Call of Duty franchising too big a risk for Nadeshot, 100 Thieves

100 Thieves owner Nadeshot discusses CWL Anaheim win, OpTic's legacy (2:55)

Matthew "Nadeshot" Haag, owner of 100 Thieves, gives his thoughts on Call of Duty World League franchising, the impact OpTic Gaming has had in CoD and more at CWL Anaheim. (2:55)

After adding nine teams across North America and Europe, Activision Blizzard's future franchised Call of Duty league hit a snag Thursday: 100 Thieves, the organization founded by Call of Duty legend Matthew "Nadeshot" Haag, will not participate.

In a video released on Twitter, Nadeshot explained the reasons behind his decision, including the cost of entry -- a reported $25 million, sources told ESPN in March -- and the league's insistence that teams make their brands Call of Duty-specific or create new sister brands for the league.

Nadeshot once captained the most transformative organization in Call of Duty esports history, OpTic Gaming, and has since built a world-renowned brand of his own. His 100 Thieves, which won two Call of Duty majors in 2019 and finished second in the Call of Duty World Championship in Los Angeles in August, will move on as a bystander to the future of premier competition in the game that made both the team and its founder famous.

The news, while heartbreaking for Nadeshot, his organization and the team's fans, shouldn't come as a surprise. That $25 million price tag is a big bet on a game that, over the past few years, has had relatively marginal success. Call of Duty was once the most popular game in the planet -- combining the rise of YouTube and content creators, like Nadeshot, with stellar game releases, such as "Modern Warfare 2," "Black Ops" and others.

But a lot has changed since then. Fortnite is the biggest game in the world, with others like League of Legends and Counter-Strike: Global Offensive leading the esports space. Slots in the League of Legends Championship Series, the franchised North American leg of that game's worldwide ecosystem, are selling at around $30 million.

The 2018 League of Legends World Championship peaked at 44 million concurrent viewers around the world, according to data released by developer Riot Games. How can Call of Duty -- which capped out at nearly 120,000 English viewers on Twitch during its world championship -- compare, even if audience streams for other platforms were added?

Like the Overwatch League, which is also run by Activision Blizzard, the future Call of Duty league offers a familiar value proposition to sports team owners: geolocated franchises with the opportunity to sell tickets and local sponsorship. That's why six of the nine teams in the league -- Dallas, Florida, Los Angeles, Minnesota, New York and Paris -- have sports team owners as their primary investors.

Eight of the nine cities in the Call of Duty franchised league are also represented in the Overwatch League and backed by the same millionaires and billionaires. For those buyers, the $25 million expenditure is a way of doubling down on Activision Blizzard and trust in that company's CEO, Bobby Kotick. Although the city-based model has commercial appeal in traditional sports, there's no data to suggest it works in esports yet. The Overwatch League and Call of Duty will be the faces of that experiment in 2020.

If you're Los Angeles Rams owner Stan Kroenke, Minnesota Vikings chairman Zygi Wilf or the New York Mets' Wilpon family, $25 million is a drop in the bucket. But if you're 100 Thieves, that's a huge investment -- one that could make or break your startup in the future -- and it's arguable if the reward outweighs the risk.

It's not that 100 Thieves can't afford the league, nor that its leadership, like Nadeshot or former Activision Blizzard senior vice president Mike Sepso -- both with extensive backgrounds in Call of Duty -- don't understand the opportunity. It's the opposite, actually; these are two of the most knowledgeable people in the business, facing a long-term but risky opportunity for the future of their team, and saying no.

If 100 Thieves can't see value in the franchising risk, who can?

This is about more than Call of Duty for Nadeshot's organization, too: 100 Thieves field teams in multiple esports. How can you convince others trust in your business judgement if you sink over $25 million in franchise fees and operation costs into a league that falls flat? Who will give you money again if you use most or all of it on one project? For 100 Thieves and many endemic startup brands, the risk of burning investors and damaging their reputations in discussions with future backers is too high.

It'll be sad to see Nadeshot & Co. absent from professional Call of Duty in 2020. The opportunity to reenter, at likely a higher price, will come up in the future and maybe then there's enough data to back up a decision that large. But for now, there's not, and 100 Thieves won't be the last major endemic brand to Call of Duty that abstains from participating moving forward.