Esports scene flourishes in Dallas-Fort Worth

The Astralis Counter-Strike: Global Offensive team celebrates its victory at ESL One Dallas in May. The marquee event was yet another example of the now-burgeoning esports scene that has overtaken the Dallas-Fort Worth area. Helena Kristiansson/Provided by ESL

DALLAS -- When Nabil Pervez moved to Frisco, Texas, in 2003, the then-13-year-old felt out of place.

Pervez rode through the small suburb of Dallas, with roughly 34,000 people at the time, and saw hills of green and cattle. Originally from Chicago, the big-city teen's life had certainly changed.

Throughout high school and college in the years to follow, Pervez became known for what he describes as a "religious" dedication to video games, so much that he would skip parties to watch weekend esports tournaments instead.

"I had been super into fighting games; I had always been the weird guy who was really good at them," said Pervez, now the local marketing manager for Infinite Esports & Entertainment. "I loved every minute of it, but it was always the alienating factor between me and the other guys."

After leaving the University of Texas at Dallas in 2013, Pervez worked a slew of technical support and account management jobs. But in 2015, he got his shot to work in esports part time as a commentator for Tourney Locator, a local organizer that ran tournaments out of various anime and game shops in the Dallas-Fort Worth metroplex. But even with Tourney Locator, and later with a job at PVP Live, Pervez didn't feel stability as he continued to commit more to esports.

But then came Infinite, one of three major esports businesses that have started or moved to the Dallas-Fort Worth area in the last year.

From May to August of 2017, investors from various Dallas-Fort Worth sports teams, venture capital groups, real estate and oil companies separately came to terms to invest in three of esports' longest-tenured organizations. Between them, more than $105 million in capital has been contractually committed in acquisitions, investments and development projects related to esports.

And the growth has gone beyond pro teams, as well. By the fall, four local colleges will have school-sponsored esports programs; at the end of 2018, two esports-specific facilities will open in Frisco and Arlington; and by 2020, the Big D's first geolocated esports franchise, the Dallas Fuel, will leave Los Angeles and come home.

Dallas was the birthplace of the industry in the U.S., but it lost its stride in the late 2000s and early 2010s. Now, it's second only to Los Angeles as the country's capital of esports.

"How many of you know about esports?" a professor asked a room in The Davidson Auditorium at the University of Texas at Dallas on May 16.

Of about 85 people, half raised their hand.

"BURN BLUE!" shouted one attendee.

In the front of the room sat Hersh Family Investments managing director Randy Chappel and Team Envy founder Mike Rufail and vice president Justin Rojas, an UT Dallas alumni. "Burn Blue," is the motto of the Dallas Fuel, which Team Envy owns.

As the esports industry has continued to grow -- research firm Newzoo predicted in February that by the end of 2018, 380 million people around the world will at least occasionally watch esports -- Dallas-Fort Worth has regained its momentum as a top destination for esports companies, three of which moved to the area in last winter.

But unlike Los Angeles, the de facto home of esports in the U.S., many would say Dallas-Fort Worth was where it all started.

In 1992, id Software moved to Mesquite, Texas, a suburb just east of Dallas; id Software would go on to release Quake, a first-person shooter game that became a staple of early esports competition, in 1996. And a year later, 37-year-old Angel Munoz founded the Cyberathlete Pro League, one of the world's first esports event organizers, and hosted his first event, The F.R.A.G., at the Infomart, a data center in downtown Dallas.

"I remember how old it looks now but how cool it was back then," said Bryan Yale, who was 17 when he attended the F.R.A.G. in 1997 as a player. Yale, now 38, works for Infinite. "It was cutting edge: 'Wow, that's a lot of PCs.' It felt like the new arcade; I was a huge arcade kid, and it seemed like the evolution of the arcade. As a kid, I was more excited to game with my friends.

"To be able to sit there and play next to people was a surreal experience."

In 1998, real estate investor John Goff asked Chappel, then a 27-year-old partner at Goff's firm, to go visit Munoz and assess the opportunity of potentially working with and investing in Cyberathlete Pro League.

"We thought about doing something about it back then, but we didn't quite understand it," Chappel said during the May panel at UT Dallas. "That was one of the first attempts to run an esports league, and that started right here."

Now Chappel and Goff are invested into the industry, even though they don't work together any longer. Munoz and the Cyberathlete Pro League, however, piqued their curiosity and represented their initial exposure to an industry that both have now committed millions to.

It's hard to decipher what makes Dallas-Fort Worth such a destination for the rapid-growing esports industry, but many believe it's the tech and fast-pace investment mindset that encompasses the city; others believe it's the centralized location, ease of access to both the East and West coasts and, most importantly, sports team owners that see a need to be involved in the future of their own business.

