Why Former LA Laker Rick Fox is Betting Big on Esports

Why Former LA Laker Rick Fox is Betting Big on Esports

Fox is taking his talents from the basketball court to the Rift and building an esports empire John Lamparski, Yuya Shino / Getty

As audiences reject traditional sports, Fox is taking his talents to the Rift, building an esports empire with his organization Echo Fox

As audiences reject traditional sports, Fox is taking his talents to the Rift, building an esports empire with his organization Echo Fox

Rick Fox's six-foot-seven frame sprawls across a couch in the North Hollywood offices of Echo Fox, his professional esports franchise. He is the very picture of LA cool, dressed – white athletic leggings, a Canada Goose jacket, knit cap pulled over his head – as if caught halfway between the gym and an audition (the retired Los Angeles Laker also boasts a long string of TV and film acting credits including Sharknado 3, One Tree Hill and HBO's Oz). He is casually recounting a now-familiar story: how bonding with his son over World of Warcraft and League of Legends encouraged him to plunge headfirst into the exploding universe of professional gaming.

It’s a story that connects two different worlds. As a traditional "stick and ball" star athlete, Fox embodies a career path familiar to mainstream America. Four years of elite college ball under coach Dean Smith at North Carolina, three NBA championships as a Laker playing alongside Kobe Bryant and Shaquille O’Neal, career earnings in the range of $30-35 million. But he’s also a serious gamer, dating as far back as the debut of Mattel's Intellivision in 1979. And he makes no distinction between the fierce battles that take place on the computer screen and those on the basketball court. First person shooter, slam dunk, dungeon crawl – it’s all competitive grist for him.

This point is never more clear than when I make the mistake of asking Fox about the stereotype that holds professional gamers as less worthy of respect than "real" pro athletes. For the previous half-hour he has been effortlessly languid and unruffled. But now he uncoils from the couch. His eyes flash. The fire that took him from his childhood in the Bahamas to the pinnacle of the NBA sparks.

Success as an athlete, he says, "has never been only about how high you jump or how fast you run." What separates Kobe from the rest, says Fox, bringing his hands up to his neck, palms parallel to the floor, is "from the shoulders up."

"Mastery," says Fox, "is established through repetition, focus, and concentration." In other words, it's all in the mind. And that goes for any sport – whether you are putting a ball through a hoop, hitting a home run across the fence, or getting a solo kill in League of Legends.

But what he really wants to stress is even more fundamental: what could possibly be wrong about building a career – any kind of career – while pursuing your passion?

Fox slaps the coffee table in front of him. "Isn't that what you are supposed to be doing in life?" he asks, his voice rising. "Doing what you love?"

The Esports Gold Rush

Rick Fox says he has been playing video games since he was 10 years old. You could argue that puts him right at the leading edge of the original video game generation. But it's his son's generation that has pushed gaming culture to a point few people could have predicted. The emergence, over the last decade, of a global scene in which millions of people spend their disposable hours on Twitch or YouTube watching live streams of their favorite gamers, is a grassroots phenomenon that just kind of happened on its own. Fans figured out what they most loved to do in the world, and now the rest of the world is catching up.

Game publishers, says Pieter van den Heuvel, an analyst who covers esports for the market research firm Newzoo, originally saw "esports as a marketing tool to drive player engagement." No single publisher did this better than Riot with League of Legends. It's only been in the last few years, says Heuvel, that publishers and advertisers and media companies started to realize that game "viewers could be monetized," along with the players.

The coming out party, at least as far as the US was concerned, arrived in August 2015, when New York's Madison Square Garden – the home of the New York Knicks and Rangers – sold out for two days straight while hosting the League of Legends North American Championship. The sight of 11,000 young males – a demographic that avoids paywalls like the plague and is unlikely to ever buy a cable TV subscription – paying real money for tickets to watch people play games could hardly be ignored.

Fox managed to legitimize esports both for its existing fans: look, the mainstream world is paying attention; and for his peers, hey, if Rick Fox is buying a team maybe we should too.

Rick Fox was in attendance, soaking up an adrenalized atmosphere that fed what he calls his "professional athlete animal" and seduced him with memories of the dozens of times he had competed on the floor of MSG as a Laker and Celtic. At Riot's invitation, he hung out backstage with the upset winner of the tournament, CLG, and after their triumph, took the team out to dinner at the upscale pan-Asian eatery Tao.

Fox had originally connected with Riot while inquiring about an internship for his son. But after Madison Square Garden, he was hooked. In December, he and some co-investors spent a rumored $1 million to buy the League of Legends team Gravity (later rebranded as Echo Fox).

And suddenly, he said, it's as if he'd personally built "the Golden Gate Bridge between esports and traditional sports." It was a neat trick: Fox managed to legitimize esports both for its existing fans: look, the mainstream world is paying attention; and for his peers, hey, if Rick Fox is buying a team maybe we should too.

The gold rush was on. In March, a consortium fronted by Sacramento Kings owner Andy Miller, Shaquille O'Neal, and Alex Rodriguez bought the League of Legends team NRG. In April, TBS launched ELeague, a series broadcasting live Counter-Strike: Global Offensive action. In September, an investment group that included Golden State Warriors owner Peter Guber, Washington Wizards owner Ted Leonsis, and Magic Johnson, purchased Team Liquid, one of the bigger brand names in the esports world. A few days later, the Philadelphia 76ers purchased two separate esports teams and merged them one entity, Team Dignitas.

