H2K, the well-known League of Legends organisation in the LCS, has threatened to leave the EU LCS after revealing it’s losing millions.
The org, whose original founder (Richard Wells) is a UK resident, posted an open letter to the EU LCS community on Friday evening.
In it, they call for a fairer system to be put in place by Riot Games, and hint that they will not be willing to move across to the NA LCS and its new franchising model.
“We are committed to the EU region so long as we continue to compete in the League of Legends,” the letter read, a joint statement by Richard Lippe, board co-chairman and Susan Tully, CEO.
“Sadly, from a business perspective we consider it irrational to continue in a partnership where our partner [Riot] earns very substantial annual profits while, by contrast, we incur annual losses of over €1 million.
“The financial arrangement between Riot and the teams is unfortunately backward and upside down. The fact is that most League of Legends teams lose money. Operating costs continue to increase dramatically and Riot’s team compensation only covers a small fraction of those costs. In essence, team losses are subsidizing the marketing activities of a multi-billion dollar company.
“The current situation is not sustainable and cannot continue. We will not continue in the EU LCS beyond the 2017 season unless Riot creates a new financial and operating structure.”
“With H2K, since January of 2017, having already subsidized Riot in excess of €2 million, the current situation is not sustainable and cannot continue. The partnership with Riot is neither rational nor fair. As our partner, RIOT should provide financial stability for the teams. The teams in the EU LCS should not be expected to continue to subsidize a multi-billion dollar company.”
Because of this, H2K say that they will have to leave the EU LCS unless changes are made.
“H2K ownership has made the decision that we will no longer financially subsidize Riot and will not continue in the EU LCS beyond the 2017 season unless Riot creates a new financial and operating structure,” the letter added.
“Riot must provide the EU LCS teams with the realistic opportunity to earn through subsidies and revenue sharing, minimum compensation of at least €850,000 per year. Recognizing that as teams we must perform and contribute to the success of the league, we accept that a portion of the revenue sharing should be based on competitive performance, viewership, effective branding activities and other reasonable metrics.
“H2K ownership and management very much wish to continue in the EU LCS. We now look to Riot to make the changes dictated by fairness and common sense.”
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Dom is an award-winning writer who graduated from Bournemouth University with a 2:1 degree in Multi-Media Journalism in 2007.
A keen League of Legends and World of Warcraft player, he has written for a range of publications including GamesTM, Nintendo Official Magazine, industry publication MCV as well as Riot Games and others. He works as full-time content director for the British Esports Association and runs ENUK in his spare time.