SBD/July 18, 2013/Marketing and Sponsorship

EA Sports Plans To Continue Making CFB Game Despite NCAA Pulling Its Name, Logo

Analysts think the NCAA is trying to limit its legal exposure to class-actions lawsuits
EA Sports Exec VP Andrew Wilson yesterday posted a statement online that the company will continue to develop and publish a college football video game despite the NCAA's decision to end its contract licensing its name and logo for EA Sports' "NCAA Football" franchise. Wilson wrote, "Our relationship with the Collegiate Licensing Company is strong and we are already working on a new game for next generation consoles which will launch next year and feature the college teams, conferences and all the innovation fans expect." The NCAA in a statement yesterday said, "We are confident in our legal position regarding the use of our trademarks in video games. But given the current business climate and costs of litigation, we determined participating in this game is not in the best interests of the NCAA (THE DAILY). USA TODAY's Steve Berkowitz cites legal analysts as saying that they "thought the NCAA was seeking to limit its legal exposure" by announcing the non-renewal "at a time when it is a co-defendant, along with EA, in at least two federal lawsuits concerning the use of college athletes' names and likenesses." Tulane Sports Law Program Dir Gabe Feldman said, "The NCAA is trying to minimize its risk going forward" (USA TODAY, 7/18).

MOVE BROUGHT BY O'BANNON LAWSUIT
: In N.Y., Steve Eder writes the NCAA's move is "perhaps the biggest real-world development in a more than four-year-old legal battle focused on the rights of college athletes on how their likenesses can be used and what, if any, compensation they should receive." The NCAA "cautioned that its decision not to renew the video game contract should not be seen as a signal that it would back away from its legal stand." NCAA Associate Dir of PR & Media Relations Stacey Osburn said, "This decision and the NCAA’s business relationship with EA only pertained to the NCAA logo and name. Student-athletes were never a part of this relationship, and plaintiffs’ attorneys know it" (N.Y. TIMES, 7/18). However, Michael Hausfeld, the lead attorney representing the plaintiffs in the Ed O'Bannon case, said the organization's decision "underscores their belief they're above the law." He said, "It demonstrates how petty and vengeful the association is." In Birmingham, Jon Solomon notes a former EA Sports exec "testified in the O'Bannon suit that video-game avatars were designed to replicate actual players without using their names." E-mails filed in the case showed that NCAA officials "knew the video games used real players and some officials expressed concern about the perceived commercialization of college athletes through video games" (BIRMINGHAM NEWS, 7/18).

CAUTIOUS ABOUT THE FUTURE: While EA plans to continue with a college football game, Univ. of Kansas Associate AD/External Affairs Jim Marchiony said that school officials would "want to digest the NCAA's decision." He said, "I'm not surprised CLC and EA Sports have a Plan B and we're looking forward to hearing from them about it, to see how we'll proceed in the future." Stanford Deputy AD Patrick Dunkley, whose school also is with the CLC, "expressed similar sentiments" (USA TODAY, 7/18). ESPN's Darren Rovell said, “Should CLC not license the schools in future games, this franchise is over” (ESPN.com, 7/17). Meanwhile, SPORTS ON EARTH's Patrick Hruby wrote, "Here’s the problem for EA Sports, the CLC, schools, conferences and bowl games if they continue with 'College Football 15' and beyond: Unlike the NCAA, they won’t be dodging future liability." Instead, they would "be on the financial hook." A loss or settlement in the O’Bannon case would "set a precedent for paying players for the use of their NILs, making future college football games less profitable and probably not worth the trouble" (SPORTSONEARTH.com, 7/17).

NOT A BIG FINANCIAL HIT FOR EA: In San Jose, Jon Xavier noted NCAA games "don't make EA as much money as flagship products like Madden and the FIFA series," but "all the NCAA games were a strong, predictable source of revenue for the company year after year" (BIZJOURNALS.com, 7/17). Boston-based Cowen & Co. research analyst Doug Creutz estimated that "NCAA  Football" accounts for about 2% of the $3.8B in total annual revenue for EA Sports. Creutz: "They will still be able to make a college-football video game, just not with the NCAA name or logo. I suspect they will still make one, though it might sell fewer units because of the changes. But this is a game that, so far, has not been that important in the grand scheme of things" (ORLANDO SENTINEL, 7/18).

REAL LIFE IMPACT: SI's Austin Murphy notes Univ. of Missouri DT Lucas Vincent earlier this month wrote on his Twitter account he wants to "buy the new NCAA game but I also don't wanna be poor till September." Vincent: "My likeness is on the game why do I have to pay for it?" Murphy notes Vincent the next day claimed he was joking with the tweet, but he managed to "distill the unfairness of the status quo: Players sweat and bleed in the arena, but they are not paid for their labor." Vincent was "asked by a reporter on Twitter if a stipend from EA or the NCAA would make his life easier." He responded, "Extremely easier! (I'd) be able to buy more groceries and be able to put more than $25 in (the) gas tank at a time . . . Would be great lol but lets be real never gonna happen" (SI, 7/22 issue).
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