During the first half of 2016, says analyst Manny Anekal, a longtime veteran of the gaming business, things were moving "quickly." But by the second half, "it was absolutely crazy." The influx of new money goosed player salaries and team valuations. National brands started exploring sponsorships. Press attention ratcheted up. Newzoo's Pieter van den Heuvel pegged total global esports revenue as likely to hit $493 million in 2016, while predicting that the billion dollar barrier would be broken by 2019.

Of course, taken in context, such numbers hardly compare to revenue figures in the traditional sports world. The most recent NBA media rights deal, signed between the NBA, ESPN and Turner Sports in 2014, added up to $24 billion over 9 years. In November, the English Premier League sold a media rights deal covering mainland China to a Chinese conglomerate for $650 million. The NFL, alone, raked in $12 billion in 2015. The so-called "smart money" is flocking to esports because they want to get in while prices for teams are still cheap, but industry observers say it will be decades, if ever, before an esports franchise is sold for anything close to the $2 billion dollar price tag the Los Angeles Clippers commanded in 2014.

Complicating matters further is the problem that, aside from the game publishers, no one is really clear on exactly how to generate significant revenue from esports. Esports teams, no matter how successful in winning competitions, do not command the same power that a New York Yankees or Dallas Cowboys does.

I ask Fox if the hubbub over esports and the decline in NFL ratings are connected. Are we living through a paradigm shift? 'Yes,' he answers

No one "owns" basketball or football. But Blizzard owns Overwatch and Hearthstone. Valve owns Counter-Strike. Riot owns League of Legends. The game publishers make all the rules and hold most of the cards. They can force owners to sell their teams if they sniff something unsavory – such as ownership by a porn website, as was the case with Team YP, which was owned by YouPorn. They can charge hefty franchise fees, as Blizzard plans to do with its nascent Overwatch League. It's in their interest to keep ticket prices low and avoid media distribution platforms with subscription fees, because their primary goal is to maximize exposure for publicity purposes.

Outside of the publishers, everything else is a confusing, kaleidoscopically shifting mess. At a "Future of Esports" conference held at the Los Angeles Film School on November 10, panelist after panelist delivered the same message: the esports world is fundamentally "fractured." There are a bewildering number of games and distribution platforms and leagues. The very idea of a regular "season" is suspect – there's always another esports competition on a weekend near you. And not only are player careers typically short (though they may be lengthening as the flow of dollars into esports makes long careers more viable) but the games themselves have lifetimes that are usually measured in years, rather than decades.

And then there the viewers themselves, a generation accustomed to getting whatever they want, whenever they want, basically for free. Is this generation ready to sit still for 30 second ads on a traditional TV network? It seems unlikely. The brands that control big advertising budgets, understandably, are having a hard time knowing exactly where to buy in.

But everywhere, there's a sneaking suspicion that they better figure it out fast, or the future will leave them behind.

Meanwhile, the NFL is losing audience

In late September, just around the time that NBA franchises and retired NBA stars were falling over themselves in their rush to get a piece of the esports action, a premonitory shudder swept through NFL universe. For the first time in recent memory, NFL television ratings were down, sharply, as compared to the previous year. There was an immediate scramble for explanations: Too many bad games. Overexposure. The election. Anthem protests. The NFL's concussion debacle. But the bottom-line problem is an inescapable issue that has been building for years. Young men are abandoning televised sports. In just the last year alone, the number of men aged 18-34 who watch NFL games fell by 15 percent.

That fact comes as no surprise to anyone who has even a passing acquaintance with the average teenage American male in 2016. What Rick Fox knows, and what gamers know, and what corporate America is fast realizing, is that the first generation to be raised in an era where wi-fi and smartphones are ubiquitous is no longer wedded to the entertainment options of the past. As Dallas Mavericks owner Mark Cuban told the Dan Patrick radio show in September, "getting my seven year-old to watch NFL games is like pulling teeth." Because all he wants to do when he gets home from school is watch Minecraft videos. And in a couple more years, most likely, watch a League of Legends final.

I ask Fox if the hubbub over esports and the decline in NFL ratings are connected. Are we living through a paradigm shift? "Yes," he answers, and then tells a story about going to see a League of Legends tournament with one of his players. "We had front row seats," he says. "So it's all right there, in front of us. But you know where he watches it? On his phone! He was watching it on the phone. Why? Because he wants to talk to his friends, he wants to comment on it, he wants to see the chat."

The rise of esports, says Jace Hall, a longtime veteran of the gaming industry and the CEO of Echo Fox, is a natural consequence of technological change. But Hall, whose own gaming prowess is the stuff of legend within the halls of Echo Fox, says none of this should be a surprise to anyone. He remembers people crowding together in old-school arcades to watch the best player tests his or her reflexes on Pac-Man and Missile Command.

"So now technology comes in and makes live streaming available to everyone," said Hall. "And lo and behold, what happens is that everybody starts watching again – which they've always wanted to do – but now on top of that we have way more games and different tastes and different things available for people to watch, so it's just exponentially more interesting to a wider group of of people."

So when an NBA team like the 76ers buys an esports team, it is in effect buying a pipeline connecting it to an audience that is flowing towards a new frontier. The 76ers are following the passion. If they, or Rick Fox, or Peter Guber, figures out how to translate the passion into a steady business, they will vastly improve their chances of flourishing in a future which, if the last five years are any indication, will look nothing like the past. It's a risk, but, as Fox notes, there simply isn't any substitute for jumping in.

"Everyone is trying to figure it out," says Fox, "But the best way to do that is be on the ground, and in the fire."

"You can stand across the street and and say 'I wonder how hot that fire is in that house over there?" says Fox, grinning. "Or you can be in there, burning."