ESGN apologizes, says all debts will be paid in June; players respond

This article was originally published on GameSpot's sister site onGamers.com, which was dedicated to esports coverage.

Update: 1:03 PM PST - ESGN's bolded part of their statement edited on request as a misread. ESGN says they did not mean to implicate contractors were initially told they'd be paid by the end of June. Statement from ex-ESGN employee added.

Original Story: Last week onGamers reported that ESGN has been having financial difficulties in recent months in regards to paying both employees and contracted players, casters for Fight Night events.

These initial details were corroborated a day later as several StarCraft 2 players, including veterans Manuel 'Grubby' Schenkhuizen and Aleksey 'White-Ra' Krupnyk, spoke out about owed payments for StarCraft Fight Night Season 2.

onGamers has learned that four seasons of Fight Night are still owed - Hearthstone Season 5 & 6, StarCraft Season 2 and Street Fighter Season 3. Contracts for each of the games obtained by onGamers state that all players and broadcasters were to be paid out 15 days after the content aired with the submission of an invoice.

Following the reports, Clauf/ESGN CEO Jong Hwan Lee sent onGamers a statement yesterday evening to apologize and detail their plans moving forward. Foremost of which is that ESGN states they will settle all owed payments to employees and contractors by the end of June.

Lee's statement is written below in its entirety:

As a new company, we always hoped that our products and services would project our interests and goals. Especially instead of complications amid controversies such as the ones you've read recently regarding our company: Clauf and ESGN. The emotional investment the eSports community has for the competitive gaming is nothing less than commending and with that in mind, we apologize to those who either enjoyed our content or what we tried to give to the scene. It goes without saying that we have and continue to resolve issues within our company and those affected by trusting us. Initially, we wanted to figure this out internally without cause for worry or concern as things have gotten delayed but it's best we come forward with both our intentions and sincere explanation of things now.

For those looking for the bottom-line: From today, May 31st, we have every intention to settle all outstanding accounts by the end of June maximum as it was always our intention to do from the start. We never wanted to hide nor to avoid responsibility but rather settle this in the most discrete manner and without burdening an otherwise healthy community. We're hoping the following context gives better understanding of the predicament we've ended up in as well as our rationale.

Launching in December and opening our ESGN TV broadcast in January of this year, our team consisted of members with up to 10 years of eSports from China, South Korea or North America and who were involved in a variety of sectors of this culture. From our perspective, we saw an industry with a lot of competitions and leagues, a setting where players were racking up international achievements without much highlight of them as people. This was something we wanted to change and our ESGN TV outlet would accommodate for that.

When we set out to do something, we wanted to do it right and with everything we had. That meant we had to accrue many expenses for equipment, our studio and video production teams. We wanted to match what the competitors offered to audiences around the world and treat them as they deserved; we hope, despite the issues shown now, that they felt that way with us during each and every recording we spent nightless weeks on improving.

We wanted to create something new, consistent and entertaining that would spotlight players in a setting where they felt relaxed, at peace and free to act as they do among family and friends. We may have missed the mark, despite how much we paid attention to everyone with fair criticisms and it is true that at this time, we have been unable to achieve outstanding results with our attempts. It is furthermore true that this fact has caused us difficulties in smoothly operating the company. We acknowledge that our take on content creation was not without flaws and agree to many of the complaints that have been voiced by the audience. While the approach and execution might have been flawed, we still believe in the original vision and see this situation as a challenge that needs to be overcome as part of the growth of the company.

In the face of such problems related to the direction of the company, issues such as delayed payments of salary as well outstanding prize money for certain players, in addition to an internal reorganization of the company, have risen. However in the instance of Fight Night: League of Legends, we want to clarify that there has been no case of the company purposefully withholding salary payments and instead allocating available funds to the production of Fight Night. At the time, Fight Night: League of Legends had already been postponed once before due to internal issues and we had a choice of either postponing it again or cancelling the show altogether. When this was discussed internally, employees were very concerned about ESGN’s promise and diligence towards talent and players that had already confirmed their attendance twice. For this reason, management made the decision to go ahead with the production and swallowed the costs from their own personal savings. It was never a case of the company putting the production of content above paying out employees’ salaries.

The idea that we were excessive in our investment with the studio and equipment setup of the company can be interpreted as an overstatement, especially if we account with what figures have been circulating around the community (and are simply untrue). For all production-related expenses, we have always tried our best to be fair to all participants within the boundaries of the current market prices. The costs of hosting a big offline event or setting up a content production studio are of comparable scale. Instead of trying to squeeze ourselves into a market that has very reliable and trustworthy brands hosting events, we went the route of a content-production studio to further emphasize those going on tours around major events. I think we can all agree that it was bold and the concept may have worked, though the execution was a bit of a miss.

