Madden 12 News Post

EA/NFL Extend NFL Exclusive License by One Year to 2013

07:10 PM - February 14, 2011 by RaychelSnr

The Sports Business Journal is reporting that the NFL and EA have come to terms on extending the current exclusive deal one more year with the uncertainty surrounding the 2011 NFL Season.

Quote:


	"The NFL has restructured its lucrative licensing and sponsorship contract with Electronic Arts to account for the sport�s uncertain future, significantly reducing the video game maker�s contractual obligations next season but adding a year to the deal, according to several well-placed sources. The contract now runs through 2013. The league is believed to have so far rebuffed pleas for fee reductions from other licensees and sponsors, many of which, like EA, find it difficult planning for the next season under the threat of a work stoppage. The league�s collective-bargaining agreement with the players expires March 4, and the two sides are far apart on reaching a deal. EA, however, is a special case, with its iconic �Madden� video game title. The licensing deal it agreed to with the league in early 2008 is believed to be worth well into nine figures in guarantees and royalties over its original five-year term. That stands as one of the most, if not the most lucrative non-TV contract the NFL enjoys. The NFL Players Association, which signed a companion EA deal for rights to the players, reaps regularly between $30 million and $40 million annually, according to the union�s annual filings with the Labor Department. The league deal allows EA to use team colors, names and logos."

This basically means that EA has exclusive rights to Madden now until after Madden NFL 14 -- or roughly right about the time the next generation of consoles are set to hit.

This just shows how strong of business partners the NFL and EA Sports are at this point. The NFL is giving EA a break on payments this year and has basically given them an additional year as a make-up of sorts to make right. Also, if you read my 2011 Predictions Post back in January, you saw this was my first prediction, that the deal would be extended in some way this year.

So in that respect, this news is not unexpected -- and with the deal stretching into the next console generation, I have serious doubts any other company is going to be in a position enter the market anytime soon due to the extreme cost of entry into quality sports game development that will be present at that time.

Thanks to Pasta Padre for the news tip.

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Member Comments

# 181 mestevo @ 02/15/11 03:27 PM

Quote:

Originally Posted by LiquorLogic


	Okay, what about the market is changing to negatively effect Madden's sales. The NFL is more popular than ever. Why are Halo and COD thriving when Madden isn't ? The lengths to which people will go to defend Madden is baffling. It's not the angst that people clearly have toward Madden, it's not the fact that previous versions of Madden, some that are over five years old, are deeper than Madden 11, now, it's not even the economy, it's the market.

It's the market. Nothing really replaced the PS2. To quote you, here, I'll bold the important part for you too.

Quote:

Originally Posted by LiquorLogic


	So it's a coincidence that Madden sales started to decline when EA got the exclusive license, and have continued to decline ever since then ?

Madden 2005:
PS2 4.46
XB 1.46
DS 0.25
Total: 6.17

(EA gets the exclusive license)

Madden 2006:
PS2 3.92
XB 1.54
PSP 0.74
360 0.64
GC 0.42
DS 0.12
Total: 7.38m

Note the YoY growth in Madden 06, after EA got the exclusive. So much for your theory.

Looking at todays figures, nothing has matched the PS2, the market is more fragmented. It's pretty simple, the market has changed, something that can be proven rather than the 'omg madden is bad ea can go to hell' yelling at the sky being done by many on this subject. Sales didn't pick up on other consoles as the PS2 fell off. Gamers got older, some of them picked up new systems, others moved on, and new ones were naturally brought into the fold.

Madden 11
360 2.27
PS3 1.82
Wii 0.51
PS2 0.39
PSP 0.34
Total: 5.33m

You also have Ultimate Team, the Facebook stuff, and other microtransactions funding this title.

# 182 ryan36 @ 02/15/11 03:29 PM

Quote:

Originally Posted by kjcheezhead


	35% of 5 million is 1.75 million. Isn't that enough sales to be a profitable game? That's not including NFL fans sitting on the sidelines or ones that would purchase both NFL titles.

Maybe, at a $60 price point. NFL 2k5 sold about that percentage at a $20 price point. I think if a competing product was $60 and Madden was $60 , Madden would beat it by a larger margin. I don't know what the dev costs would actually be, but I know you'd have a longer ramp-up period, you wouldn't instantly be the better game this gen. You'd take a couple years to get to profitability and stock holders don't like that.

