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Riot Games has filed a motion to compel (opens in a new tab) yesterday in hopes of ending its League of Legends Championship Series sponsorship deal with cryptocurrency exchange FTX (credit to crypto researcher and Harvard Innovation Lab scholar Molly White (opens in a new tab) for the spot.) This follows the highly publicized implosion of FTX (opens in a new tab) and the arrest of its founder, Sam Bankman-Fried, on charges of fraud.
Coindesk (opens in a new tab) reported on Riot’s deal with FTX last August. The sponsorship deal was to run for seven years, with the FTX brand displayed prominently at LCS events. Riot did not publicly disclose the price of the deal at the time, but said it was the largest such esports sponsorship the company has ever secured.
FTX was one of the largest cryptocurrency exchanges in the world and had a well-organized public image. You may remember the company ad featuring Larry David (opens in a new tab) at the Superbowl, something that was kind of funny but mostly sad at the time, and is now absolutely hilarious in hindsight. As of this writing, FTX still owns the naming rights to FTX Arena Miami (formerly the American Airlines Arena), home of the Miami Heat.
Internal documents showing massive discrepancies in FTX’s accounting were leaked to the public last month, with massive customer withdrawals and a declaration of bankruptcy soon after. Bankman-Fried had continued to deal with the public relations mess before eventually stepping down as CEO and then being arrested in the Bahamas. (opens in a new tab) earlier this week.
FTX is virtually insolvent, but according to Riot’s motion, it still owes the company half of its $12.5 million payment for 2022. This annual payment was only expected to increase for the life of the deal. seven-year sponsorship. It makes sense that Riot would want to jump this sinking ship, but the company also cites the association as being detrimental to its brand.
Riot humorously points to Sam Bankman-Fried’s infamous League of Legends habit as a particular sticking point. “Media and Twitter commenters circulated footage of Mr. Bankman-Fried playing League of Legends – Riot’s game – at the same time as FTX crashed,” the motion reads. Perhaps the reputational damage would have been less if Bankman-Fried was really good at the game. (opens in a new tab)although ideally it would have just been better at running a cryptocurrency exchange.
Before your heart bursts with too much sympathy for Riot, the company is actively looking for an explicitly crypto-focused advertising partner to replace FTX. “The more Riot is prevented from trading the crypto-exchange sponsorship category and assets currently held by FTX,” the company explains, “the more damage Riot suffers.”
It’s hard to imagine this move not being sustained – there’s simply no universe in which FTX could pay Riot what it already owes, let alone be able to support again multi-million dollar esports sponsorships. The only question in my mind is if Riot will come clean in time to have another crypto sponsor for the LCS in 2023 and then have to make another motion to force out of this deal when the next bank rush arrives.
If the story of an esports organization trying to cut ties with FTX sounds familiar, you might be thinking of TSM and Furia’s efforts on this front. (opens in a new tab). TSM had signed a 10-year, $210 million deal to change its name to TSM FTX in 2021, while Furia had struck a one-year, $3.2 million deal with the failed exchange. Both teams decided to cancel their partnerships with FTX last month.
