Activision allows CDL and OWL teams to skip franchise payments in 2020 - Dexerto
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Activision allows CDL and OWL teams to skip franchise payments in 2020

Published: 30/Sep/2020 3:18 Updated: 30/Sep/2020 3:24

by Brad Norton

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Both Call of Duty League (CDL) and Overwatch League (OWL) organizations have been allowed by Activision Blizzard to dodge multimillion-dollar franchise fees in 2020.

In the midst of an extremely turbulent year, to say the least, both CDL and OWL competition has continued forward. The best Call of Duty players competed in an online postseason with $4.6 million on the line.

Meanwhile, the best Overwatch players are currently gearing up for the Grand Final Weekend which kicks off on October 8 in South Korea.

Despite the wrenches thrown in the gears for both leagues, Activision has pressed forward in 2020. However, the leagues haven’t quite operated how they were supposed to. Proper events with thousands of attendees came to a halt. Home Series and Homestands alike were both off the table due to the ongoing lockdown.

Fleta playing for Seoul Dynasty in 2019 OWL
Ben Pursell for Blizzard
Overwatch League will soon be returning to LAN competition, though without crowds for the Grand Finals Weekend.

With a huge chunk of change supposed to come from these live events, organizations certainly took a hit. As a result, Activision Blizzard is foregoing the need to pay millions in franchise fees this calendar year.

Sponsorship deals, merchandise sales, and prize winnings are just a few of the ways in which these orgs make money. When factoring in player and staff salaries, content costs, and everything else along the way, however, these fees add up. One of the planned means of generating revenue across the CDL and OWL was through live events.

Just four LAN events were held during the inaugural CDL season before the switch to online. OWL had six LAN events across North America before the same pivot.

It’s during these events that orgs look to turn a profit through ticket sales and merch stands. With these opportunities coming to a halt, teams haven’t been able to make the amount they would have projected at the beginning of 2020.

Houston Outlaws fans at an Overwatch League homestand event
Ben Pursell for Blizzard Entertainment
There’s no telling when crowds might be allowed back to live events.

As a result, Activision Blizzard is allowing them to defer multimillion-dollar franchise fees that were reportedly due this year, according to The Washington Post. As many paid upwards of $20 million to acquire franchise slots in either league, payments are expected on an annual basis.

Due to the lack of live events, these repayments have the option of being postponed. Some orgs may choose to continue paying back in 2020, but the choice is there to hold off until 2021 for the teams that need it.

los-angeles-guerrillas-cdl
Twitter: LAGuerrillas
The final LAN event of the 2020 season took place in Los Angeles on March 7.

There’s no currently no ETA on when live events will return.

Options to establish bubbles akin to the NBA have been in discussion for the 2021 CDL season, and the OWL Finals are indeed taking place in a safe South Korean hub, though the return of crowds could still be a ways off.

Business

Rainbow Six champs DarkZero deny conflict of interest with Raven investment

Published: 26/Oct/2020 18:18

by Adam Fitch

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DarkZero Esports respond to conflict of interest concerns after Dexerto found documents revealing they’ve invested in merchandise company Raven.

Despite declaring themselves as partners in the public domain, it has not been announced publicly that DarkZero had acquired an ownership stake in the merchandise company until now.

DarkZero compete in Rainbow Six Siege, recently placing first in the North American Six August Major and Season 1, Stage 2 of the North American League — results that arguably position the team as the best in their region.

Raven produces and sells merchandise for partner teams Excel Esports, Rogue, Spacestation Gaming, and Tribe Gaming. DarkZero are also listed as a partner on their website.

DarkZero Esports Raven Sleeve
DarkZero
DarkZero Esports has a merch line available for purchase with Raven.

On April 27, Raven published on their site that they had raised $1.4m in a seed funding round with a “US-based private equity fund.” The fund’s identity was not revealed in the blog post, nor had there been any public declaration of ownership beyond company records on Companies House — the United Kingdom’s official registrar.

You had to have purposefully gone seeking these documents to find DarkZero’s involvement in Raven.

In a confirmation statement published to Companies House dated July 22, it’s revealed that DarkZero Esports LLC owns 6666 ordinary shares in the company. Raven’s managing director Samuel Wells owns 8500 ordinary shares, making the North American team the second-largest shareholder.

Other shareholders include Adam Cooper and Robert Loveday, Raven personnel who both hold 750 ordinary shares each. DarkZero’s CEO Zach Matula and director of operations Robert Stamey were both appointed as directors of Raven on April 24, according to documents.

Conflict of interest?

Dexerto contacted Wells to ask why DarkZero’s position in Raven had not been declared in the initial announcement, nor on social media or their website. He replied: “As long-term partners, DZ took a minority share in Raven to grow their ecosystem as an esports organisation which in turn allows Raven to grow and expand as an endemic esports apparel brand. All information is readily available in the company registrar.”

There is nothing inherently wrong with DarkZero not declaring their ownership interest in Raven, but it raises conflict of interest concerns such as them gaining access to information about Raven’s partner orgs that they otherwise wouldn’t be privy to. DarkZero and Raven partner Spacestation Gaming both compete in North American Rainbow Six Siege, for example.

DarkZero’s Matula responded to Dexerto’s request for comment on the investment, why it had not been announced to their fans, and conflict of interest concerns.

“DarkZero has a minority financial interest in Raven and this has never been something that we have attempted to conceal and is even a matter of public record,” he said. “If the investment is of interest to the public we would be thrilled to have Dexerto readers be aware that DarkZero is proud to have invested in the most innovative esports apparel brand in the world!”

People having ownership stakes in multiple companies is nothing new and there have been plenty of concerns voiced surrounding conflicts of interest — even in esports.

Examples include OpTic Gaming founder Hector Rodriguez used to be a shareholder in Dexerto and was declared as such in relevant articles, ESPN covers esports and their owners, Disney, are also investors in Team Liquid’s parent company aXiomatic, and Valve has had to issue multiple orders to resolve such conflicts in Counter-Strike. Earlier this October, it was unearthed that the CEO of Better Collective, the parent company of CS:GO news site HLTV, is also a co-owner of Astralis.