Team Liquid co-owners and co-CEO's Victor "Nazgul" Goosen and Steve "LiQuiD112" Arhancet sold the controlling interest of their organization to aXiomatic eSports on Tuesday. A new player on the scene, aXiomatic eSports is an ownership group whose investors include Magic Johnson, Peter Gruber, who is co-owner of Golden State Warriors, Los Angeles Dodgers and Los Angeles Football Club, and Ted Leonsis, who is the majority owner of Monumental Sports & Entertainment which owns the Washington Wizards and Washington Capitals.
In what would be a very busy day for Liquid, Arhancet took the time to talk to theScore esports about what the acquisition means for the team, the growth of Liquid and the challenges facing the organization over the next year.
Editor's Note - This interview was conducted on Tuesday, Sept. 27.
So, how are you feeling right now?
I'm feeling excited, a little proud and anxious to get started and build the next chapter for Team Liquid with the kind of incredible network of relationship capital and financial resources that we'll have at our disposal.
Did you ever think that you'd sell your controlling shares to an investment group that consists of NBA owners and one of the most famous basketball stars in history?
I started off in esports in a pretty humbling way. I've been a gamer all my life and, like many people, fell in love with League of Legends. I've always kind of been in awe of the accomplishments that we've been able to make, previously at Team Curse and now at TL, so I think, no is the answer to that.
I didn't start into this thinking that it would happen that way but as I was able to help navigate and professionalize esports and saw some of the similarities, both from a revenue and opportunity standpoint, I think it became more and more clear that folks like those, that we partnered with, became a reality.
In your opinion, how has the esports scene grown in the past five years?
The esports scene has grown in terms of viewership. I think the number of people that are watching other people play video games has increased steadily year after year. I think the professionalism and management from team owners, especially in North America and Europe, has become much more professional and organized. There are more organizations taking better care of their players and I think salaries have rose significantly since five years ago. You're seeing sizable contracts being negotiated in the offseason, and I'm sure you've heard many of the stories of player salaries in China and Korea. And I think you're seeing a catch up to those numbers in North America and Europe.
The last thing that's really changed is an awareness from advertisers and marketers who want to be involved in marketing their products and services to the esports demographic which is mainly male, millennial audience. They're finding it as a really captive way to get their message across and also be really creative, using forms like Twitch and YouTube and more influence media type of marketing strategies.
How did the process start for this acquisition by aXiomatic?
During the League of Legends offseason last year, we saw a huge influx of additional investment into the space. Andy Miller with Sacramento Kings, Rick Fox, etc.. So we saw a ton of new investment. And in that offseason, it was the first time where the salary levels were beyond the purchasing power for Team Liquid and I needed to make a decision in conjunction with Victor to go out into the marketplace and find out if there's a partner out there that can provide strategic value, and access to partners and practices that could elevate Team Liquid in capital. So that's when we started the process and there was an immense amount of interest. We fielded a number of meetings and phone calls, and through that process it became evident that Peter and Ted and a number of other folks that have been listed in the press release were the right group to get partnered up with.
So there were multiple groups that you were in talks with for capital?
We were highly sought after, I guess. There were many parties that engaged with us.
What specifically about aXiomatic drew them towards you? What did you like about them when you started talks with them?
A big reason why that group was so attractive to Victor and I was credibility. How they conducted themselves in such an ethical and stand-up, professional way. We felt like it would make sense doing business with them. When Victor and I got partnered up together, one of the things that I was nervous about was the possibility of the relationship to not work out. It's like getting married in a lot of ways and you just need to be able to work with someone really well. You've just got to have a synergy to get things done, to think big together, to cry together, laugh together, it's just having a good relationship. And that's the first thing that drew us was the relationship.
Was it a difficult decision for you to sell your controlling shares in Team Liquid?
Absolutely. The decision to do a controlling interest into Team Liquid was a difficult one, and one that Victor and I thought a lot about. But over time, I became increasingly confident that the history of accolades that Peter, Ted, Steve Case, Magic Johnson, have demonstrated would result in the highest degree of success for Team Liquid as a brand. And for our players to have the very best and for us to achieve the goals that we had set out that is becoming the largest esports brand in the world.
And do you think with aXiomatic at your back, you can become the largest esports brand in the world?
