Justin Tan: I definitely made some mistakes and there are certain things I should never have done.
Contracts, control, and money.
When former Excelerate Gaming Call of Duty player Michael “Beehzy” Said took to YouTube and described a mid-season, contract re-negotiation as bordering on blackmail and extortion, the esports world took notice. Organization owners, pundits, and fans at once condemned the CEO and owner of Excelerate Gaming, Justin Tan, for dropping his entire Call of Duty team for reasons believed to be unethical.
Money changes people. For better or worse, when large sums of money are infused into a space where it hasn’t been seen before, whether that be personal, a business, or an industry, sometimes it brings out the worst in humanity. Add to the equation, a business owner who probably was in over his head and employees who had blinders on looking only at salary size and not contract sections, you have a recipe for disaster.
VPEsports reached out to Justin Tan to discuss what he says happened at Excelerate Gaming that caused such an uproar. Was what Beehzy was saying true or was this an emotionally charged situation where hurt people took to social media to take shots at each other? Maybe both? Here’s what he had to say.
The last couple of days has seen your name dragged through the mud with some pretty serious accusations thrown your way. Everything from blackmail to extortion in regard to strongarm tactics used to get players to sign contracts when they were already under contracts. Thoughts?
First, let me say that I definitely made some mistakes and there are certain things I should never have done. There was a point where there was very little staff, I was going to school, and I was dealing with multiple teams. I got frustrated because I was overwhelmed. I’m young and learning on the go, but I will say this, I have never done anything out of spite or malice. I honestly thought that I was making the right business decisions. Looking back, the way I went about some things was dumb and I am so sorry for that. People probably won’t believe me right away, so I will just have to show them that I’ve learned from this. However, that’s not even the worst part. The worst part is how it affected the players.
When did you first decide you wanted to be an esports organization owner and run a Call of Duty team? Did you have a business plan what was your end goal?
I did a lot of research and presented some numbers to my dad who is very smart and understands things. It’s not a secret he has money to invest. He also did some research and said, yeah, the time is right to get into esports, so he invested in my company. Call of Duty made sense for me because my manager knew the scene and if you can put together a good team and win, you might be able to get into the league as a franchised spot. So my business plan was to either develop a great Call of Duty team and continue to own and operate them or sell the team and the slot, if we got in, which we did.
Your team gets into the Call of Duty World League and obviously you took the route of trying to sell the squad and the slot. This seems to be the beginning of the end. What happened?
Well actually it may have been the removal of Ethan “FA5TBALLA” Wedgeworth from the team that started it all but yeah once we got in the league I solicited teams for offers and ended up selecting Wildcard’s offer. The sale was actually made and the contract signed by both sides on January 30. However, due to the contracts being so vague, which again was my fault but have since fixed, negotiations between Wildcard and the players went south. The two sides couldn’t not agree on salary, terms, etc. So, they were not going to get what they were getting with me previously. I should have negotiated something along those lines in advance. I just didn’t think about it. So, when the players came back to me saying man this sucks is there anything you can do, I asked them if they wanted to come back. They said yes. So, on February 1 we dissolved the deal. So technically they were Wildcard players for two days which is another story in itself as far as money owed.
Talk to me about that. Players have come forward saying you owe them money or they didn’t get paid on time. The community at large really hates that kind of stuff. Is what the players are saying true?
Some of it, yes. There have been late payments and some discrepancies. For instance, I fully expected Wildcard to pay the team the two days’ worth of salary since the guys were a part of that org, but that didn’t happen. The guys were shorted four days because we were trying to figure out who owes what. I should have just paid it and then gotten them to pay me back. However, after all this, I see that was not right and I have since paid the players. In fact, I have paid them everything they are owed.
That first month when Beehzy said he got paid $213 instead of the full amount. What happened?
In that contract, we were entitled to 15% of all winnings. So yes, we did take that. But not out of smite or anger, but to add to our operational cost budget. Here’s the deal. We were paying our team a fair salary, but look at it this way. The league gives us a stipend and pays orgs per win. Even if we won every match at every event it would not cover the costs of the players’ salaries or other expenses. So orgs like mine then need to turn to sponsorship money in order to break even or squeak out a profit. That’s where we started to feel the pinch. We couldn’t land sponsors. It hurt us. I don’t know if the reason was that we weren’t winning or if my depleted staff just wasn’t doing their job, it’s something I need to look into, but that lack of cash flow leads me directly into why, for two reasons, I wanted to renegotiate their contracts.
You wanted to negotiate new contracts while they already had contracts? In Beehzy’s YouTube video he says you tried to blackmail or force them into signing the new ones. He contends you wanted 100% of the prize earnings and wanted to lower their salaries by 40%. That’s a big ask. Were they getting anything in return?
Remember when I said it was Ethan that was the beginning of the end? That’s part of the reason I thought this new contract would work. I was hoping that the players would take a salary cut in exchange for they being the authority on who gets added or removed from the roster. I thought it was a win-win. We would be able to help this team be self-sustaining financially and the players would have job security for the duration of their contract. As it stood, the organization could simply cut people as they see fit. I thought the players would want that.
When the sale didn’t go through, I needed to renegotiate the contract to help us remain financially solvent. The way I handled this situation is my biggest regret. I thought they were going to play hardball, so I was going to play hardball. Two sides negotiating hard against one another. But honestly, a really stupid thing to do. I should have just explained the situation, telling them, that there is a possibility you get cut if this team doesn’t break even or become profitable. I need you to sign this contract so that we can continue to move forward, plus I wouldn’t be able to release you. That would take a team vote. I got caught up in an emotional fight. Just stupid looking back.
The screenshot that was sent that looked like I was blackmailing them to sign the contracts? That’s not true. I was trying to work it out with the guys. That was also at a time where I was very stressed. I had no staff. I was running everything on my own and Jason and I needed to settle this immediately. I was like, can I just get a break right now? It’s not necessarily a break from everything, but like there’s just so much on my plate. I can’t do everything, and I just acted it out of emotions rather. I just wanted to get the contract signed so myself and the team wouldn’t be so stressed.
Now that you have had a couple of days to process this, what are your thoughts?
I would say I made more than a few mistakes. I thought I knew more than I did. I definitely could have handled this situation a lot better. I have tried to make things right in the past couple of days by paying the players what they are due and have made apologies. I understand why people are saying the things they are. But please understand, I didn’t do these things because I was mad or angry, trying to hurt people. Running an esports organization isn’t as easy as people think and I welcome the criticism and advice going forward. Bottom line, I screwed up and am sorry.
When asked for comment regarding the situation Beehzy had this to say:
“I truly think Justin feels bad and is being genuine. A lot has changed in the last 24 hours between me and him. I still think what happened is unacceptable on every level and shouldn’t just be summed as Justin is inexperienced and a little “green”. But there’s two perspective’s to everything I understand his and he understands mine. Justin really did try to fix this situation and made the best of it with the new roster but I think the real question is would that have even happened without me making my video? In the future he can’t be making decision on one side of the moral and business spectrum he has to find a better in between. “