If you’re an ESPN NFL 2K5 fan who happens to be single today, then this news isn’t going to make your Valentine’s Day any better.
According to a SportsBusiness Journal report, the NFL is doing Electronic Arts a big favor: the league has reduced the fees for its exclusive contract with EA Sports for the publisher’s Madden NFL videogames, and in addition, has extended the deal by a year — through 2013. The ominous prospect of an NFL lockout (and accordingly, the possibility that there will be no football season this fall) is leaving in the lurch companies who have similar licensing contracts with the NFL, but then, there’s nothing quite like Madden.
As a result of the looming lockout, EA made conservative forecasts for its revenue this year, since Madden is such a perennial big seller — in a recent investors’ call, EA CFO Eric Brown explained that the publisher’s financial expectations take into account the assumption that a lockout will occur, and that it will wipe out the 2011 NFL season. In addition, the publisher reportedly requested in October that its scheduled payments to the NFL for 2011 be reduced by $30 million.
The new terms of the agreement were not disclosed, but Wayne Weaver — owner of the Jacksonville Jaguars and chairman of the league’s Business Ventures Committee — noted that the restructured contract is an acknowledgment of the “difficult environment” that the potential lockout has created. It’s a mutually beneficial agreement between the NFL and one of its “core partners,” said Weaver:
Maybe it makes some sense to extend something out longer and give our partner some relief in the short term but gain something on the back end.
So the deal, which was originally signed in 2005 for three years and renewed for another five years in 2008, has now been extended for one more year. That means that the next NFL-licensed football videogame that could possibly have direct competition is Madden NFL 15.
Don’t hold your breath, though. The exclusive contract is simply too lucrative for both sides — the five-year agreement that was signed in 2008 is estimated to be worth hundreds of millions of dollars in guarantees and royalties — so it would be silly to let the deal ever run out as long as it remains profitable.
We contacted EA Sports for this story, but the publisher had no comment.
NFL gives EA a break [SportsBusiness Journal via Pasta Padre]
