In an exclusive interview with Richard Lewis, Rick Fox has revealed the series of events that led to Echo Fox being forced to sell its spot in the LCS after the company was unable to oust investor Amit Raizada.
As a deadline imposed by Riot elapsed for Echo Fox to oust Raizada, Kroenke Sports and Entertainment announced it was buying the team’s slot for approximately $30 million. In the interview with Lewis, Fox said that the Kroenkes’ goals for the slot didn’t include him and he may not be involved with League for the foreseeable future.
Issues at the company came to light only a few months ago after a blockbuster report from Lewis that claimed investor Amit Raizada had made racist comments in internal emails and had then threatened Rick Fox’s family. Following this, Fox announced plans to step away from the company but quickly reconsidered and stayed with the company in an attempt to oust Raizada.
But Echo Fox’s downward spiral really began eight months ago when Fox had attempted to buy controlling interest in the company from Raizada for an undisclosed sum. At the time, Echo Fox was struggling to stay afloat financially and had incurred an unstated amount of debt. Following the sale agreement, Fox indicated that 2019 was intended to be “a runway year where we could actually get the company back to a healthy place,” as well as pay down the debt balance.
Raizada, who controlled a portion of the debt in what Fox described as “self-dealing,” agreed to extend the maturity of the company’s debt by a year. That would give Echo Fox flexibility to raise additional capital this year to pay off their LCS slot fees, among other costs. But Fox alleges that Raizada instead went behind the company’s back and acquired Echo Fox debt owed to other parties. In Fox’s words, he then “put a gun to the company’s head and threatened to call the debt – hence, setting the company into a tailspin.”
The company was already dealing with financial troubles before this incident and was forced to sell LCS players because it couldn’t pay high enough salaries. It’s unclear which players these were, but Joshua “Dardoch” Hartnett and Heo “Huni” Seong-hoon both left during this period.
Raizada and Echo Fox entered into a complicated series of transactions to avoid forcing the company into insolvency. In the end, the debt Raizada controlled was converted into a senior preferred position inside the company, which receives the first cut of any cash distributions to company shareholders.
Not only that, Fox alleges that Raizada changed the company’s operating agreement to reduce proceeds available to other investors in what is known as the cash waterfall. Fox initially rejected Raizada’s proposal, but with the company in crisis, eventually acquiesced. As Fox told Lewis: “money is Raizada’s God, and he will do anything to get it.”
These events occurred prior to the alleged incidents of racism, in which Raizada used racist terms to describe Twin Galaxies’ Jace Hall as well as threaten Rick Fox’s family. Raizada initially denied these accusations, but the denials were subsequently recanted once proof of these threats were shown. Following this, Riot Games launched an inquiry into the situation and then gave Echo Fox 60 days to oust Raizada; otherwise, its slot would be sold.
Echo Fox submitted a proposal to transfer Raizada’s shares to his brother-in-law to Riot days before the deadline passed. But Riot wanted Raizada and all his affiliates out and denied the proposal. Echo Fox were given another week to come up with something new. Unable to remove Raizada, the company had to make the difficult decision to sell Echo Fox’s slot in the LCS.
Fox said that deciding between the multiple offers for the team’s slot was complicated by Raizada’s changes to the cash waterfall, which hurt certain investors, including himself. There were also some disagreements between Fox and the other limited partners of which offer to take. Ultimately, even after the company signed the deal with the Kroenke group, not all investors will be made whole.
According to Fox, Raizada “damaged the company, eroded the value, prevented a raise [in value] by structure he created, and he breached the contract. Not only did Raizada’s comments and his business practices damage the company, it actually also damaged Echo Fox’s ability to raise capital and operate a healthy company.
Fox said that he regrets not researching Raizada, as he later found out that he lost previous partners for self-dealing and other behaviors that he later repeated with Echo Fox
Fox has reiterated repeatedly that he won’t back down and will do everything in his power to make sure that Raizada doesn’t do this again.
“When you ask me where I’m going, or would I go anywhere—I’ve got thicker skin than that. I live in iron,” Fox said. “I live in the iron of the ranks. So I’m an Iron Fox.”