By Elle Thibeau
Special to VPEsports
Documents acquired from the H1Z1 Pro League show alleged insolvency which may have contributed to its termination on Friday, according to multiple sources and internal company documents provided to VPEsports during a five-month investigation.
In addition to accounting for the whereabouts of the alleged $27 million associated with the H1Z1 Pro League, issues regarding Facebook’s partnership have also been raised alleging viewer statistic manipulation and the reporting of those statistics to investors involved with Caesar’s Entertainment, where the first split was played.
While the failure of the H1Z1 Pro League can be attributed to a variety of issues, one issue in particular played a huge role -Twin Galaxies and Vision Esports never appeared to be on the same page when it came to making decisions and has been summarized by many as a dysfunctional partnership.
At the center of it all stands Jace Hall, Chairman of the H1Z1 Pro League, LLC, and CEO of Twin Galaxies. From the start, the H1Z1 Pro League was at a disadvantage. Many questioned the decisions coming from Hall, investors, and the H1Z1 Pro League staff, including choosing a game with a that saw a daily concurrent player count of roughly 31,000 in October of 2017, while choosing to broadcast events on Facebook over Twitch on a weeknight during a timeframe that would be too late for most of their potential EST and EU viewers. Then, before the inaugural weekend of matches, it was revealed that the league had not given sufficient time for organizations and players to acquire the proper visas to participate. Some players then appeared to circumvent the requirements and played with no compensation.
Hall and the league paid for extravagant parties and social media influencers, paying over $2.5 million dollars in expenses and appearance fees bringing in Michael “Shroud” Grzesiek, Jaryd “Summit1G” Lazar, Timothy “TimTheTatMan” Betar, Stephanie “FemSteph” Driscoll, and actor Michelle Rodriguez.
Despite the money spent on influencers to promote the league, the league was unable to sell tickets to the live events and drink vouchers were often given out to casino patrons to wander into the arena as audience members. Sources stated that paid audience members were obtained from the nearby Caesar’s Employment Center in subsequent weeks.
Although leading up to Saturday Hall asserted that there would be a second split, the culmination of these things along with other factors resulted in the H1Z1 Pro League never completing its first season. This failure left 15 organizations and their players taking significant losses, including multiple players and support staff being left homeless.
Former Employees Describe Hall
Along with these questionable decisions, past employees have characterized Hall as abusive, narcissistic, and lacking a solid work ethic. “Jace is super abusive,” one past employee who wished to remain anonymous fearing repercussions told VPEsports. “He would say that the show was shit and they didn’t get any views. He blamed production staff even though he spent no time in the office and when he was, he would be busy playing ping-pong with Rick Fox. One night he freaked out and fired everyone.” Another employee who wished to remain anonymous due to a fear of reprisal stated, “Jace thinks he’s smart, but he really just wants to play video games and have others run his business.”
Among the most concerning is the allegation that multiple sources have made regarding viewer statistics. One past employee told VPEsports, “He [Hall] freaked out and realized he lost Facebook as a client – the way they were scamming their investors was because Facebook counts three-second plays as a view and they promoted those posts. They promoted their posts, they purchased bots to like and view the videos. They were going to investors selling three-second views as the full view of every single thing they do,” the source continued; “There was a spreadsheet sent out every month that stated how many bots were purchased, social media insights, and how many organic vs how many they paid for.”
When asked about this, another source explained, “Facebook was shady, but they did provide us with a $200k advertising credit. They turned off boosting a few times after the Daybreak-Russian [sic] tie-in. If we didn’t boost we would get 100k views, keep in mind Facebook counts a view as 3 seconds, when we boosted we could get 1-1.5 million views with most of those coming from Brazil and the Philippines. What’s interesting about our premiere of H1PL, we ended with 1.1M views without boosting, and then all of a sudden we hit 3.2M views two days later.” Multiple sources have alleged that artificially inflated statistics were used in presentations to potential sponsors.
In the quarter two review slides for Caesar’s investors, a number of over 20 million views was allegedly given to Caesar’s by TG/VVP executives. It is unclear how this number was derived considering the data in the table below which comes from documents acquired by VPEsports.
The table shows a significant lack of staying power in terms of keeping viewer eyes on the broadcasts. Looking at time spent, it shows that viewers are most likely passing through as the category shows a range of 6 to 46 seconds spent the with broadcast playing in a browser. Also, the highest completion rate, meaning viewers had the browser up with the broadcast on from start to finish never gets above 0.2% with 6 of the 10 weeks having a completion rate of 0%.
TheVerge reported that Facebook knew about the inaccuracies in their video viewership metrics that it provided to advertisers and brands for more than a year and it appears so did the H1Z1 Pro League.
Hall’s earlier business ventures have been described as less-than-successful and previous employees described a pattern of gaining investors, over-spending, not achieving business goals or outcomes/not being profitable, and then finding a new investor and rebranding. “Twin Galaxies was going to go under last year, it was saved by Vision Venture Partners investing. We were 1337 Lounge Live, Twin Galaxies Live, and then we became Vision,” said a previous colleague. “His solution is always ‘we need more money’ and then it’s always a loss for investors. Take note, NantG is exactly what he did with Twin Galaxies Live/Vision.”
Twin Galaxies, Echo Fox and Vision Esports issued another round of layoffs this week, leaving approximately nine employees with Vision Esports, eight employees with Echo Fox, and six employees with Twin Galaxies. In an email written by Angela Correll to staff being laid off, she wrote:
“Esports is an exciting yet turbulent industry. It is young and progressing at an exponential pace, and with that comes growing pains. We aimed to add infrastructure and shape the industry’s future by becoming a full-service, vertically integrated esports company. We pioneered the first battle royale league and created some of the highest quality broadcasts and programming in the industry. Unfortunately, we fell short of our expectations and did not see a positive return. As a result, we have decided to refocus the company and reduce staff.”
