dis/cover

Contract Coagulation: NEOM Partnership Failure Highlights LEC and BLAST Risk Deficiencies

On July 29th, 2020, the League of Legends European Championship (LEC) announced a partnership with Saudi Arabia Future City NEOM, making NEOM the main partner for the LEC summer split. Similarly in the CounterStrike world, esports tournament organiser BLAST announced a partnership with NEOM to develop NEOM as the regional esports hub on July 28th. Both announcements were met with community outrage from LEC staff, BLAST staff and fans alike. The immediate backlash from the esports community resulted in some of the shortest-lived partnerships to date, with Alberto Guerrero, Director of Esports, EMEA announcing the cancellation of the sponsorship between LEC and NEOM less than 24 hours after the original announcement. BLAST followed suit, and the deal with NEOM was also terminated on August 13th, lasting less than three weeks.

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BLAST – One of the world’s largest esports tournament organisers. Image courtesy of Sporting News.

 

False Promises? – What is NEOM

The official NEOM website, presents the project as the “First Cognitive Cities Built on 5G Technology”. While this is an alluring line, throwing in flavour-of-the-month words like “cognitive” and “5G”, it ultimately tells us nothing. (At this stage, we are surprised that there was no mention of “Cloud” or “Digital Technology”). Visiting the “About” section displays another slogan which occupies the majority of screen real-estate. This time it reads “An accelerator of human progress – A bold vision. A living laboratory and hub for innovation. A sustainable ecosystem for living and working. A model for the New Future”. An ambitious project, NEOM’s vision for 2030 states the following:

NEOM is the vision of His Royal Highness Crown Prince Mohammed Bin Salman and is a centrepiece of Saudi Arabia’s 2030 Vision plan to grow and diversify the Saudi economy and position the country to play a leading role in global development. While NEOM is being driven and initially funded by Saudi Arabia, it is an international project that will be led, populated and funded by people from all over the world

NEOM presents information on several sectors, one of which is titled “Entertainment, Culture and Fashion”. the ambition is to allow people to immerse themselves in a high-tech experience, including “being IN movies and games”. Furthermore, the Sports sector pitches NEOM as a future global hub. The development of LEC and BLAST is aligned with NEOM’s vision for both entertainment and Sport, at least according to the original announcements. However, the main unspoken attractor for both was likely the reported $500 Billion upon which the NEOM project is funded. Even a small fraction of this gargantuan budget would provide BLAST (who’s latest deal was valued at $13.6 Million) and the LEC (value unknown) with enough funding to achieve their aspirations. While the lucrative partnership with NEOM was overvalued, it appears that the LEC and BLAST undervalued the community backlash that would result.

What NEOM don’t publicly boast is the mistreatment and eviction of the Huwaitat tribe from the land upon which NEOM is planned to be built. The Guardian shares the story of Abdul Rahim al-Huwaiti, a face of the tribes’ criticism of their forced eviction who voiced complaints in videos posted to social media. Abdul Rahim al-Huwaiti was later found dead. Saudi authorities claimed he’d been killed in a shootout with regional security forces. The Guardian indirectly argues that this was to silence al-Huwaiti and preserve the NEOM land acquisition. Furthermore, journalist Jamal Khashoggi, who was critical of the Saudi-government and NEOM project, was additionally found dead in 2018. The Saudi government released a statement saying Khashoggi was involved in a “physical confrontation, which resulted in his death.”

 

Immediate Regret – Negative Public Reaction

Ironically, at the time the partnership between the LEC and NEOM was announced, the LEC twitter account’s profile image was the LEC logo stylised with the Pride flag, demonstrating their commitment to LGBTQI+ equality. Under Sharia Law, which is heavily influenced by conservative-Islam, Saudi Arabia does not recognise LGBTQI+ rights, and same-sex sexual activity is illegal. According to multiple sources, homosexuality and being transgender are widely seen as immoral and indecent activities, and the law punishes acts of homosexuality or cross-dressing with punishments of fines, public whipping, beatings, vigilante attacks, chemical castrations, prison time up to life, capital punishment and other forms of torture.

