Rick Fox will be removed as a general partner from Echo Fox, the esports team he co-founded, on Oct. 21 after more than 80 percent of his limited partners stated in August that he did not act within the best interest of the business, according to a letter sent to Fox and obtained by ESPN.
The letter says that Fox repeatedly worked against the best interest of the company and his partners, alleging that he was negligent, forced the sale to auction by Riot Games and told others he would, "burn this company to the ground." The full context of that quote was not stated within the letter.
Signatories on the letter include Vision Esports head Stratton Sclavos, investor Daniel Deshe, Raizada Group manager Ravi Srivastava and Khalid Jones, who was Fox's partner in the general partnership. Fox and Jones' company, SourceRock Ventures, acquired its general partnership stake in Echo Fox in October 2018 from co-founder Amit Raizada for $10 million in financed loans.
In the removal letter, the shareholders also allege that Fox tried to poach three employees -- Echo Fox president Jared Jeffries, head of public relations Haley Hey and general manager Jake Fyfe -- for another company of his after Fox took over Echo Fox in October 2018. Fyfe ultimately left the organization abruptly and subsequently took a job working for NantG, a company owned by Los Angeles Times owner Patrick Soon-Shiong. Over the past 18 months, Fox has expressed interest privately in working with Soon-Shiong; he also owes Soon-Shiong a $2.5 million loan, sources familiar with his finances told ESPN.
On Aug. 16, Fox fired many of the team's employees, which the shareholders claim has become detrimental to winding down the business's operations. Fox also advocated for the acceptance of an offer from Mosaic Media Investment Partners, a group led by Dick Clark Productions executive chairman Allen Shapiro, despite his shareholder's wishes.
Despite the advice of Echo Fox's investment bank and his fellow shareholders, Fox refused to take an offer from Evil Geniuses for $30.5 million. On Thursday, Riot Games agreed to sell the team to Evil Geniuses for $33 million, $30.5 million that will be paid to Echo Fox plus an additional $2.5 million that Echo Fox owed Riot, according to sources.
"When you are in business with Amit Raizada, a man who has repeatedly been accused of dishonest and fraudulent behavior and who has a long track record of business disputes ending in litigation, then this is unfortunately what you should expect," Fox said in a statement to ESPN on Saturday. "I founded Echo Fox with great hopes that were dashed by racism, deception and greed. On behalf of the Echo Fox General Partnership, I wish to congratulate Evil Geniuses on acquiring the LCS spot, and look forward to moving forward with high hopes for the future."
Fox also is in a dispute with Sclavos, who raised $11.3 million for Echo Fox in late 2017 and early 2018 as a larger $38 million funding round for his and Fox's business, Echo Fox parent Vision Venture Partners. Investors in that round and subsequently in Echo Fox include the New York Yankees, the St. Louis Cardinals, Kevin Durant, CAA's Evolution Media and more.
Fox and Sclavos have argued over the waterfall of payment as outlined in Echo Fox's operating agreement. According to that agreement, Fox and Jones are entitled to payout after Echo Fox's debt holders and senior preferred and preferred partners. The shareholders are hoping to install a new general partner who will resolve the dispute amicably, sources said.
"[The other general partner] SourceRock has confirmed its commitment to a fair outcome to all parties with respect to this issue," the letter reads.
In April, Raizada used racist language toward former Echo Fox CEO Jace Hall in an email exchange over finances for Hall's company Twin Galaxies. In a letter to Fox's attorney, Raizada also threatened Fox's family.
In May, Riot Games notified Echo Fox that it had 60 days to remove Raizada from its cap table or face potential consequences, such as losing its slot. Echo Fox struck a deal, after 67 days and an extension from Riot, with Kroenke Sports & Entertainment for $30.25 million. That deal fell through after the Kroenke group was sued by Sentinels CEO Rob Moore, who alleged that the Kroenkes had violated a verbal joint venture agreement by going behind his back to acquire Echo Fox. Since late 2017, Sentinels have operated the Los Angeles Gladiators on behalf of their owners, the Kroenke group.
After the Kroenke deal fell through, Fox and his partners could not agree on a sale to another party. Fox was eager to sell to Mosaic and Shapiro, while his partners, including Jones, wanted to sell the team to Evil Geniuses, sources said. The group eventually came to an agreement to let Riot auction off the slot.