This newest round of layoffs was preceded by a failed attempt to acquire an esports production company, which would have secured millions of dollars in revenue for quarter four. Todd Roy, Miranda Charsky, and others were seen on Twitter sharing their participation with Fortnite events apparently in relation to a deal that was in the works at that time. Another project called Fatal Gaming also fell through.
On July 3, 2018, a more extensive round of layoffs took place which saw most production staff being let go with the notable cessation of TauntFest. Facebook, who had previously invested $4 million dollars did not renew their funding agreement which prompted these cuts. It was at this time Hall and other executives knew the League was insolvent. “Facebook was basically footing the entire bill for the H1PL,” a source told VPEsports. “On the same day as the layoff, Echo Fox dropped their partnership with Vision Venture Partners.” It is estimated that approximately 65 people were laid off at this time. More layoffs followed in the weeks after. Employees who were laid off described their paychecks dwindling without explanation over a period of several months, being paid late, or not at all.
Instability in Relations
On July 13, 2018, a feud between two of the partners reached its peak culminating with Rick Fox packing up his office and leaving abruptly. On July 16, 2018, Angela Correll sent this explanation to staff via email: “As some of you may notice, Rick Fox vacated his office on Friday afternoon. He has decided to not maintain a full-time office in Beverly Hills. As we all know, Rick has many obligations that span acting, media, and of course esports. To avoid any confusion, we wanted to be clear that he remains a partner at Vision Venture Partners and is fully-committed to supporting Echo Fox and ensuring long-term success.”
Since then, Rick Fox and Khalid Jones have allegedly grouped together and purchased shares from Amit Raizada, becoming the general partners of Echo Fox. Past and present employees have described Hall, Stratton Scalvos, Rick Fox, and Amit Raizada to be at odds with one another. Sources say Hall removed Scalvos from Twin Galaxies just this past week although Scalvos still has equity in Twin Galaxies and Echo Fox.
The Force Majeure
On August 30, 2018, Hall approached the H1Z1 Pro League organizations claiming a “force majeure” event was occurring at Daybreak Game Company. Hall refused to supply relevant details as required in their League Participation Agreement citing a non-disclosure agreement – which was revealed to have been signed after-the-fact – as being the reason he could not disclose the cause of the indefinite postponement of the second split. He told organizations that Twin Galaxies did not expect them to continue paying their players, even though they were contractually obliged. These were contracts that Twin Galaxies themselves reviewed and approved prior to the commencement of the League.
A representative from Daybreak reached out to VPEsports stating that Daybreak is unaware of any such “force majeure” event.
League Organizations Become Upset and Start Asking Questions
Organizations expressed frustration at the assertion that he could not disclose the nature of the “force majeure” and they pressed Hall on his obligation to fully disclose per the league agreement. Hall repeatedly blamed Daybreak as being the cause for this “force majeure event”. Shortly after, it was announced that NantG had created a separate entity with Hall and purchased the rights to H1Z1 for PC.
Organizations and players have been requesting the financial breakdown of H1PL spending and revenue numbers from Hall and Charsky since September when it became clear it was unlikely that a second split would take place and doubts into Hall’s story became more prevalent.
In the league agreement between the H1Z1 Pro League and the organizations, financial statements were to be provided by the end of the fiscal year – April 2019. The lack of transparency has led to many asking as to where the alleged $27 million dollars Jace purports was spent on the H1Z1 Pro League has gone. There has been an absolute refusal from Hall and Charsky to provide these details even upon the reported termination of the League.
Hall has been confronted by some players and owners of the now defunct League as being dishonest about the state of the League and ignoring his obligations to notify them on the status as required in the League Participation Agreement. It is alleged Hall was fully aware that the H1PL was insolvent at the time he claimed there was a force majeure and instead purposefully tried to obfuscate the true state of affairs.
Partial Budget Records
VPEsports has obtained partial budget records that shows some of the budget vs. actual expenditures of the H1PL. These do not include manpower and are not a full accounting of the alleged $27 million. Charsky was responsible for these projections and is in possession of the full, detailed financial documents which are being kept from other staff.
Note: These tables are recreations of actual documents sent to VPEsports.
The stand-out figure in this overview is what was budgeted for team stipends. It appears the portion of the stipend which was to be allocated for the second split was never included and the amount allocated for split one appears to be $750,000.00 less than what was to be allocated to the organizations. $20,000.00 was paid to Team 10’s Jake Paul for a promotional video, however these materials were never used due to the controversy surrounding Logan Paul’s suicide forest video.
These figures create a solid case that it was apparent, even from these incomplete revenue and budget records, that the League was insolvent well ahead of the end of the first split. “Most folks were not empowered and the experts in their functional area were not listened to,” one source told VPEsports. “Crazy projections were made for revenue and the spending was nuts.”
Another source stated, “H1PL was a financial flop. Its costs were absurd and made nothing back. VVP/TG was hemorrhaging money. That whole force majeure claim is bullshit. Before the layoffs, Jace often discussed buying into daybreak games as a passion project. He is heavily invested in the game and thinks he can save it from its abysmal state.”
Sponsorships and Investments Didn’t Come
Hall and the H1Z1 Pro League were depending on gaining sponsorships and investments prior to split one commencing in order to continue with split two. Nothing materialized, partially due to low viewership.
When asked about what they believe will happen next, a recent employee told VPEsports, “I would be surprised if they will pay out the stipend. We have no money. $0 revenue coming in. I heard Jace talk about filing for bankruptcy for the Pro League.”