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Team Liquid CEO Steve Arhancet on LCS franchising: 'It's the first time when esports is a real f***ing sport'

TL CEO talks franchising, player development and the future of esports.

We haven’t heard much about NA LCS franchising since it was announced back in June, but rest assured it’s still looming large in the minds of the potential owners. With that in mind, The Rift Herald recently had the chance to talk with one of the North America’s longest standing League of Legends owners, co-CEO of Team Liquid, Steve Arhancet.

The Rift Herald: How did franchising first come up from Riot, did you guys have a heads up on that?

Steve Arhancet: Yeah, absolutely. So, franchising or a franchise-like system had been discussed multiple times and been expressed as a desire by team owners for years, and the impetus associated with that desire was mainly with regards to the security of current level of investment as well as desire and willingness for future investment into the League of Legends franchise system. And what I mean by that is just putting more money into the players and the infrastructure, because there was always apprehension that you could be relegated in three months after spending X number of dollars.

TRH: Was that a struggle for potential advertisers as well, the potential for a team to just disappear from the league?

SA: Absolutely, our conversations with partners have always been nervous about that. I think that has been part of the reason why some of the other newer brands to the LCS have had a hard time signing new long-term sponsorship agreements for their team because of the potential for being relegated.

TRH: How long was this whole thing in the works? You said team owners and organizations had been asking for it for years was Riot open to that initially or was it something that had to be worked on for a while?

SA: I think they were open to the idea and the concept of moving to a franchise system but they were more concerned about the actual product, the league itself and how far reaching and engaging that was, over the monetization or the stability for team owners, so there was just an order of priority that I believe kept Riot from making the decision sooner.

TRH: What do you think made this the right time for that to happen?

SA: I think it’s a combination of the right ownership in the current LCS system professional well capitalized well managed. Some of the team owners that were less desirable weren’t in over time so I think that’s one aspect.

I also think when you grow something to a certain size you want to find out how much that thing is worth, and I think they did that with the market outreach with the MLBAM deal that was closed. Once they found out that this league could be monetized appropriately and that there was wealth to be shared, then they moved to creating an architecture for what the terms of revenue share and stability and financial align between teams, owners and Riot might look like through inquiry with teams and players and really smart people designing it.

Riot Games

TRH: As a point of clarification, since not everyone may know. As someone who has been around the League scene basically since the beginning, can you talk a little bit about how big a step forward for esports and especially for League of Legends, franchising is?

SA: As an esports team owner for about six years, one of the downsides to team ownership that’s not really understood by players and folks within the space is that teams are not really sports teams, in the sense that we have permanent positions in the league that the teams participate in. Most of the time we just provide free marketing and participation for the team in exchange for potential prize money.

Which is really atypical, in fact I think it ceases to exist in any of the over competitive sports leagues. The big ones that are most obvious like the NBA and the NFL and stuff, but trickled down all the way to the Skateboarding league or the drone racing league. That kind of Jenga-like infrastructure made it really difficult for there to be any kind of confidence in the past market for team ownership, but with Riot having plans for LCS franchise and executing on those, it’s the first time when esports is a real fucking sport. In terms of the revenue and business infrastructure that is needed for sustainability, it’s a hallmark moment in history. People will go back and read wikis and look at the first moment an esports league was born and they are going to remember June 1st, 2017.

TRH: Riot has their outline for how they are going to select organizations to participate, was that something that was there when they first came to the organizations with the idea of franchising or was that something that was built alongside the owners that were already in the league?

SA: It was designed with the thoughts and considerations of the owners. From my perspective, questions were asked of Riot of what is important to teams and teams have a seat at the table and a voice that was heard because the terms that were outlined were inclusive of some of the thoughts and opinions and suggestions.

I think Riot listened and built something.

TRH: Where do you see Liquid’s place in the league and in the future in helping grow the LCS as being?

SA: Our contributions in the past have been vast. We have had some really hallmark, defining, moments that really pioneered the way that North American LCS teams operated. It actually goes way back to times when I was coaching and managing the team, before LCS, I actually thought it would be best to have a sixth man in the game. So, I would be on comms, and this was before they even had a rule where this wasn’t allowed.

TRH: What would, actually, become the Counter Strike model?

SA: Exactly! So, I kept pushing things. I mean, I think we were the first team to sign an international player to play in North America and one of the first teams to sign a World Championship player from a Korean team. These were all things that really drove the scene forward from a competitive standpoints, but also from a business standpoint. I was one of the first teams to build the challenger scene and support the challenger Eco-system, we ran tournaments and developed players. There is a lot of evidence to suggest the number of players that developed and started their careers under the TL and Curse orgs. A lot of those contributions serve as a reminder that we have the capability of thinking outside the box and doing things for the health of the league.

So, the future of TL’s participation in the league is really served up through the creative thought of Ted Leonsis, Peter Guber and Jeff Vinik and the types of things that they share with me as a spokesman to the league that I can execute on some of those ideas and thoughts. They have a lot of experience participating in franchise models in the NHL the NBA and through their decades of time, they have learned many things and those things won’t have to be recreated and won’t be lessons that we have to learn through mistakes, they can serve as contributions to how the league should develop.

And Team Liquid’s presence in the league as a great partner who is extremely motivated and passionate about our contributions to the League of Legends community. We are really excited now that we potentially have the opportunity to own a permanent seat and now invest in so many aspects of our business that we were apprehensive or gun shy to do previously.

Riot Games

For instance, we were the first team to sign a lease on a practice space that is right next to the Riot facility. It’s over 8,000 square feet where we will have our teams players training, in addition to the 10,000 square feet of living space we have for our players. That will serve as a foundation where a lot of this culture and contribution is going to happen. We already have great content teams that are producing and highlighting the story lines of our athletes.

1UP Studios is one of the best in the esports and gaming space, most notable for their Breaking Point movie and their Rebirth series. We just know how to do content, we know how to do branding we have shown that we have put together competitive rosters for five years. I’m just so excited for the opportunity to do bigger and better things and drive LCS engagement.

TRH: You talked a little bit about the sheer amount of experience that Team Liquid has with, not only traditional sports franchises, but also with the Challenger Series. I think, even before the challenger series existed, back with curse you were fielding Academy teams and things like that. Is it kind of refreshing and exciting to you to see the Challenger Series actually become an academy series?

SA: Oh — abso-fucking-lutely. Like you mentioned, before teams were even fielding challenger rosters we were doing that within the league and we had no financial motivation to do so. You couldn’t sell your spot at the time. We were just doing it because we wanted to and because I wanted to support the ecosystem. It’s so important for the health of the league to ensure that new talent that is turning 17 that have climbed to the top of the challenger ladder have an opportunity to compete and play and to spend six to 12 months building the competitive experience and their base game understanding to compete against the very best that are currently in North America. Without that, you will get a stale system. So, I’m super excited about fielding an academy team again and ensuring that training ground and that feeder system into the LCS is healthy and active. Yes, absolutely.

This interview is edited for length and clarity.