EA to BUY NFLPA rights???

TRI · Post by **TRI** » Sat May 15, 2004 4:07 pm

It is rumored at OP that EA will pay the NFLPA a nine figure payment for the exclusive right to include player's names and likeness in only EA sports football games for the purposes of creating a monopoly in football video games. If this happens it is to be considered an attempt to create a monopoly in video football games and should be illegal under business anti competitive laws. This is clearly an ANTI COMPETITIVE move for EA and is illegal.

XXXIV · Post by **XXXIV** » Sat May 15, 2004 4:16 pm

Is there anything concrete to back this up?

Lets say it real.
I dont see how thats illegal.
I can see how that would be bad for gamers.

It is is something EA would do. They did it with NASCAR. Destroying any chance of getting a good NASCAR game.
EA is already incredibly LAZY. You take away the competition....

..That could be ugly.

Im not going to worry about it until I have a reason to worry about it.

pk500 · Post by **pk500** » Sat May 15, 2004 4:21 pm

It's not illegal. Any sporting entity has the right to grant "official" status to licensees, which grants exclusivity in return for large sums of money paid to the entity.

For example, Miller Lite is the official beer of the Indianapolis Motor Speedway. No other beer is sold here, and no other beer is allowed to advertise here.

The NFL could grant the same kind of "official" status to the EA to become the "official video game publisher" of the NFL. As mentioned before, NASCAR already has struck such a deal with EA.

There's not an iota of it that's illegal. Sucks for gamers, but it's not illegal.

Other companies can still produce football games, but everything would need to be fictitious. A similar setup existed in Formula One games, as Monaco Grand Prix in the 90s didn't have the FIA license. It had fictitious cars and drivers but real tracks. Konami's soccer games in the 90s didn't have the FIFA license, so all national and club teams were fictitious with fictitious player names.

The precedent already is set. But I agree, this would be a very, very bad deal for gamers.

Take care,
PK

wco81 · Post by **wco81** » Sat May 15, 2004 4:55 pm

9 figures is over 100 million and the time period cited was 4 years.

So we're talking in the neighborhood of $25 million or more.

That's just astounding. They'd have to sell so many copies just to cover that licensing cost, not to mention all the development and marketing costs.

How many more incremental sales could Madden pick up now that the field only consists of themselves and ESPN. Oh I guess Blitz is there too.

Maybe the license is based a volumes shipped and with Madden selling over 5 million last year, this new contract wouldn't be that much more.

Sports games have really hit the big leagues.

mobiggins · Post by **mobiggins** » Sat May 15, 2004 5:13 pm

Wouldn't anybody selling licenses like this benefit from opting out of an exclusive license?
I mean, isn't there more money in selling 4 licences for x amount than one license for y amount?
It would seem like anyone in the business of selling licences would have multiple customers and always make sure that the sum total of all their licence profits would be more than any one licence offer on the table.

cootdog · Post by **cootdog** » Sat May 15, 2004 5:14 pm

If the rumor is true, then it's a great business decision for EA. If the NFLPA's willing to sell, then it makes perfect sense for a corporation to throw down the money, lock up exclusivity for multiple years, and shut out the competition when it comes to such a key selling point. If Sega had the dough, they'd be delighted to do the same. No real names, no real faces, no star player on the cover of your game -- that takes a LOT away for the general public browsing the racks at Best Buy. So much of the ammunition behind the sales battle thus far has been subjective, in that some people prefer Madden's gameplay to ESPN, vice versa and etc., but the license issue is cut and dried. Sure, it's ugly and evil, but coups are rarely not.

The timing of this news is somewhat suspect (which, frankly, makes it seem even more like a rumor), in a year when the buzz is that ESPN will finally definitively surpass Madden in terms of graphics and gameplay. Does anybody know if this would this take effect for this year?

bdoughty · Post by **bdoughty** » Sat May 15, 2004 5:39 pm

Well it's not like this has not happened before with the NFL. Remember back in the early Nintendo 64 days Acclaim was somehow able to buy the full NFL License (teams, players, etc) for a full year. Madden 64 was left with made up teams and player names.

While it may be great for EA to grab this, and like others have mentioned above it is legal, it is defiantly not in the best interest of gamers. But if EA can make it profitable and root out the competition, they will try their best. I only wish they could simply do it on the field, so to speak.

Funny thing is from the posts I read, the news was reported in ESPN the Magazine...

