$28 Million NFLPA Verdict Reveals Details of EA's Madden Monopoly
November 17, 2008
Here at GamePolitics I've been complaining (some might say whining) since 2005 that EA's exclusive arrangement with the NFL is, at best, a bad deal for gamers.
At worst, it's a monopoly.
Ultimately, the Federal Trade Commission, looked at the Madden issue in relation to EA's merger dance with Take-Two Interactive. But, inasmuch as the FTC pre-approved the EA-T2 deal, its regulators apparently came down against the monopoly view.
But that was before secret e-mails from officials of the NFL Players Association were made public in September during a bitter court fight between retired players and the NFLPA. As GamePolitics reported last week, the retirees were ultimately awarded $28 million by a U.S. District Court jury in San Francisco. Three-quarters of that amount was levied as punitive damages. The NFLPA says that it will appeal.
While millions in Madden licensing fees were central to the case, EA itself was not a defendant. Despite that, incriminating e-mails clearly show that EA knew it was "scrambling" the likenesses of retired players on Madden's classic NFL teams. More relevant to the monopoly issue, however, is an e-mail which demonstrates that the NFLPA was complicit in helping EA maintain its status as the sole publisher of a pro football game. A February, 2007 e-mail from NFLPA executive Clay Walker to an NFLPA attorney makes this quite plain:
I was able to forge this deal with the [Pro Football Hall of Fame] that provides them with 400K per year (which is significantly below market rate) in exchange for the HOF player rights. EA owes me a huge favor because of that threat was enough to persuade Take Two to back off its plans, leaving EA as the only professional football videogame manufacturer out there.
...The per player price for most of these guys was tens of thousands of dollars less than what they were guaranteed by Take Two Interactive so it’s a real coup that we were able to pull this off so cheaply. You have to remember that EA’s total cost is only $200,000 per year. We know that Take Two offered six figure deals to several former NFL players so the total cost is millions below market prices...
Will the revelation that the NFLPA was actively assisting EA by keeping Take-Two on the sidelines raise any red flags at the Federal Trade Commission? Will FTC regulators revisit the Madden issue?
That remains to be seen. If you're asking yourself, "why is this issue important to gamers?" There are several very good reasons; all revolve around the concept of competition:
When Take-Two published the NFL2K series, EA had competition.
Competition forces companies to put out a better product.
Some gamers even preferred NFL2K to Madden.
Without an NFL license, Take-Two could not compete with Madden and gave up on pro football.
After EA's exclusive deal killed NFL2K, EA's raised the price of its next version of Madden by $20.
The price has remained at a higher rate ever since.
Finally, we should point out that a class-action lawsuit, Pecover vs. Electronic Arts, is currently working its way through U.S. District Court in California. Pecover essentially argues that game consumers were screwed by EA's Madden monopoly.