Rick Fox Shares New Details Regarding Controversy, Sale of Echo Fox LCS Franchise Slot
Over the past several months, esports organization Echo Fox as been the subject of controversy involving racism and financial trouble. Co-founder Rick Fox went on The Richard Lewis Show this week and finally opened up about the ordeal that ended with Echo Fox deciding to sell its slot in the League of Legends?Championship Series (LCS). Fox did not indicate whether their sales proposal had been approved or denied by Riot Games yet.
According to Fox, about eight months ago, he purchased a controlling interest in Echo Fox from shareholder Amit Raizada. During that process, he discovered that the company was in a very “distressed” financial situation. Raizada agreed to purchase the debt, release Echo Fox from its lease and extend the debt out beyond 2019 to allow the company to recover.
Instead, Fox alleges, Raizada secretly acquired the debt, changed the company’s operating agreement, and immediately “put a gun to the company’s head” to pay it back immediately.
In an interview with The Upcomer, Raizada claims that Fox only wanted to buy into the company so he could be the “center of attention.” Fox paid half the agreed buyout of $10M USD but rather than pay the second half, he threatened to leak the email in which Raizada called Echo Fox co-founder Jace Hall the n-word, Raizada claims. When Raizada refused to the alleged extortion, Fox supposedly leaked the email to Dexerto.
In a June interview with The Esports Observer, Echo Fox co-founder Khalid Jones claimed that the company was already taking steps to remove Raizada before the complaints were made public.
Raizada now openly admits to the racist remarks, blaming “anger management issues” that erupted when Hall lost $13M and wouldn’t take responsibility.
While Fox ultimately decided to stay with the company, Riot Games issued an ultimatum that required Echo Fox to remove Raizada within 60 days (June 15). As the deadline loomed, however, Fox explained that ousting the shareholder and former friend was easier said than done.
“..it always came back to the situation that [Raizada] had put himself in at the top of the stack.”
“At every turn, when people did their diligence…it always came back to the situation that [Raizada] had put himself in at the top of the stack,” Fox told Richard Lewis.“Any money that flowed through the company, he would get the lion’s share.”
Investors did not want to give money to an “anti-semitic racist, self-dealing, fraudulent individual,” Fox explained, citing a slew of lawsuits and legal trouble in the shareholder’s past.
Raizada claims that he and Fox drew up the operating agreement together, and provided a copy of alleged email proof to The Upcomer’s Kevin Hitt. The Esports Observer confirmed with Hitt that he has seen the original working agreement, as well as what it was changed to, which was agreed to by Jones, Raizada, and “signed by everyone else.”
“[Fox] says I placed myself on top of the stack,” Raizada told The Upcomer. “That’s not what happened. What happened was Echo Fox had $6M in loans and they couldn’t afford to pay those loans back. And we were in material breach according to Riot’s licensing agreement.”
Raizada explained that owners of an LCS franchise slot cannot give away more than 10% of the company without prior approval from Riot Games.
“It was my duty to give them what they wanted. ”
Regardless of the true reason, July 15 arrived and Raizada was still attached to Echo Fox. Riot extended the deadline by a week (seven days) and offered to assist in the auction of the team’s LCS slot. Investors were nervous, Fox said, because Riot would have the final say. He, meanwhile, felt that an auction would bring the value of their team’s LCS slot up, which would benefit all teams in the long run.
Three purchase offers were posed to Echo Fox during this time, according to Fox, including one from Los Angeles Gladiators owner Kroenke Sports & Entertainment, for a reported $30.25M. In the end, investors pressured Fox to submit the Kroenke sales proposal to Riot, which they did on July 23.
“To me, that’s fine,” Fox said, adding that he got a “flood” of emails from lawyers pushing the deal. “It was my duty to give them what they wanted. It’s at the expense of some people including myself, but when you have a clear communication like that and you want to do what your investors want you to do, you do it.”
Fox blames himself for taking Raizada’s help at friends’ recommendations and not doing his own research. In addition to multiple lawsuits and an assault charge, he has since learned that Raizada was charged for unlawful sexual misconduct with a minor in 1997, to which Raizada claims was a case of “mistaken identity.”
During his interview with The Richard Lewis Show, Fox said he will pursue legal recourse against Raizada both professionally and personally. In the meantime, he said the future of Echo Fox is uncertain and may include rebranding once the sale is complete. Regardless, Fox is determined to remain in the esports industry.
“I started this because I love [my son] and I love video games so I’m not stopping that. I’m not going anywhere,” he said.
The Echo Fox sale to Kroenke Sports & Entertainment is still subject to approval by LCS. Should the proposal be rejected, Echo Fox has agreed that LCS will be taking over the sale process for the slot, with the goal of having a seamless transition for the 2020 season.