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NCAA Cancels Electronic Arts Deal

The NCAA is taking its name off this EA Sports franchise.
The NCAA is taking its name off this EA Sports franchise.

JULY 19, 2013 • The National Collegiate Athletic Association (NCAA) has notified Electronic Arts that it will not renew their college football contract expiring in June 2014. As a result, EA Sports’ upcoming NCAA Football 14 will be the final installment in the series. The NCAA made the decision in reaction to ongoing litigation with former and current college football stars who want compensation for having their likenesses used in the video games – compensation that could run into the billions of dollars if the athletes win in court. “We are confident in our legal position regarding the use of our trademarks in video games,” the NCAA said in a statement. “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.” EA and the Collegiate Licensing Co. are co-defendants with the NCAA in two Federal lawsuits. The publisher marketed its first NCAA Football game in 1998, and the series is estimated to have generated $1.3 billion in revenue since then. ESPN reports that EA Sports will publish a new series with the name College Football 15, which will be supported by agreements with the College Licensing Co. to continuing licensing specific universities and stadiums, but without the NCAA’s name and marks.

Impact: As the litigation turns… The NCAA claims that it never licensed the use of current student-athlete names, images or likenesses to EA, and has had no involvement in licenses between the publisher and former student-athletes. Regardless, the association obviously feels the need to distance itself from Electronic Arts in the matter. Although the NCAA may have had no direct role in using player likenesses, the argument can be made that the association did not make an effort to keep such inclusion from happening. Therefore, not renewing the contract is the first step on putting the onus squarely on Electronic Arts. Neither EA or the NCAA disclose how much the former pays the association for use of its name and marks. As an athletic ruling organization, the NCAA has an obligation to keep money out of  the hands of amateur athletes. But it has been a long running issue that amateur athletes raise millions of dollars for their organizations and go unpaid. When they raise money for an educational institute and get a free education it doesn’t seem as problematic as when they are raising millions for a commercial enterprise like a video game.  In addition, current college players cannot negotiate rights to their likenesses since that would put them at odds with NCAA rules against getting paid to play. We can see where some game designers may feel tempted to cheat on crafting player likenesses that are close to the real thing to add authenticity. It is for the court to sort out whether this was done with sanction from higher-ups. All of this should be of major concern to EA. The professional and college sports franchises that EA Sports leverages are the evergreen money makers for the company year in and year out. While there is no reason to expect the new College Football incarnation will perform less than its NCAA Football predecessors, there is danger any time a major brand is diminished. At $60 a pop, consumers can be finicky about what they are buying if they perceive they are receiving something less. And for mainstream consumers who do not follow the news, they may not be aware that College Football 15 is really the same as NCAA Football 14 – especially if the NCAA finds a new partner to license its name and marks to.  That is a brand communication challenge added on top of whatever possible negative fallout may arise from the ongoing legal action.

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