EA To Get Exclusive NFL Player Rights? 57
Thanks to GameSpot for its news story reporting that EA may be on the verge of an exclusive contract for NFL football player likenesses. According to the piece, which quotes a Sports Business Journal article: "Electronic Arts is in final negotiations with Players Inc., the NFL Players' Association marketing arm, to exclusively license all NFL player rights for the next four years. The Journal set the price tag of the deal at $250 million each year, which EA would pay Players Inc.; in other words, a literal billion-dollar contract." The story goes on to note: "If that turns out to be the case, no non-EA Sports game could license NFL player likenesses--an almost certainly fatal blow to the Madden series' rivals." Update: 05/19 21:07 GMT by S : It seems the linked article has been retracted: "When contacted by GameSpot, NFLPA executives said that not only was the story false, but The Sports Business Journal has since run a retraction."
Scary part is that they can afford it (Score:5, Informative)
Madden 2k3 was the #4 best selling console game in 2003 -- selling 2.6m units for the PS2 alone. (~$130m USD)
Madden 2k2 was the #6 best selling game in 2003 -- selling 1.99m units (~$97m USD)
Madden 2k1 was the #33 best selling console game -- selling a respectable 900k units (~$46m USD)
Madden 2k3 for the XBoX is way down at #76 with 490k units (~$22m USD)
Madden 2k2 for the XBox is clinging to #96 with 411k units (~$19m USD)
So the Madden franchise brought in ~$314m USD in 2003 on the consoles alone. EA also has the NFL Blitz and NFL Street franchises which also require likeness rights' licensing.
Also keep in mind retailers don't typically make much profit (if any) off video game sales. (the publisher/distribution/storefront business is more hackneyed and assinine than film distribution) -- So nearly all of the revenue goes right back to EA, who as we all know, puts very little development money back into its minute incremental gameplay updates for each season. However, it's marketing budget is likely quite sizeable for the industry.
The shocking part of this is that EA can afford this contract. But will it be worth squeezing out their competitors?
Sega NFL 2k3 sold only 600k units (~$16m), and MS Fever 2k2 sold only 500k units (~$25m)
Is a potential increase of $40m worth spending $250m to get?
(granted we don't know what the current fees are for non-exclusive likeness rights -- but I have to assume exclusivity adds more than $40m to the price)
Re:Scary part is that they can afford it (Score:4, Informative)
Also, to clarify a point. Let's use the Madden 2003 version as an example. According to NPD, the PS2 version of Madden 2003 was the #1 selling video game for all of 2003, yet the game was released in August 2003 (giving it just a scant 4+ months of sales compared to other titles on the list). Pretty significant for a single title on a single platform (add to it what the XB/GC/PC/etc versions pulled in as well).
Let's backtrack a little bit: From the day it was released through the end of September, Madden NFL 2003 moved approximately 1.7 million units in the U.S. at $50 each. That would be $85m in sales just for that timeframe.
Digging further, GameDaily said that Madden sold "3.8 million to date" [gamedaily.com], which would be around the time that Sega pulled out of the sports market a few weeks ago -- still not looking at a full year yet. 3.8m games @ $50 comes out to $190m. Extrapolate these numbers over the course of a year and I can definitely see where EA can afford to spend $250m per year on this title alone.
disclaimer: i hope i carried the one when calculating those figures. i was never the best at math
The story is bogus (Score:3, Informative)
After a well-respected sports-industry magazine reports the sports-licensing deal of the century is in the works, NFLPA reps say the story has been retracted.
Two weeks ago, The Sports Business Journal, one of the most respected trade journals of the athletic entertainment business, revealed the identity of Madden NFL 2005 cover athlete Ray Lewis several days before EA Sports announced it.
Now it appears they may have broken one of the biggest rumors in the game industry's history.
The May 3 issue of the Journal contained a story with the headline "EA set to pay Players Inc. $1 billion." According to the article, Electronic Arts is in final negotiations with Players Inc., the NFL Players' Association marketing arm, to exclusively license all NFL player rights for the next four years. The Journal set the price tag of the deal at $250 million each year, which EA would pay Players Inc.; in other words, a literal billion-dollar contract.
Given the large sums reportedly at stake, the exclusivity of the EA/NLFPA deal would have been almost certainly strict. If such a deal were ever done, no non-EA Sports game could license NFL player likenesses--an almost certainly fatal blow to the Madden series' rivals, such as ESPN NFL Football.
When provided with excerpts from the article by GameSpot, EA Sports representatives promised to pass them along to "someone who can answer your questions." As of press time, no official confirmation or denial of the EA/NLFPA negotiations had been given by EA. However, off the record, one source close to the company called the story "way off."
While the The Sports Business Journal broke the story, it was, ironically, reprinted in the magazine ESPN. This prompted a moderator at ESPNvideogames.com to call the NFLPA. According to the moderator, NFLPA reps denied that anything other than "normal" licensing deals were in play.
When contacted by GameSpot, NFLPA executives said that not only was the story false, but that The Sports Business Journal has since run a retraction--something that will undoubtedly make fans of the ESPN NFL franchise breathe much easier.
By Tor Thorsen -- GameSpot
Link [gamespot.com]
Gamespot reports the article has been retracted (Score:5, Informative)