadership team was excited at that prospect.”
“Then it was all taken away, unfortunately, super-suddenly. I didn’t have any [inclination] before that. I didn’t have any inkling that there was any selling [of the team.]”
The Timeline of the Departure of Golden Guardians and Evil Geniuses from the LCS
June: Team owners begin discussing potential proposal ideas amongst themselves.
August: Those meetings become more formal, organized by Team Liquid co-CEO Steve Arhancet.
Late September: Arhancet submits pitch deck of ideas, including some around consolidation, to Riot Games’ LCS staff.
October 10: League of Legends World Championship kicks off in South Korea.
November 13: Riot contacts teams to request authorization to shrink the league and offer buyouts.
November 14: Teams authorize Riot’s proposal.
November 15: Riot holds calls with six teams, 100 Thieves, NRG, Golden Guardians, Evil Geniuses, Immortals and Dignitas, who hear buyout offer.
November 16: Evil Geniuses and Golden Guardians agree to buyout.
November 17: Riot, Evil Geniuses and Golden Guardians sign buyout agreements and players and staff are told.
November 20: League of Legends free agency begins.
At Evil Geniuses, the team was eager to leave but was not guaranteed to do so, either. In that Nov. 19 interview, Needham blamed Evil Geniuses’ “public issues” for its departure.
For the past 18 months, Evil Geniuses has been embroiled in controversy, from allegations of mismanaging a player’s health to promoting a toxic work environment. Matt Hulsizer, the founder of Evil Geniuses owner PEAK6, told The Jacob Wolf Report that ultimately its decision to leave came from a lack of faith in Riot to turn the LCS around.
“To be perfectly candid, the number-one thing I'll tell you we've been disappointed in is the uptake in LCS. It just hasn't gone great, and that's the truth,” Hulsizer said.
“We think Riot is gonna figure it out. I just don't know that we have the patience to go on that ride with them, but we're happy to be their partner on Valorant.”
But it was no guarantee that Evil Geniuses would be one of the teams to depart when Riot kicked off its outreach around shrinking the League. One Riot source said the game developer felt confident that Evil Geniuses would accept the buyout offer, but if it didn’t, then the league could have continued with nine teams instead of 10. Hulsizer said the intimation that their widely-reported issues contributed to their decision to leave was not true.
When Parkes asked his team at Golden Guardians to post to X, formerly known as Twitter, about their exit on Nov. 20, they posted what he knew: Riot wanted to reduce the number of teams, the Warriors accepted a buyout and the Golden Guardians were leaving League of Legends.
“Given Riot Games’ decision to shift the LCS from a 10-team league to an 8-team league, we have made the difficult decision to exit League of Legends,” the Guardians wrote on X. “ We are so grateful for the contributions of our players and coaches and wish them the best of luck in their next endeavors. We will support them through the transition period.”
A quote tweet of that by Travis Gafford, the interviewer who broke the news with the Needham interview, contradicted the Golden Guardians’ tweet. Community moderators would later affix a community note to the Golden Guardians’ tweet based on Gafford’s reporting, though all the sources spoken with for this piece agreed with the Golden Guardians’ portrayal of the situation.
The team owners first presented Riot with the idea to downsize the league far earlier than Nov. 13. Owners began speaking off-hand with one another about the idea, as well as others, as early as June. Discussions later heated up in August and September, as the team owners began setting more calls with one another to discuss new ideas, sources said.
Leading those discussions was Team Liquid co-CEO Steve Arhancet, according to multiple people present in those conversations. Arhancet declined to comment for this story. By mid-September, Arhancet and his team at Liquid began building a presentation deck to give to Riot with a plethora of ideas—including a consolidation plan that saw the league reduce the number of teams and compete internationally more frequently. Arhancet submitted that proposal to Riot at the end of September, sources said.
Riot is not capable of doing this.
Since the departure of commissioner Jackie Felling in April, many LCS teams have been frustrated with Riot for a lack of firm leadership. Felling’s role was not backfilled quickly, and a new hire didn’t come until several weeks ago, after many 2024 plans were finalized, sources said.
Frustrations continued to grow throughout the summer. “Riot is not capable of doing this,” one team executive told The Jacob Wolf Report this week, referring to the game developer’s ability to run a successful pro sports league.
But when Riot made a swift decision to shrink the league, most of the owners felt positively about it.
“I’ve never seen Riot act so fast like this. That was shocking for me, in a good way,” another team executive said.
Lost in the thick of it, though, were the players, coaches and staff at both Golden Guardians and Evil Geniuses. More than 10 player roles were eliminated almost overnight—at a time when more than a handful of players felt they had a secure spot on those two teams.
For Golden Guardians, Parkes says that the Warriors are giving staff generous scaling severance based on the time they’ve spent with the organization. That doesn’t help the players who were never under contract or needed to be renewed but assumed they’d be on the team, though.
“My plan for next year was to play for Golden Guardians again, so as of right now I don’t have a team and will likely not be a starter in the LCS next year, since remaining teams have all locked top laners [as far as I know],” Golden Guardians top laner Eric "Licorice" Ritchie said on X on Nov. 20. “I’m feeling a lot of sadness about this. 2024 was going to be my seventh consecutive year playing in the LCS, and having that cut short with minimal warning is really tough.”