"You had to have your head in the sand to not see the growth of esports if you're in the sports business," Kenneth Hersh, a co-owner of the Texas Rangers and an investor in Team Envy, said. "If you haven't seen the growth of esports in the last 24 months, you probably haven't been serious about your sports ownership, let me just put it that way."

But the 2017 investment boom and the subsequent influx of esports into the area was never coordinated. Sure, Dallas Mavericks owner Mark Cuban, Rangers owners Hersh, Ray Davis and Neil Leibman and the Dallas Cowboys' Jones family -- collectively the Dallas sports-team owners that invested in esports in 2017 -- have spoken to one another about their opportunities. But according to all of them, those conversations occurred after each completed their deals.

Dallas-Fort Worth esports, by pure coincidence, has leveled up.

In the early summer of 2017, Chappel sat in his chic, upscale office in Las Colinas, an Irving-based business hub a few miles southeast of the Dallas-Fort Worth International Airport. Chappel's office was covered in sports memorabilia, most notably the jersey that Brett Hull wore when he shot the Stanley Cup-winning goal for the Dallas Stars in 1999.

Chappel received a call from Charlie Jackson, an executive at consultancy Catalyst Sports & Media.

"Do you have time this afternoon?" Jackson asked.

"Yeah," Chappel replied.

"Well, this guy is in town, and you're in town, and you two need to meet," Jackson said.

The guy whom Jackson was referring to was Rufail, the founder of Team Envy, an esports organization that started in 2007 and rose to popularity through Call of Duty early in its tenure and later Overwatch after that game's release in 2016.

To remain in the professional Overwatch scene -- and to keep a slot in the League of Legends Championship Series, which Envy initially paid a reported $1.2 million to join in May 2016 -- Envy would have to come up with a total of $30 million by July to pay for franchise fees. Rufail recalls a time when, early in his esports career, he and other esports players couldn't pay their water bill for their team house -- and even though much more successful years later, $30 million was not affordable alone.

Enter Chappel.

Nineteen years after he first met Munoz, Chappel's new boss, Hersh, had become insistent that his group invest in the esports space.

Those conversations led Hersh and Chappel to invest in Fnatic in a $7 million funding round that included a handful of other sports team owners and entertainment investors. But with Rufail, the opportunity was bigger: Hersh, a board member of the Rangers, saw the opportunity to have hands-on involvement and bring an esports team to his backyard.

"Mike came to our office in Los Colinas 24 hours after I heard his name, and he was there for a couple of hours," Chappel said. "I remember calling Ken afterwards and saying, 'This is the guy. He was born and raised in Texas. He's looking for a reason to bring the team back to the big market. He wants to be in Dallas.'"

In July, Hersh's group committed to invest $35 million in Team Envy for a large minority stake in the company. In August, Envy agreed to pay $20 million in Hersh-backed money to acquire the Dallas slot in the Overwatch League, a 12-team geolocated league that will have its teams play home games beginning in 2020.

In the end, Envy did not win a bid for a franchise slot in the League Championship Series. Chappel said it was his lowest moment in the business thus far.

"That was pretty bad news. I don't want to be shy about it," he said. "That was a pretty disappointing moment."

But Envy found success too. By October, the Dallas Fuel was born.

Mark Cuban is used to being ahead of the curve.

The 59-year-old Mavericks owner first made his multibillion-dollar fortune by funding, developing and then selling broadcast media platforms in the late 1990s and early 2000s. And in one of those projects, television network AXS TV, Cuban met Sundance DiGiovanni, a co-founder of Major League Gaming. MLG was one of esports' first tournament-organization and event-broadcasting companies, and DiGiovanni himself is often considered a founding father in the industry, much like Munoz.

DiGiovanni's company, among others such as Munoz, ESL and id Software, host esports events in the Dallas area nearly once a year. Cuban has not attended those events, but he would keep in touch with DiGiovanni over the years. During that 2004 meeting, Cuban saw a booming industry that sat right in front of him.

"It was a league in its infancy, and you had some hard-core gamers, but the technology really hadn't advanced enough to make it easy to follow the best gamers," Cuban said. "You had to be into it, and then, you had to watch it on TV. Streaming wasn't really a foundation for building interest. And Twitch -- [its founder] Justin [Kan] was still walking around taking videos back then -- and you're talking more than 10 years ago. It's come a long way because of the technology, what's happened with Twitch and YouTube, and that phones and consoles have gotten better; it's a different universe."

In June 2015, Cuban made a splash by becoming the first NBA owner to invest into esports via a $7 million funding round in a wagering site, Unikrn, founded by ex-Microsoft executive Rahul Sood. But unlike many of his peers, he has never purchased any stake in a team.

When he played in a League of Legends show match in San Jose, California, in November 2015, Cuban made his apparent interest even more visible, and within days, teams were pitching him to invest in them. And with the Overwatch League and the North American League Championship Series franchising this past summer and fall, even more teams and applicants wanted Cuban involved.

