Image: FaZe Clan

Earlier this week, Turner “Tfue” Tenney, a 21-year-old Fortnite pro who is one of the most popular streamers on Twitch, sued FaZe, the esports organization to which he is currently signed. The suit says that the contract between Tenney and FaZe is “oppressive” and “illegal,” arguing that FaZe is in violation of California’s Talent Agency Act. Today, the celebrity-focused website The Blast published what it says is Tenney’s contract.

While neither FaZe nor Tenney has yet confirmed its veracity, FaZe’s owner Ricky Banks went on a Twitter rant shortly after The Blast published its report, saying that “obviously Turner’s initial contract was horrible” and that FaZe has offered him multiple more favorable contracts “over the last year.” Banks also said that he will release copies of every contract FaZe has tried to negotiate with Tenney in the near future. Two industry sources, who are not contracted with FaZe and who chose to remain anonymous, have told Kotaku that the contract is real. Kotaku reached out to FaZe, Tenney, and his attorney, but have yet to receive replies.

The contract, signed on April 27, 2018, was initially set to last six months, but with a clause for an automatic 36-month extension so long as Tenney participated in tournaments and training sessions as designated by FaZe and provided “publicity and promotional services as required by the company.” Today, Tenney is still under contract.

Tenney’s direct pay from the team, according to the contract, is $2,000 per month, but that comes in addition to “other income (including, but not limited to, salaries, earnings, fees, royalties, bonuses, share of profits, and gifts, etc.) generated in connection with Gamer’s Services (whether individually or as part of the Team).”

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These sources of income are split in ways that, largely, favor FaZe. For example, if Tenney were to strike a “brand deal” where he endorses a product, he’d split the revenues 50-50 with FaZe. But if FaZe cuts the deal, it gets 80 percent of the take, even if it’s Tfue’s face on the can of Mountain Dew. Tenney comes out on top only where prize money is concerned, getting to keep 80 percent of his tournament winnings. But FaZe takes 50 percent or 80 percent on everything else, including brand deals, team merchandise, and in-game merchandise—the last of which, according to Break, can be an especially big source of income for streamers. Basically, Tenney signs away his intellectual property rights.

Since the lawsuit entered the public eye, FaZe has said a number of things about Tenney’s contract. In its first statement, provided to Kotaku for our initial report on Monday, the organization said that it had collected no money from Tenney’s Twitch, YouTube, tournament winnings, or social media presence. FaZe said it had only ever made $60,000 off its partnership with Tenney, while he’d made millions during the same span. However, it failed to address sponsorships and brand deals, which are Tenney’s main points of contention.

In a second statement, issued on Twitter, FaZe did address the brand deal element of the contract, even posting a screenshot of the above 80-20 contract stipulation. But it then went on to say that it had never actually collected any of those monies from any of its members, saying the clause was the work of a “previous legal team.” FaZe went on to note that “every new agreement since last summer has maximum 20% to FaZe Clan and 80% to the gamer,” and in Tenney’s case specifically, it said it has been working with him and his attorney since September of last year to try and “dramatically improve” his contract with things like a seven-figure bonus. FaZe said that all improvements offered so far have been “rejected or ignored.”

This, as well as a lengthy response video from Banks and an appearance from him on Daniel “Keemstar” Keem’s popular “Drama Alert” YouTube show, led to a public back-and-forth between Tenney and Banks. Yesterday, Tenney released a video on YouTube in which he walked back statements in the lawsuit about being encouraged to engage in underage drinking and gambling while living under FaZe’s roof, saying he has instructed his attorney to remove those things from the suit. However, he stood firm on his feelings about his contract, calling it “bizarre” and “insane.”

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“What I’m trying to do here is serve justice to the esports community and esports industry,” said Tenney in the video. “These kids are getting ripped off. They’re getting taken advantage of… There’s tons of people in contracts this bad, just like me. I’m the first person to stand up and say this is fucked, this is not right, this is not cool, this is fucking bullshit.”

Banks, who calls Tenney a friend, has repeatedly expressed doubt about Tenney’s motivations on Twitter and YouTube. “This wasn’t about standing up for what’s right, it’s manipulative to suggest that,” Banks said on Twitter yesterday. “This was about what Tfue’s dad believed was in his best interest (leaving FaZe) and stopping at nothing to accomplish it.”

Today, he proceeded to perpetuate a rumor, started by Keemstar, that Tenney is looking to start his own organization. “Turner wants to make his own org?” said Banks on Twitter. “So this whole superhero, for the people, by the people narrative makes a little more sense now. Convenient.”

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Speaking to Keemstar today, FaZe’s CEO Lee Trink also expressed concerns that Tenney plans to get out of his contract and create a competing organization, but offered a more measured response than Banks. He referred to Tenney’s contract as a “starter contract,” saying that “before somebody’s a big talent, they’ve got to start somewhere.” He made comparisons to the NBA and NFL, as well as the film and music industries—the former two of which, it should be noted, are still required to pay new players a minimum base pay of hundreds of thousands of dollars per year thanks to collective bargaining agreements.

Trink went on to say that if players excel, then it’s expected that those contracts will be renegotiated. He also said that since FaZe did away with its previous legal team, newer players have started out with better contracts, though he did not offer specifics on what that entailed.

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It’s tough to deny that Tenney has benefited from FaZe’s influence. Even leaving aside all the claims about how much money he’s made, raw Twitch numbers paint a convincing picture. According to third-party site Twitch Tracker, Tenney had been streaming for a couple years before beginning his relationship with FaZe in April 2018. During that time, he managed to build up a healthy but still relatively small community of around 80,000 followers. Past April 2018, his follower number skyrocketed, breaking one million by July and rising all the way to six million in a year. His YouTube subscriptions follow a similar pattern, now sitting at ten million. Is this entirely FaZe’s doing? Probably not. The Fortnite craze went mainstream around the time Tenney signed with FaZe, so he was in the right place at the right time on a number of levels. But certainly, this wasn’t a one-way street.

