NCAA Parting Ways With EA Sports

by Kyle Woodley | July 17, 2013 2:58 pm

The NCAA announced today that it won’t renew its contract with game-maker Electronic Arts’ (EA[1]) EA Sports division, making recently released NCAA Football 14 likely to be the final college football title to carry the NCAA name.

In a press release, the NCAA said, “The NCAA has never licensed the use of current student-athlete names, images or likenesses to EA. The NCAA has no involvement in licenses between EA and former student-athletes.”

The passage would appear to be a nod to a lawsuit by former UCLA basketball player Ed O’Bannon over use of player likenesses in not only video games, but also apparel sales and other uses. O’Bannon is seeking compensation, which on its own might not be threatening; however, the specter of financial disaster for the NCAA should the suit gain class-action status was enough to convince ratings agency Moody’s to downgrade the organization’s credit outlook to “negative” last month[2].

The nonrenewal doesn’t completely kill the possibility of future games including the NCAA’s members, but it does make it more difficult. The release states that “member colleges and universities license their own trademarks and other intellectual property for the video game,” and “will have to independently decide whether to continue those business arrangement sin the future.” SB Nation’s David Piper points out[3] that “the difficulty of signing 120 contracts, plus the thought that the schools may not want to face litigation of their own would seem to make that unlikely.”

Through NCAA Football 13, the NCAA franchise has brought in $900 million on sales of 23 million copies, with NCAA-branded titles spanning back to 1998.

EA shares had slipped by more than 3% after the NCAA issued the release, and were trading down 1.7% as of this writing.

As of this writing, Kyle Woodley did not hold a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2013/07/ncaa-parting-ways-with-ea-sports/

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