"Every gaming group, every team, every new game, every platform, every video chat, every enhancement, every accessory," Cuban said. "You name it, I got pitched."

On this May afternoon, Cuban sat in a warehouse that, aside from some blue Mavericks decals and some tables made from the court that his team won the 2011 NBA Finals on, is mostly empty -- but not for long.

By the end of the year, the Mavericks will open a facility here for its NBA 2K team, where fans can come watch and lounge as well. Mavs Gaming, the Mavericks' 2K-focused subsidiary, is the only esports team Cuban is invested in, which he said is solely because of it being an extension of his basketball franchise.

"It allows us to kind of learn at the NBA level with what works with a generation of kids that don't watch TV, that stream differently than how we think of over-the-top streaming," Cuban said. "It allows us to learn more about teaching; you have to learn these games. They're hard to be good at, it takes time and it teaches you from an educational perspective. There are just so many nuanced benefits from 2K."

Cuban said he is unsure if he'll ever invest in a traditional esports team; he cited industry disruption, like Fortnite -- which gained over 2 million live viewers on June 12 in its inaugural E3 Pro-Am in Los Angeles -- and how games like it could take away from others such as Overwatch, where operating costs exceed $25 million in investment. Cuban, for his part, said he believes he has invested $10 million in esports in the past three years, between Mavs Gaming and Unikrn.

"If you're playing Overwatch or Counter-Strike: Global Offensive, and I don't know who the big streamers are in those games, whoever those people are, they're not getting the billion views that [Tyler "Ninja" Blevins] is getting right now," Cuban said. "Something's gotta give. From the business side, that's the most interesting thing going on right now."

Chris Chaney is one of the smartest new people in esports, his colleagues and industry peers will tell you.

The 34-year-old Princeton graduate and former NBA global partnerships associate left that job to work as a consultant and eventually moved to Dallas-Fort Worth, where he has lived for the past four years.

"I first got interested in esports in early 2016, April or May," Chaney said. "I remember my first conversation, which was in early May 2016, with a friend of a friend who works at Riot Games. We talked esports, and he knew esports as a player and a fan, and he was really informative about esports."

Chaney then met Neil Leibman, an energy executive from Houston, who is the head of the ownership committee at the Rangers. A day after an introductory phone call with Leibman last summer, Chaney drove to Arlington, the home of the stadiums for the Rangers and Cowboys, to meet him at the Rangers' offices.

"Walking into his office, it didn't feel like you were meeting the owner of a major sports franchise," Chaney said. "It felt like you were meeting someone who was just welcoming you, in his office, in his world, but not in an opposing or ego-driven manner. We're talking business, obviously. I don't know if disarming is the right word, but I remember that first interaction being so positive."

Within weeks, Leibman knew he had to be involved in esports. He formed an ownership group that summer called Texas Esports, comprised of himself, Rangers majority owner Ray Davis' Avatar Investments and Houston Astros co-owner John Havens. Texas Esports provided Chaney with seed money to go and invest, with a focus on the League Championship Series and the Overwatch League. Leibman and Chaney declined to comment on Davis's involvement, which has never been publicly disclosed.

After a few attempts at finding a suitable partner, Chaney came to OpTic Gaming.

Few teams in esports rival OpTic in terms of popularity. With more than 3 million followers on Twitter and a slew of fans at any given event it competes in, OpTic first gained its footing, like Envy, in Call of Duty. But during the past year, thanks in part to Chaney and OpTic's new parent group, Infinite Esports & Entertainment, the team has added competitive teams in each major esports title and franchised in the League Championship Series and Overwatch League.

"We were looking at different financial partners in that time frame, and it wasn't until Neil and his group came in at the tail end of this thing," that OpTic had the funding it needed, said Ryan Musselman, a founding member of OpTic who is now Infinite Esports & Entertainment's senior vice president. "The way the stars align on this is pretty nuts."

Although the group had interest in Overwatch League in Dallas, it was too late. Envy, ironically one of OpTic's biggest rivals in Call of Duty history, had already claimed the spot -- and it was funded by Hersh, nonetheless, a partner of Leibman's in the Rangers.

Since then, Infinite has become the fastest-growing business in esports. The company has a total of 11 subsidiaries, which it has either acquired or helped start with budding entrepreneurs; among those companies are four competitive esports teams, two player-and-skill development companies, one event organizer, one sales organization, one media house and two apparel companies. As of June, Chaney said that, including players and coaches, the company has 195 employees, and it plans to continue hiring.

Its event organizer, NGAGE, has been tasked to remodel the Arlington Convention Center, less than a mile from Global Life Park, the Rangers' stadium and Davis and Leibman's Dallas-Fort Worth home base. The majority of the funding, a total of $10.6 million, for that project will come from the city of Arlington itself, but both Infinite and Hersh will contribute funds. The remodeled arena is expected to open by the end of 2018; and Rufail and Hersh said that it could be a home for the Dallas Fuel, but that those details have not yet been decided.

