Riot Games is trying to exclude itself from its $96 Million sponsorship deal with FTX, as the former Chief Executive Officer Sam Bankman-Fried is hurting the company. The company then asks the court to terminate its contract due to "reputational harm."
DUBLIN, IRELAND - JULY 20: The crowd during the opening of Riot Games, Project STRYKER remote broadcast centre on July 20, 2022 in Dublin, Ireland. (Photo by Tristan Fewings/Getty Images for Riot Games)
Tristan Fewings/Getty Images for Riot Games
(Photo : Tristan Fewings/Getty Images for Riot Games) DUBLIN, IRELAND - JULY 20: The crowd during the opening of Riot Games, Project STRYKER remote broadcast centre on July 20, 2022 in Dublin, Ireland.
Ending the $96 Million Sponsorship Deal
League of Legends Developer Riot Games filed a motion to terminate the League of Legends Championship Series (LCS) Sponsorship agreement with FTX, as it hurts the company's reputation. The contract cost $96 million and was supposed to last for seven years.
As reported by Engadget, FTX still owes the company half of the $12.15 million deal that was agreed to pay in 2022 for FTX branding at LCS events.
Aside from this, another $13 million will be owed by the company to Riot in 2023, as the first quarterly payment of the year will be due on January 2nd. These payments will increase each year through 2028.
LCS is considered one of the top-level esports leagues of professionals for League of Legends in the United States and Canada.
Company's Reputation with FTX
Riot states, "Images of Mr. Bankman-Fried playing League of Legends were displayed alongside text describing his cavalier attitude towards investor meetings and irresponsibility with corporate funds. These images created a public narrative that Mr. Bankman Fried's interest in League of Legends, once relatable and human, was now reckless and juvenile."
During those times, Bankman-Fried has been tweeting his interest in League of Legends. This was good publicity for Riot as it was followed by the seven-year sponsorship deal.
Now that the FTX announced its bankruptcy and the former CEO has been charged with fraud and money laundering, Riot is cutting its ties with the exchange and said "image and reputation to its customer base are inextricably linked to."
The filings cited that putting corporate controls for the safekeeping of customer funds is already too late, as the reputational harm cannot be undone.
Dexerto reported that if FTX rejected the deal, Riot will request the court to grant them relief from the automatic stay to permit Riot to terminate the agreement. Through the "automatic stay," the creditor cannot take action against the debtor even if they cannot pay what has been owed.
The Verge reported that several organizations aside from Riot Games also dropped FTX's branding after the company's collapse.
These include professional esports group Team SoloMid which scrapped its former name, TSM FTX, for a sponsorship deal, Miami Heat that already started to search for a new sponsor for its arena (FTX Arena), and Mercedes Benz's Formula 1 team already took off the logo of FTX to its vehicles.