The question, then, is what FaZe gets for clinging on to Tenney, from whom it says it has only made $60,000. The answer lies in the shaky economics underlying esports, about which Kotaku’s Cecilia D’Anastasio just published an extensive report earlier today. In short, esports teams don’t have access to many of the most reliable money streams that traditional sports teams take advantage of. Video game companies own the games and, increasingly, the leagues, so teams don’t typically pull in a large chunk of broadcast money the way that, for example, NFL teams do. They’re just licensees. And while esports stadiums are starting to crop up thanks to things like the Overwatch League, even traditional sports stadiums have trouble turning a profit through ticket sales and advertising, and are typically subsidized by the government.

This leaves sponsorship sales, where esports teams make the lion’s share of their money. In a time when esports teams struggle to turn profits, YouTubers and Twitch streamers are the golden light at the end of the tunnel. As charismatic individuals, they tend to pull in more dedicated fans than comparatively faceless teams, something that’s caught the attention of advertisers. Teams partner with influencers to boost their brands and make deals look more attractive to potential sponsors. Letting YouTubers and streamers cut their own brand and sponsor deals on top of that, then, creates a problem for organizations.

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“If you’re an accessory brand sponsoring a player on an esports team, and that esports team has a bunch of influencers, and then all of a sudden your competitors start going after the influencers on that same team, it almost invalidates your sponsorship,” an industry source who’s worked on the sponsorship side of things and who chose to remain anonymous told Kotaku over the phone. An additional industry source agreed that this is the central issue at stake in these player contracts.

In a worst-case scenario, this could lead to deal cancellations, something esports organizations do not want. In the lawsuit, Tenney and his attorney said that FaZe had at one point passed on a deal with the hardware company HyperX that would have benefited Tenney because FaZe was worried it might “upset another sponsor and potentially jeopardize and negatively impact its relationship with that sponsor.”

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On top of that, Fortnite has managed to spawn a crop of players that started out as entertainers on Twitch and YouTube, but became esports professionals by demonstrating unusually high skill at the game. Fortnite developer Epic Games has structured its esports league around this, turning official broadcasts into amalgams of individual streamers’ broadcasts with commentary on top. Tenney is one such player, and an especially high-profile one at that. His contract dispute could make waves through the streaming and esports industries.

“Tfue’s a good example of that Fortnite pro, that battle royale pro who came up as a content creator, who’s actually really good at the game, can compete at a high level, and can actually win tournaments,” said the source who worked in sponsorships. “That’s the goldmine. Every team wants that.”

Teams who now want to attract and groom these sorts of players into stars are starting to offer better deals right off the bat. But Ryan Morrison, an esports-focused lawyer and head of esports and influencer talent agency Evolved Talent, says that the scales still aren’t tipped in favor of players, who tend to be young and naive in their dealings with potential employers.

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“I am certain when I very firmly say FaZe’s agreement is far more the norm than the outlier,” he told Kotaku in an email. “In fact, the leaked agreement for Tfue is far better than most I see that I unrepresented players sign.”

Video-game-focused attorney Stephen McArthur concurred. “While unfair, it is not uncommon for that to be an opening offer,” he said of Tfue’s initial contract in an email to Kotaku. “The mistake the vast majority of esports players make is never hiring a video game attorney or agent to review and negotiate the contract. Esports players need to stop signing contracts handed to them without hiring professionals to negotiate on their behalf.”

Tenney and Banks
Photo: FaZe

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Besides calling the contract unfair, Tenney’s lawsuit also argues that it is illegal. Tenney argues that FaZe runs afoul of California talent agency laws by essentially operating as a talent agency without being licensed by a labor commissioner or operating under corresponding regulations.

Esports lawyer Morrison believes this is “an absolute game-changer.” “We will see the effects of this start as soon as tomorrow as every investor and org owner is calling their attorney and demanding to understand these issues,” he said. “Your employer can’t be your agent. Your employer especially can’t be your exclusive unlicensed agent. This was so overdue and will instantly correct so many wrongs in this industry just by shining a light on it.”

McArthur seemed less impressed by this part of the lawsuit, calling talent agency laws “red tape” that organizations “will adapt to.” The real question, he said, is whether people like Tfue are being hired first and foremost as athletes or entertainers.

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“FaZe’s lawyers will argue that the TAA does not apply to them because an employee like Tfue is being hired first and foremost as an athlete,” McArthur said. “The entertainer aspect of what Tfue is doing is a minor, peripheral, almost accidental part of his role in the esports organization. Tfue will argue that he is at least as much of an entertainer as he is an athlete.”

It’s a new frontier, and everybody’s still trying to figure out how to avoid being taken advantage of and, of course, how to make money. The impassioned conversation around Tenney’s contract is, if nothing else, a symptom of these growing pains, as well as of esports’ tenuous economic footing. Tenney is straddling the middle; he’s an overnight star with a contract that still represents the raw deals offered to rookies. Whether starter or star, everybody wants a fair deal. Right now, with no collective bargaining and little in the way of representation and regulation keeping organizations in check, it’s much easier for players to get decent treatment at one end of that spectrum than the other.

“Tfue’s contract is nothing new,” said Morrison. “Evolved has negotiated countless deals for battle royale genre game stars that straddle the line between pro gamer and influencer. There are ‘norms’ for each and every clause in there. But ‘standard’ changes dramatically from what orgs will offer your agent or lawyer from what they’ll offer an unrepresented 19 year-old.”

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