Sources: Dignitas' League of Legends Championship Series franchising application declined

Team Dignitas, one of the original teams in the NA LCS, has had its franchising application denied. Provided by Riot Games

Team Dignitas will not participate in the 2018 North American League of Legends Championship Series season following its franchising application being declined by Riot Games, league sources told ESPN.

Riot Games began notifying phase two applicants of the status of its application on Tuesday, with calls going through Friday evening, sources familiar with the process said. Team Dignitas was not the only existing team in the league to be notified of its removal, sources said. Reasoning behind the declination has yet to be disclosed.

Team Dignitas will be entered into a pool for compensation for an exit fee, alongside the other teams that participated in the 2017 Summer League Championship Series and Challenger Series split, according to a Riot Games explainer. Dignitas will be rewarded a minimum of six shares in that pool, three for each split since Dignitas' ownership change in fall 2016. The dividends will be calculated based off the extra $3 million buy-in fees paid by each team that is entering the league for the first time. Existing teams that are accepted into the franchise era will pay the standard $10 million, which means they will not contribute to the exit fee pool.

One of those new teams, Golden State Warriors owner Joe Lacob and his son Kirk, were accepted into the league on Wednesday, sources said. The Lacobs will have to pay $13 million over several years to enter the league: $10 million as a flat buy-in and the $3 million for replacing an existing franchise.

Dignitas will be forced to sell or terminate the contracts of AD carry Benjamin "LOD" DeMunck and jungler Lee "Shrimp" Byeong-hoon, whose contracts extend into the 2018 season, in order for Dignitas to be entitled to its exit fee from the league. The remaining player contracts will end on Nov. 20, the day before the opening of the transfer period for the 2018 season.

Riot Games announced in June that it would be reformatting the North American League Championship Series for the 2018 season to include permanent ownership, an academy league and revenue sharing. The league received more than 100 applicants, sources said, spanning from those who previously participated in the league, sports team owners, venture capitalists and entrepreneurs.

The applicant list was narrowed to a shortlist in September, known as phase two, that saw ownership and executive staff of those applicants travel to Los Angeles to meet with Riot Games and review their application.

Team Dignitas is one of the four active remaining founding teams of the NA LCS. With this exit, only Team SoloMid, Counter Logic Gaming and Team Liquid (formerly Team Curse) remain as the original organizations. The league started in February 2013 and has seen organizations enter and leave through relegation and promotion, as well as the sale of rosters and league slots, over the past four years.

The parent organization of the Philadelphia 76ers and the New Jersey Devils, Harris Blitzer Sports & Entertainment, acquired Team Dignitas and Apex Gaming in September 2016. Team Dignitas was the first esports organization to be acquired by a sports team ownership group, rather than one participating member. With the acquisition, those two brands merged, with Apex Gaming's League Championship Series slot rebranded as Team Dignitas, who were relegated from the league earlier that year.

Team Dignitas, the Philadelphia 76ers and Harris Blitzer Sports & Entertainment declined to comment. Riot Games did not respond to request for comment.