In the newest ESPN the magazine, it said that EA is working on a 9 figure deal with the NFLPA. It will give them four years of exclusive rights to the NFL players and likeness.

Of course you have to figure in the other implications if this was to take place. The NHL, MLB, NBA, PGA could be next.

davet010 · Post by **davet010** » Sat May 15, 2004 5:53 pm

And how long do you think it would take for roster files to be produced and on the net for ESPN 2k6 ? A week ? Two ?

TRI · Post by **TRI** » Sat May 15, 2004 6:07 pm

Buying exclusive rights is not illegal as long as it does not allow someone to create a monopoly. This would be really easy to prove considering EA already has 90% market share in video football games.

XXXIV · Post by **XXXIV** » Sat May 15, 2004 7:48 pm

I dont see how it would be a monopoly.
Everyone else would still be welcome to make a football game.
Why should someone be punished for good business sense?

Post by **ScoopBrady** » Sat May 15, 2004 9:30 pm

I would imagine that if EA shelled out that kind of cash for the NFLPA rights they would be able to sell permission to use them right? Imagine if they made Sega pay for the chance to get wiped across the floor in sales.

RobVarak · Post by **RobVarak** » Sat May 15, 2004 10:23 pm

(sniff)(sniff) Smells like troll in here.

Post by **Jared** » Sat May 15, 2004 10:32 pm

Are there any links to this rumor? I'd like to see that....

And I don't know if this is a good idea...it depends on how much EA currently pays for the NFLPA license...but if it's $5 million, they'd have to have $80 million more in sales over the next four years. That's an extra 400,000 a year. How many total did ESPN and Fever sell last year? If it's less than 400,000 then it's likely not a good idea. (That's if they're even thinking about it....)

GTHobbes · Post by **GTHobbes** » Sun May 16, 2004 1:54 am

I don't know if it's illegal or not, but I've seen lawsuits filed over a lot less meritorious reasons than this. It would be a monopoly plain and simple. And pretty chicken sh it on the part of EA, if you ask me.

If you're a lawyer filing suit, all you would need to do is get past the judge at the motion to dismiss stage. If you did that, you could get it tied up in the court for years. Courts generally don't hold all that much sympathy for cmpanies that try to rule the world (Microsoft, Ma-Bell, etc.), like EA is trying to do here. I'm sure you could get some experts to testify how this is some kind've competitive disadvantage. Whether it flies or not, who knows.

Leebo33 · Post by **Leebo33** » Sun May 16, 2004 3:09 am

GTHobbes wrote:I don't know if it's illegal or not, but I've seen lawsuits filed over a lot less meritorious reasons than this. It would be a monopoly plain and simple.

I don't see how it would cause a monopoly. Football games are just a segment of the video game market. I could see it maybe if EA obtained all the official licenses for every major sport.

JRod · Post by **JRod** » Sun May 16, 2004 3:10 am

I think this is saying a few things...

ESPN is a bigger threat than previous stated. If ESPN is so far down the line in sales why would EA Sports even consider it? If this was ESPN trying to steal away the license from EA Sports than I could understand it. This isn't like Nascar where EA Sports didn't dominate the market so by locking up the license all game sales would go for it. So ESPN game sales must be more than thought or EA Sports thinks ESPN can start to compete in the coming years.

To me this proves how coporate driven EA Sports is. I know companies think bottom line but this is getting to a point where it's hurting the consumer. They can't put out good games across the board so to ensure better sales they have to lock up the rights. Great business practice but just goes to show you that everyone that buys an EA sports game this year isn't a custumer but a bottomline.

bdoughty · Post by **bdoughty** » Sun May 16, 2004 3:59 am

Jared wrote:Are there any links to this rumor? I'd like to see that....

And I don't know if this is a good idea...it depends on how much EA currently pays for the NFLPA license...but if it's $5 million, they'd have to have $80 million more in sales over the next four years. That's an extra 400,000 a year. How many total did ESPN and Fever sell last year? If it's less than 400,000 then it's likely not a good idea. (That's if they're even thinking about it....)

Well you have to subscribe to see it but Street and Smith has something not only on the EA deal, but the fact that the NFL cut ties with Midway a few links below (From April).

http://www.sportsbusinessjournal.com/in ... ronic+arts

An NFL spokesman said that the league’s other game licensees, Sega, Electronic Arts, Microsoft, Sony 989 and Atari, along with other hard goods licensees, were granted a one-year extension earlier this year. But Midway was not

...

pk500 · Post by **pk500** » Sun May 16, 2004 12:23 pm

EA will pay the NFL $1 billion over four years for exclusive rights, according to this story.

