Valve notifies seven teams to settle conflicts of interest before ESL One Rio

Photo credit: Helena Kristiansson / ESL

Seven Counter-Strike: Global Offensive organizations received a letter from game developer Valve notifying them that they needed to resolve conflicts of interest prior to the ESL One Rio major in November if their teams want to participate in that event, as first reported by HLTV and confirmed by ESPN.

The Seattle-based games company sent the letter to MIBR and their parent Immortals Gaming Club, Yeah Gaming, FaZe Clan, Evil Geniuses, Dignitas, Ninjas in Pyjamas and ENCE following each team's participation in the Road to Rio event in May and completion of a conflict of interest form.

"At the beginning of the year, we entered into a services agreement with Yeah and were subsequently made aware of certain MIBR members' ownership interests in that company," Immortals CEO Ari Segal said in a statement. "We disclosed the services agreement and encouraged Yeah to disclose its ownership conflicts to Valve. Following disclosure to Valve, both the services agreement and ownership issue were made public, and have been widely known in the CS community for several months. Now that Valve has informed us of its official stance, we will of course take the necessary measures to ensure compliance.

"We encourage our players to think of themselves not just as players, but as business people, too. They will have professional lives after their playing careers end and we try to be supportive of our players engaging in activities that will benefit them economically, professionally, or both, over the long term. Still, it goes without saying that all activity -- ours and theirs -- has to conform to and align with relevant rules and standards, and we will actively work with our players to get to the right place."

Players, coaches and management from MIBR, FaZe Clan and Evil Geniuses are at the center of the letter, as several of them have ownership stakes in Yeah Gaming. Among those are MIBR player Epitacio "TACO" de Melo and manager Ricardo "dead" Sinigaglia, FaZe Clan player Marcelo "coldzera" David and Evil Geniuses coach Wilton "zews" Prado. Previously all part of MIBR and other teams prior, those four banded together to found and fund Yeah to help give back to up-and-coming Brazilian Counter-Strike players.

"Wilton was clear about his work with Yeah when he joined Evil Geniuses and we supported his desire to keep building opportunities for Brazilians through Counter-Strike," Evil Geniuses chief gaming officer Phillip Aram told ESPN. "It's disappointing that Valve have deemed his and others' stakes in Yeah as a major conflict. Wilton and the others have reached out to Valve to discuss ways to mitigate that don't involve stripping the team of the community leaders who have given it life."

Other conflicts of interest identified in the letter included one between Immortals Gaming Club and ENCE, in which Immortals executive Tomi "Lurppis" Kovanen is also a co-founder and stakeholder in ENCE. Dignitas player Christopher "GeT_RiGhT" Alesund is also a minor shareholder in Ninjas in Pyjamas. FaZe Clan did not respond to requests for comment.

"Tomi helped a group of friends to cofound ENCE Esports as a project in 2016 and has been a minority shareholder since," ENCE CEO Mika Kuusisto told ESPN. "By the time Tomi joined Immortals in 2018, we did not even field a CS team. We have naturally disclosed his ownership to Valve and respect their request to resolve the potential conflict of interest. However, while ENCE is a bootstrapped and profitable business, we do not have investors and have never raised any capital, hence we have limited opportunities for financial arrangements with individual shareholders. Tomi in fact has no control whatsoever and has been a passive owner from early 2018. This is an unfortunate situation but I am confident that we can solve this with Valve before the next Majors."

"GeT_RiGhT informed Dignitas that he is a shareholder in Ninjas in Pyjamas and that since joining Dignitas, he has been actively working to transfer those shares," Dignitas vice president Heather Garozzo said. "Dignitas and GeT_RiGhT are confident this will be resolved before the next major."

"Since Christopher was transferred [to Dignitas] in December last year we have had an ongoing conversation about his ownership in Ninjas in Pyjamas and CoI it can have should we participate in the same tournaments," Ninjas in Pyjamas CEO Hicham Chahine told ESPN. "They have been planning a resolution for some time, which will be completed this summer. Even though the stake is non-controlling of a passive nature, it is important to the integrity we resolve this in due course."

The ESL One Rio Major was initially scheduled for May in Rio De Janeiro prior to the beginning of the coronavirus outbreak earlier this year. As events began to be canceled or postponed, citing concerns about the virus, Valve and ESL decided to move the event to November, in the slot originally occupied in the competitive calendar by the second Counter-Strike major of the year. Valve have combined the prize pool of the Rio Major with the money set aside for the second major, meaning the Rio event will feature a $2 million prize pool.

Given the large gap between the previous major, which occurred in Berlin in August, and the Rio Major in November, Valve began to award event licenses for special events that would award Regional Major Rankings points, which would serve as the qualifying system for the November event. MIBR, Evil Geniuses and Yeah Gaming competed in one of those events, the ESL One Road to Rio, in April and May.