By Elle Thibeau
Special to VPEsports
The H1Z1 Pro League, a product of Twin Galaxies and the Daybreak Game Company has been no stranger to criticism since its launch on April 21, 2018. From the start, orgs, players, and fans have openly questioned the planning and decision-making made by the League and they’ve had good reasons.
When the League chose to use Facebook instead of Twitch and stream at a time which potentially alienated the Eastern and Europeans time zones, viewership during the live events was considered to be low by the community at large and industry professionals. Routinely shown to have anywhere between 2,000 and 12,000 concurrent viewers, the chat on Facebook allegedly was largely dominated by bots attempting to obtain skin codes. All this seems to fly in the face of claims by Twin Galaxies and Caesars that the H1PL was earnestly viewed over 20 million times because the act of simply scrolling past the video in a Facebook feed registers as a view.
However, other, more serious issues surrounding the H1PL have been creeping their way into the administration of the league.
Even before the league was underway, Twin Galaxies and the organizations in the league were pressed and did not receive sufficient time to ink all the necessary contracts in order for all the players to be able to participate legally.
Sources confirmed that many players and organizational support staff entered the U.S. under the pretense of leisure in order to fill their contractual obligations and worked without appropriate visas. In the immediate weeks prior to the commencement of the League, Twin Galaxies’ Miranda Charsky replied to org’s concerns over there being insufficient time for visa applications and processing by suggesting they chose American players instead. Orgs were also instructed by Twin Galaxies not to pay such players. VPEsports has confirmed that some players were paid under the table while some ended up in situations where they were financially struggling due to weeks or months without salary. Others had to return to their home countries in order to then come back with their proper visas.
Event attendance became an issue soon after the inauguration of the League. Organizers struggled to fill seats for the live event and according to multiple sources, first tried to provide drink vouchers to employees and patrons as an incentive for attending. Many of these attendees were spotted by staff obtaining their free drinks and leaving. In the weeks following, sources also stated that envelopes had been given to patrons which they believed contained either casino vouchers or cash compensation for attending the weekly events. Some attendees were observed coming and going from the Caesars Entertainment Employment Office nearby.
With all the indicators pointing to a sub-par first split in terms of revenue, the question many players, orgs, and fans have is when and if there will be a second split. Speculation is running rampant due to the absence of any formal announcement of a start date.
The first split session of the inaugural season of the H1Z1 Pro League ended on June 20, 2018. The commencement of the second split was originally anticipated to begin in early October and run for ten weeks into December. However, players reported being told several weeks ago that there were issues with the venue (Caesars) and that they would need to return to Las Vegas much sooner for a short, condensed split beginning September 15. This short split would consist of two days per week (one with and one without an audience) and would be less than four weeks in duration. Players were then subsequently told days later that the second split would most likely be postponed until early 2019.
The problems seem to continue to snowball.
The League had promised, at least in year one, that each organization would receive $250,000 from the league in order to pay player salaries and cover other expenses. According to a payment schedule between the league and the orgs acquired by VPEsports, this money would be given to the orgs at or near the beginning of each split. Payments are to occur at seven weeks and again 10 days prior to the anticipated start of the second split. Without an established start date for split two, orgs have been on the hook for player salaries and expenses in order to fulfill their contractual obligations without any relief from the League thus far.
After weeks of what some have described as inadequate communication, Jace Hall, Co-Chair of Twin Galaxies, has now informed the orgs that the reason for the delays in the announcement of the second split and payment disbursement is because of a “force majeure” that has occurred at Daybreak Game Company.
In legal terms, a force majeure is an unforeseeable circumstance(s) that prevents someone from fulfilling a contract.
Hall has refused to specify the details of this force majeure citing a non-disclosure agreement. He also informed the orgs that he does not expect them to cover player salaries until they receive additional payment from the League and that the league entity is willing to allow teams to withdraw.