Holy sh*t! If that sum is true, then there's no question this deal will happen. $250 mill per year -- that's insane cash.

Take care,
PK

wco81 · Post by **wco81** » Sun May 16, 2004 12:37 pm

One billion?

9 figures is 100 million isn't it?

EA claimed to have sold over 5 million copies of Madden 2004.

That is probably their highest volume ever.

Well 5 million at $50 each grosses out to $250 million. If they're paying One billion over 4 years, they're paying $250 million a year? No way. I don't think the TV contract is that much more than that.

Anything in the high 8 figures also sounds unlikely. What could they get per copy, say $2?

What is EA's profit per copy? It's $50 at retail so their number is something less than that. Deduct licensing fees to Sony, Microsoft and Nintendo, deduct marketing and advertising, deduct development and distribution.

I forget what EA's total profits were last year but their gross revenues were in the 2 to 3 billion range. If they profited over $100 million on those 5 million copies, they did very well. Software has huge margins since it probably costs them $1 or less to produce each copy. But EA does a lot more advertising than Microsoft Office it seems, at least on TV.

Anyways, I wouldn't get worked up about this story until it gets past the rumor stage. Worst scenario, Sega can't reference the NFL or actual players. I think the hardcore will still get it, the way they prefer WE over FIFA. How much sales they'd lose is an open question, because I'm not so sure they even hit a million last year, since they came out later. Still they didn't discount the game so fast as 2K3 so maybe they took share from Fever and other second-tier games.

pk500 · Post by **pk500** » Sun May 16, 2004 1:01 pm

WCO:

You can't base the feasibility of the deal based on past or current profits. I think EA anticipates two things when figuring the financials of the deal:

1. The videogame market, in general, is growing every year. So EA would have increased profits next year even if it didn't lock up this deal.

2. EA's football game sales will increase exponentially due to this deal. There's a massive segment of the gaming public that will insist on playing a game with the NFL license. I would think this deal will increase EA's football game market share to scary levels, pumping up its profits even further.

From a personal standpoint, I much prefer Sega football to EA football. But if Madden is the only game with the license next fall, I'll reluctantly buy Madden instead of ESPN NFL.

Another spin-off of this deal to consider is the fate of the ESPN licensing deal with Sega. Will ESPN really want to pay decent bucks to put its name on a series that doesn't feature the NFL license? Doubt it, and I bet that's also part of EA's strategy to weaken its competition through this deal.

Take care,
PK

wco81 · Post by **wco81** » Sun May 16, 2004 1:09 pm

Yeah but the numbers don't add up if what you say is true.

Even if they got 100% of all football game sales, how big do you think that is? Last year, it was probably 6-6.5 million if you count all the copies sold.

So even if they added 2 million copies sold over last year, we're talking $100 million gross. Plus at some point, I don't think Madden's biggest competition is ESPN or other NFL games. I think it's NCAA and maybe NFL Street to a lesser extent. In other words, there's a limit to how many football games can be sold in any year and at some point, Madden cannibalizes sales from other EA football games, or vice versa.

The NFL, as popular as it is, may not have the leverage it used to have. Some people question whether for the next TV contract, they will be able to see the kind of expansion they've seen from one TV contract to the next. It may be lucky just to get the same terms as the current one.

Cincinnati_Kid · Post by **Cincinnati_Kid** » Sun May 16, 2004 1:10 pm

sega could always cut a deal with Lavar Arrington

exclusive rights as there cover boy.....

actually they could just go the college route and deliver us

ESPN Gameday 2k#

Brando70 · Post by **Brando70** » Sun May 16, 2004 4:01 pm

I agree with WCO that there's no use getting worked up over this until it becomes a fact. But if it happened, I think you'd see the end of any other football franchises during the duration of the exclusive agreement. There is no way, in this day and age, that an NFL game would sell without the real players. The only way that could be fixed would be through manual editing or Action Replay, which few gamers have. It's not like Sega could offer a roster download. It would kill off their franchise.

pk500 · Post by **pk500** » Sun May 16, 2004 4:17 pm

>>>It would kill off their franchise.<<<

The mantra running across the marquee screensaver of every EA executive working on this deal ...

Take care,
PK