LEC Pride
The LEC Pride Logo. Image courtesy of DariusExMachina on Twitter

The disregard of morally and ethically correct decision making affronted the LEC casters, including Indiana “Froskurinn” Black who is quoted as stating that “This is disappointing because this is the LEC. It’s my team, my product, my managers, my office. My family. My home. This isn’t someone far away in HQ that I don’t know. This is devastating because I know who made these choices and I feel silenced.” Reddit user “Lulullaby_” compiled a list of reaction from League of Legends casters, professionals and players speaking out against the NEOM deal. This was mirrored by CounterStrike talent, who announced they would refuse to work with BLAST if the NEOM deal was upheld. Casters Hugo “Hugo” Byron and Harry “JustHarry” Russell both released statements on twitter in support of their LGBTQI+ colleagues and anyone harmed by “archaic governments”.

 

LEC and BLAST’s Critical Risk Failure

 While it would be easy to dismiss this as a case of “money talks” and that the lucrative deals with NEOM were the sole reason for partnership, the fact that both BLAST and the LEC signed and publicly announced the deals indicates a failure of their internal risk assessment processes.

Under a generic risk taxonomy, organisational risk can be thought about as four (4) key risk groups: Strategic, Operations, Financial and Compliance. In order to address each key risk group, a set of internal controls must be developed to offset each risk. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) risk management framework is widely regarded as the standard upon which international organisations should measure their internal controls against. The framework argues that to have an effective internal control system, four (4) components needs to support the organisation’s objectives:

  • Strategic- These objectives are high level and are aligned with an origination’s mission.
  • Operations- These objectives refer to the effective and efficient use of resources.
  • Reporting- These objectives surround an entity’s need for reliable reporting.
  • Compliance- These objectives refer with an entity’s need to comply with applicable laws and regulations.

An esports tournament organisers risk model might look like this:

Risk TO.png
The four (4) risk categories of a typical esports organisation (Re:Cover esports)

In order for an organisation to successfully achieve its mission, there needs to be alignment between all four risk groups. For example, in the strategic risk pillar, partnerships are located under “Planning and Resource Allocation”. The LEC satisfied this component through their partnership with NEOM. However, while an aspect of the Strategic risk column was satisfied, there was limited consideration for the “Code of Conduct” risk group under the Compliance risks, specifically the ethics component. Furthermore, with the dissatisfaction and risk of strike from their staff, the LEC had also failed to properly consider the “People/Human Resources” component of the Operational risk group. While this may at first appear as a simple oversight from the LEC while completing the NEOM deal, Re:Cover understand that Riot Games (the parent company of the LEC) did not have a global ethics committee established at the time the deal was made. This is worrisome as a lack of such a critical component of a healthy risk environment from one of the largest esports league organisers globally may indicate a lower risk maturity across the esports environment. This is not the first time Riot Games have been in hot water over risk failure, as they have previously been called out for gender discrimination and sexual harassment, which demonstrates a lack of People and Human Resources controls stemming from the top.

Re:Cover were unable to find any information on a BLAST ethics committee, or any changes being made by the Danish organisation resulting from the cancelled deal.

Esports tournament organisers need to improve their internal risk assessment processes. While Re:Cover are not in a position to inform Riot Games and BLAST about which partnerships will offer the biggest return on investment, we cannot stress enough how important it is that these organisations take risk seriously prior to making partnering decisions. This includes reputational risk and the impact each deal will have on your owns staff and fans. To this end, esports organisations need to establish proper gateways and risk assessment steps in the partnership process. We are glad to see Riot Games establish their global ethics committee in response to the NEOM mishap, but this alone will not correct the issue. The ethics committee needs to directly feed into the risk and decision-making process, and a representative from the committee must be consulted for approval for all future partnerships. Ultimately the tone will be set from the top, and we hope to see a clearer mission statement to align organisational practices with from both Riot Games and BLAST.

Have a topic in mind you would like us to write about? Want to learn more about cyber security and how you can increase good cyber practices at your esports organisation? Feel free to contact the Re:Cover team at recoveresports@gmail.com, we are always happy to answer any questions you might have

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