The Cleveland Cavaliers' application for the North American League of Legends Championship Series has been accepted, and the organization has been awarded a franchise spot starting in the 2018 season, league sources told ESPN.
The Cavaliers and other teams participating in the league were notified of their acceptance into the league last week, sources said. The team will be required to create a new brand for the league as it is unable to use the Cavaliers brand due to NBA guidelines.
The 2016 NBA champions will have to pay $13 million in franchise fees for the spot, with $5 million due upon acceptance; $3 million of that buy-in will be contributed to a pool that will be divided and awarded to teams that were removed from the league to make space for new franchise owners. Endemic organizations Team Dignitas, Team Envy, Phoenix1 and Immortals have all been rejected from the league, as previously reported by ESPN.
The Cleveland Cavaliers were unable to be reached for comment. Riot Games did not respond to request for comment.
The news comes after changes to the NA LCS that include permanent long-term partnership, an academy league, revenue sharing and a players association. Gaining entry to the league started with an application process in July in which more than 100 parties applied. That list was narrowed in September, and selections were made in early October.
The Cavaliers have hired former Call of Duty professional player Matthew "Nadeshot" Haag to oversee operations, sources said. The team is currently recruiting staff to run the League of Legends team ahead of the transfer period opening on Nov. 21.
Cavaliers owner Dan Gilbert's venture firms have previously explored investment opportunities in esports, sources said. CourtsideVC, a venture capital fund backed by Gilbert, is currently invested in Wavedash Games, a studio that is producing an esports platform fighting game. It has explored investment opportunities in Team Envy and Team Liquid, but ultimately did not contribute to those, sources said.
One of his other firms, Detroit Venture Partners, has also explored the space. Detroit Venture Partners will have some role in the new team, sources said.
The Cavaliers are the third nonexisting team to purchase into the league. Golden State Warriors co-owner Joe Lacob and have also also obtained spots at the $13 million price point, leaving at least one more owner unreported.
This is not the first dip into esports for either NBA team. Both the Cavaliers and the Warriors will also participate in the NBA 2K League in 2018, which will be under the team brands because of that league's partnership with the NBA.