Without a doubt.
What changes in Liquid's day-to-day operations now?
It's the same, but better. The day-to-day is, if today is any kind of indication now that things have went public, is a lot busier. It's still a lot of meetings, a lot of gaming events. Things will be the same from a public point-of-view, in the name of the brand and our websites. But it will be a lot better for players and salaries, in environment and coaching structure and staff, and all of the resources that we'll be able to put in will be amplified. The type of partnerships that we'll be able to put in place will be that much more significant. I think what we'll be able to achieve will be even great. Still a lot of esports. Still be living and working here in the gaming complex in Santa Monica.
Does anything change in your job?
No. Co-CEO for Team Liquid will be fully aligned to help grow aXiomatic and the other initiatives that we have outside of just the esports team that I am very excited about. I'll continue working out of LA at the gaming complex, so none of those things changed as far as logistics and location.
Has the complex expanded? Last I saw, from an interview with Business Insider last year, it was a three room office. Has it grown since then?
Yeah, we have five units in an apartment complex. And each of those units is anywhere between one and four bedrooms. I think in total we have probably close to 10,000 square feet. We're a decent size. We've grown considerably since last year. We added a number of new units, we have part of our Counter-Strike team living here in LA, we're fielding a number of League of Legends players. And we've added a number of staff for 1UP Studios, which is the production company that does a lot of features and commercials. We film, edit and produce commercials you see when you're watching Twitch, a lot of the pre-roll ads. A lot of the features in tournaments, we did the features at CS:GO Columbus. So a lot of video equipment and production.
You've already said that Liquid's long-term goal is to be the biggest esports organization in the world. What are some of Liquid's immediate goals?
Goal number one is to win across the board and in order to win we have to have great talent. So that's goal number one: sign great talent. Goal number two is to provide the very best in terms of structure and training, and just cultivation in player performance. That's in a number of areas: it's in the psychological side, it's in the physiological side, it's on the analytics side. And so increasing staff, making further investments into some of the proprietary technology that we used for measuring in game statistics and analysis. And having the right environment for players to train, everything down to having an amazing team chef
Why do you think that the NBA has been getting into esports so quickly as opposed to other professional sports leagues?
I'm not sure I know the answer. I mean, I think there has been a ton of growth in esports. I think that that is clearly stated in the viewership and engagement numbers for the sport. I think that there's a number of team owners and operators that see that and want to get involved and start figuring it out. And so, word gets out and folks get involved. I'm not sure why NFL teams or some other sports haven't gotten involved. As you know, Ted has the Washington Capitals, we've heard of some interest in the NFL, but nothing's been announced.
So what are some things that these more experienced owners can bring to esports that will help it grow?
I think these other owners have a lot of experience in unlocking additional revenue streams for the team and player model. Looking at media rights, sponsorships, optimizing merchandise sales, ticket sales, gate revenue, that has yet to be fully defined in esports. There's a complex set of revenue streams based on game and developer or third party tournament organizer. It's also missed player and team opinions and collaboration to grow those revenue streams, so I think they bring a lot of expertise with that. I think a lot of these partners have established great relationships with non-endemic sponsors who they've been able to package and partner with big brands and deliver things that are in their particular inventory. And I think that those sales relationships and relationship capital brings a lot to esports because one of the areas that esports still needs to grow is unlocking additional revenue in order for the ecosystem to be sustainable and healthy.
What do you think will be the biggest challenge for Liquid over the next year?
I think one of the biggest challenges that we'll have is managing our growth. If you just take a look at what Victor and I have been able to accomplish since Victor and I merged entities in January of last year, it's been extraordinary. In terms of our Twitch viewership, the number of players we have active on our roster, the number of games we now represent, the traffic across all of our website properties. This is now going to be infused with a number of plans we have for the next year, and we need to figure out how to handle that growth. It's going to come in the form of new hires, new office space, new environment for players to be housed and trained, new sponsorships to be signed. It's going to be a lot at once that we need to manage.
Are you looking forward to the challenge of it?
Always have been. I'm one of the hardest working people I know, so I am absolutely looking forward to the challenge.
This interview has been edited for clarity.
Preston Dozsa is a news editor for theScore esports. You can follow him on Twitter.