Meanwhile, at Infinite's offices in a startup park in Frisco, Texas, Missouri-based Stadia Ventures will launch an esports accelerator in the fall -- providing up to $100,000 per company, for a 12-week period. Other local venture capital companies are continually getting involved, like Deep Space Ventures, which invest in Infinite and eight other esports companies.

On a warm August morning, Stephen Jones, 53, and Jerry Jones Jr., 47, headed from their homes in Highland Park, Texas, to Fort Worth's Meacham International Airport, about 35 miles away. The two sons of Cowboys owner Jerry Jones were en route to meet Goff and his son Travis Goff. The Goffs are longtime friends of the family.

Together, the four would fly on the Goff's private Gulfstream G200 jet to Camarillo, California, a Los Angeles suburb, for a meeting with the elder Jerry Jones.

Cowboys training camp, held in Oxnard, California, was on the agenda, but the main objective of the trip was to finalize the families' first business partnership: esports. For several weeks, the two parties had met with Jason Lake of compLexity Gaming. Founded in 2003, it is one of the longest-tenured teams in esports.

The younger Goff, while in high school and simply a fan, had first met Lake at a Counter-Strike esports event, the aforementioned Cyberathlete Pro League, at the Hyatt Regency hotel in Dallas in December 2004. It had been 13 years since the now-vice president of his family's investment arm and the esports CEO had met; by chance, through a mutual colleague Goff contacted via LinkedIn, Goff and Lake were reintroduced and became determined to do business with each other.

Travis Goff, 33, gave a presentation to the room -- Goff's father, Jerry Jones and the Cowboys owner's sons -- at Cafe Fiore, a small Italian restaurant, in Ventura, California. There, he pitched the owners of the most valuable sports franchise in the world on why esports was another suitable investment.

It didn't take much for the Joneses. The elder Jerry Jones and the elder Goff shook hands; the deal was done.

"Jerry was about to be inducted into the [Pro Football] Hall of Fame. I had a binder for everyone, so I went and searched for a gold binder for him," Travis Goff said. "His presentation was the only one in the gold binder."

"We have a lot of different partners in a lot of different places in a lot of different business, but I will tell you, this has been fantastic," John Goff added. "We think alike. We kind of know what the other one is going to say before we're going to say it. It's been terrific. It's early on, and I'd say there have been no surprises.

"The success of this investment is almost entirely geared on your ability to go get sponsors. If you want to go get the best sponsor machine on the planet, it is probably right here in our backyard."

What's next for compLexity is a bit of a mystery. When Activision Blizzard, the developer of Overwatch, approached the Cowboys about the Overwatch League early last summer, none of the parties involved in the eventual acquisition deal was far enough along to make a $20 million commitment. And in August, compLexity's application to the League Championship Series was declined.

What once was a top organization in esports, compLexity now looks to find its footing -- but Lake is happier than ever. Before the end of 2018, compLexity Gaming will open a facility at The Star, the Cowboys' $1.5 billion home that includes shopping centers, the Ford Center and the football team's headquarters, in Frisco, Texas.

What separates compLexity from OpTic and Envy, though, is who works down the hall. For now, until the new facility opens, compLexity is staked out in a part of the Cowboys headquarters at The Star -- which features massive recording studios, player catering and nutritionists, a full-size gym and, most importantly, the Cowboys' front office. The world's most valuable sports team wants to make its esports arm just as wealthy.

In the three years since Pervez joined Tourney Locator, his life, Yale's and others like theirs could not be any different. From financial stability to social acceptance, esports is a viable career -- and now, colleges across the metroplex, like UT Dallas, where Pervez and Rojas are alumni, have committed to esports. By the fall, four universities -- UT Dallas, University of Texas at Arlington, Texas Wesleyan and University of North Texas -- will have school-sponsored esports programs.

And the events have grown too. In May, ESL concluded a two-year agreement with the Verizon Theatre in Grand Prairie, Texas, just west of Dallas and east of Arlington, to host the annual ESL Pro League Finals there; and according to sources, it's likely that ESL will continue to bring that event back to the area -- potentially even at the new arena in Arlington, being built by Infinite.

Dallas will likely again be a stop for the Call of Duty World League circuit ran by MLG, which hosted events in the metroplex in March 2017 and December 2017. And the 23rd annual QuakeCon, ran by id Software, will take place at the Gaylord Texan Resort Hotel & Convention Center in Grapevine, Texas, in August.

"We're all a part of this community of people that I got to fall in love with every week when I was at Tourney Locator," Pervez said. "The fact that no one feels like the weird kid anymore, I guess that's full circle."