Riot Games wants a court to end its League of Legends sponsorship deal with FTX. We explain their reasons!
Riot Games, a video game developer and publisher, has filed a lawsuit in the District of Delaware Bankruptcy Court in the United States, seeking to terminate its sponsorship deal with FTX. Anyway, the contract with the League of Legends Championship Series was extended until 2028 and was worth $96 million if fully fulfilled.
Essentially, according to the document, FTX still owes $6.25 million through 2022 and will owe $12.875 million through 2023, with payments increasing through 2028.
As a reminder, former FTX CEO Sam Bankman-Fried was recently arrested in the Bahamas and will soon face charges. All of that considered, FTX has signed numerous deals with sports teams and big corporations, especially with Riot Games.
As such, the two companies had entered into an agreement that FTX would be the exclusive sponsor of League of Legends for the League of Legends Championship, for the 2022-2028 seasons.
“There is simply no way for FTX to undo the reputational damage already done to Riot. Due to the very public shame caused by the debacle that preceded FTX’s bankruptcy filing.”
Riot Games to end sponsorship of FTX due to reputational damage
According to Riot, the agreement, which was signed on August 21, 2021, is non-transferable. And so FTX cannot pass it under the Bankruptcy Act.
Specifically, Riot Games is seeking to end sponsorship with FTX due to reputational damage. Citing a violation of the morality clause.
Riot Games just filed a motion in the FTX bankruptcy case to end their deal, pertaining to the League of Legends Championship series.— Molly White (@molly0xFFF) December 17, 2022
FTX still owes $6.25M (about half the payment) for 2022, and will owe $12.875M for 2023. Per the agreement, the payments escalate through 2028.
Additionally, Riot announced its independent right to terminate the agreement due to breach of the morality clause, which states:
“The parties have agreed to a mutual moral clause which gives both parties the right to terminate.”
Basically, this clause gives each party the right to terminate the agreement if the other party “commits an act or becomes involved in a situation or event” that brings “substantial public discredit to the party’s products and services concerned” in ways that cannot be mitigated.
In conclusion, Riot Games wants to get out of its deal with FTX. But he also indicated that he would like another cryptocurrency-focused backer to take his place.
I’m going with this quote from :
“True greatness is in making everyone feel good.”Charles Dickens