According to the League Participation Agreement (LPA) acquired by VPEsports, there is a specific clause addressing a force majeure event and it explicitly states that the details of such an event must be disclosed and that the other parties shall receive prompt notification.
This issue appears to have been known by the league entity and has been withheld from the orgs and players for an extended period of time. It appears from the contract language that the H1Z1 Pro League is obligated to notify and disclose the details to the orgs promptly.
Hall’s assertion that he cannot disclose the information to the orgs due to an NDA with Daybreak has been questioned by some in the league. The refusal to provide details to the orgs has put them in a precarious position including:
- Orgs cannot make an educated decision on whether to stay or leave the H1PL without the relevant facts. They have not been given the opportunity to even make the determination with their legal counsel whether this is a legitimate force majeure or not.
- If orgs stay in the H1PL they will be forced to continue to pay expenses and honor player contracts out-of-pocket regardless–they are contractually obliged to do so. Many of these orgs cannot afford to do so without income and are in the red already. VPEsports has heard from multiple players and managers who have not seen salary payments on time, in full, or at all. Players have also reported not receiving their portion of the $150,000.00 prize money awarded at the end of the first split.
- If orgs leave the H1PL, many will still be required to honor the contracts they had with their players and could be open to lawsuits for not fulfilling those obligations. While there are many clauses which allow for a contract to be terminated under reasonable grounds, short of the League Entity or orgs themselves becoming insolvent or declaring bankruptcy, many of these contracts will remain enforceable.
- Players, especially those who fully relocated to Las Vegas will lose their accommodations and suddenly be without their jobs or salaries if their orgs pull out of the H1PL. The impact on players, their careers, and their financial well-being is substantial. Many players and org staff members had quit their jobs or postponed post-secondary school, relocated to Las Vegas and have signed leases. Some of these players have spouses, children, mortgages, and other important financial obligations.
Orgs are now left with very difficult decisions to make, one of which is whether or not to sue the league entity to disclose the nature of the force majeure.
Outsiders appear to be reevaluating Daybreak’s now denied connection to Columbus Nova as a possible reason for the instability of the league. Questions are being asked if the issue behind the “force majeure” is related to the news that appeared back in April 2018 when economic sanctions were placed upon Russian oligarch Viktor Vekselberg which affected Columbus Nova, who reportedly purchased Daybreak from Sony Online Entertainment back in 2015. According to a report by CBS, “Extricating Columbus Nova’s holdings from Vekselberg’s is not so simple. The sanctions apply to all assets in which Vekselberg has more than a 50 percent stake — including some investment funds managed by Columbus Nova in which the firm has an ownership interest, the spokesmen said. They discussed the matter on condition of anonymity because of the sensitivity of the ongoing discussions.”
Daybreak has since denied having ever been purchased by Columbus Nova–stating it was Jason Epstein who actually acquired SOE–and ever being in-part or wholly sanctioned by the U.S Department of the Treasury.
However, despite the denial by Daybreak, there has been no substantial proof provided that Jason Epstein purchased Sony Online Entertainment independently in 2015.
Any company in which sanctioned individuals or entities own 50% or more either directly or indirectly would have sanctions apply to them. While Columbus Nova purports to not be owned by Vekselberg, he is their largest investor and that money could have been used for investments which includes the acquisition of other U.S. companies.
Columbus Nova also denied having an ownership stake in Daybreak Game Company, which could be true; however, that does not mean they did not invest in either Daybreak nor Epstein with such funds.
According to a report by The Globe and Mail, Columbus Nova is trying to negotiate.
“Extricating Columbus Nova’s holdings from Vekselberg’s is not so simple. The sanctions apply to all assets in which Vekselberg has more than a 50 per cent stake — including some investment funds managed by Columbus Nova in which the firm has an ownership interest, the spokesmen said. They discussed the matter on condition of anonymity because of the sensitivity of the ongoing discussions.”
If conjecture is to be dispelled, the onus will fall on Daybreak to provide adequate proof that Epstein made this purchase independently with independent funding.