All in all, Clauf is a start-up company, a new endeavour that, even months after launch, is still searching for its identity and what works. We are an easy target to dismiss and it is an unfortunate barrier we will need to overcome but we had no intention to hurt or cause trouble to the scene. We simply wanted to create new outlets of both content and facility to a fast-growing industry. We're a company that consists of people with lives and dedication to this scene, who some even come from the community. Like many start-ups, some attempts don't quite work out, but they use it to learn on what to build towards next.

To finish, we want to express our sincere apologies for causing such concern and bother to the community. We are thankful for everyone's opinions and take their criticism to heart. If now or in the future, anyone has a particular comment or feedback to give to us; do not hesitate to contact us directly as we are always open to fair views and improvements.

Thank you very much for your time,

Jong Hwan Lee.

After receiving ESGN's statement, onGamers reached out to verify the statements written above, with the focus on ESGN's bolded implication that they notified employees and contractors 'from the start' that they would be paid by the end of June.

Several players, broadcasters, managers and ex-employees tell onGamers that is not the case, and that no signed contract, email chain or verbal agreement was ever had in regards to being paid by the end of June from the start of negotiations.

Global Esports Management (GEM) co-founder Tobias Sherman says his clients have not been paid across all games, including StarCraft 2 legends Jung 'Mvp' Jong Hyun and Lim 'NesTea' Jae Duk, SC2 broadcaster/Hearthstone player Dan 'Artosis' Stemkoski and fighting game broadcaster/players Ryan 'Gootecks' Gutierrez and Mike Ross.

"At this time 10 of my clients are currently owed money and they have been extremely patient and professional throughout the ordeal", Sherman told onGamers. "Unfortunately, as I said, in eSports this has become so common it's almost expected."

"It's a shame really. Here's an organization that was treating the talent very well and they were very committed to creating something fresh with the talent. However none of that matters if you aren't going to compensate the talent as agreed. It's happend all too often in eSports. It's to the point now where for certain events I ask for money up front for the talent. It's a relief when DreamHack wants to use talent, because you know they will get paid. Unfortunately they are the exception."

"I believe that ESGN will make good on the payments, and I have offered assistance to non-clients in an effort to ensure everyone is paid the proper amount".

Sherman says that while GEM was initially funded by the same investment group as that of ESGN - Sapinda - his clients do not receive any special treatment.

"GEM clients have neither been expected to wait longer for payment, nor have they been paid yet," he said. "They are in the exact same boat as the other talent. We are all looking forward to getting this settled."

A former employee of ESGN, who wishes to remain anonymous, tells onGamers he is skeptical of a end of June payout.

"It should have been months ago. I'll be surprised and happy if they can honor what they've said, but after the experience that we've all had, I'm starting to feel extremely pessimistic about the possibility."

While also still missing payments, defending Hearthstone Season 5 and Season 6 champion Johan 'Darkwonyx' Hansson are looking towards the future.

"The ESGN Fight Night experience was amazing from a player perspective," said Hansson. "We got treated really nicely by the staff and had a great time filming everything. Sadly we haven't been paid yet for neither of the seasons we casted. It went from '2 weeks after season air' to '2 weeks after next season'. It's been 3 months now from the first season and we're still pocketless. We've been promised that the money will arrive however so I guess we'll just wait."

StarCraft's Schenkhuizen agrees.

"I'm well pleased that ESGN TV & Clauf have full intentions to make good on all outstanding payments, as is their responsibility," said Schenkhuizen. "If all goes as according to their stated plans, they should be considered vindicated as they wouldn't be the first organization to pay later than scheduled."

"These things happen, but a lot of drama could have been avoided if the communication towards the players and the audience were better. Everyone deserves to be well informed so that they need not grow concerned, as that can lead to rumors going around."

Gutierrez isn't as happy.

"My experience with ESGN was mostly positive and then swiftly took a turn for the worst when it became clear that it was going to be hard to get paid for work that I did," he said. "I was smart enough to ask for half of the money upfront in cash when I arrived in Berlin to shoot Season 1 of Fight Night, but trusting and naive enough to not ask for the same conditions the second time around."

"After months of chasing them around for payments and being reassured that the money was coming 'this week,' 'soon,' or 'by the end of the month,' now it seems pretty clear that nobody is getting paid."

"I consider myself lucky that I didn’t pack my life up and move to Berlin to work for these jokers like some of the ESGN employees did, who have been working for months without pay. However, it’s time to set the record straight about exactly what went wrong and why I think things fell apart."

onGamers has reached back out to ESGN for additional comment.

Image Credit: Clauf.com

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