# 183 RJTurneR @ 02/15/11 03:43 PM

Quote:


	If any of this were true Madden would only be worked on by 8 animators, a UI guy and a numbers guy in a portable outside of an EA campus. A lot of money goes into these games, and the individuals have a lot of reason to make a good game - their continued employment. While there are plenty of reasons to want competition, going the complete other way with blanket statements is contrary to your title.

This is why I rarely bash EA. To say they put no effort into it is a ridiculous thing to say. The reason why Madden stinks is because year after year their building on the same game engine they have been using for years. Mass amounts of code. I'm no game developer, but I'm sure its pretty hard to pick up these tiny little problems within a HUGE game engine that has code added to it year after year.

The next thing people will say is "Why don't they just build a new game engine?"

Ok, thats possible, but game engines, in order to be great, take a long time to develop. It's not something done overnight. If anyone wants a game engine thats worse than the mediocre one we have now, then by all means go ahead.

Madden releases on a yearly bases. Unless they have a completely separate project building a game engine while still releasing Madden, then there's no way they can possibly make a perfect game.

The guys are EA are just like anyone else. They work hard to earn their money and keep their jobs.

# 184 boom.h @ 02/15/11 03:58 PM

I doubt EA Tiburon has employees working for them that can, not only write code, but have a deep understanding about the game of football.
I think when EA decide on the team to code for Madden, they just go for the employees who are NFL fans instead of hiring football heads WHO JUST HAPPEN to also know how to code.

# 185 RGiles36 @ 02/15/11 04:01 PM

Quote:

Originally Posted by LiquorLogic


	What will happen is that EA will no longer want to pay for, or be able to pay for, the expensive exclusive license, and the NFL( more than likely) will just go back to letting multiple publishers produce a game to make up the difference.

This doesn't sound like wishful thinking in the least to you?

I know this thread is going to go on & on as it should. But it's clear that every time this debate sparks, the same rhetoric goes back & forth on both sides. Whether it's suspect sales numbers courtesy of VG charts, bad analogies ("if I bought a car w/ no engine"), dialogue about the economy, neither side gives up any ground.

However, there is a bottom line to all of this. That, my friends, is that the exclusive license is here today (and in all likelihood not going away). Fans have been yapping about sagging sales since M08. And twice now since then, the NFL & EA has re-up'd. So much for the impact those sales are having on EA/NFL.

Again, if you think that the exclusive license hasn't produced benefits for both EA and the NFL, you're probably being naive. If it didn't make business sense for neither company, I assure you a license would not be in place. It is what it is. Carry on...

# 186 baumy300 @ 02/15/11 04:05 PM

Quote:

Originally Posted by ryan36


	This is just untrue.

Which part?

The NFL isn't turning fans off with the Super Bowl seating debacle, the proposed 18 game schedule that an ESPN poll showed over 75% of the people are against, the talk of a Super Bowl in cold weather, the talk of a Super Bowl in another country, the stupid fines, or the impending lockout?

And do I really need to try and prove to you that Madden isn't losing fans?

# 187 Dog @ 02/15/11 04:08 PM

Quote:

Originally Posted by baumy300


	The NFL isn't turning fans off with the Super Bowl seating debacle, the proposed 18 game schedule that an ESPN poll showed over 75% of the people are against, the talk of a Super Bowl in cold weather, the talk of a Super Bowl in another country, the stupid fines, or the impending lockout?

No, they aren't. The NFL breaks ratings records every year, it is the most popular it has ever been.

# 188 mr janny @ 02/15/11 04:14 PM

Quote:

Originally Posted by baumy300


	Which part? The NFL isn't turning fans off with the Super Bowl seating debacle, the proposed 18 game schedule that an ESPN poll showed over 75% of the people are against, the talk of a Super Bowl in cold weather, the talk of a Super Bowl in another country, the stupid fines, or the impending lockout? And do I really need to try and prove to you that Madden isn't losing fans?

and the most recent Super Bowl was watched by more people than any other Super Bowl before it.

None of those things that you mentioned, except for the lockout, will have any negative impact whatsoever on the NFL's ratings. And who knows if the lockout will even happen, at this point?

# 189 raz77 @ 02/15/11 04:15 PM

Remember the rising population plus the rising number of TVs and consoles in homes in any argument about the growth of the league.

# 190 boom.h @ 02/15/11 04:16 PM

Quote:

Originally Posted by EddieV


	EA's shareholders aren't going to continue to accept hundreds of millions of dollars of loss every quarter -- sooner or later, current management will have to start showing some profit, or else they'll be out on the street. No telling whether new management would make the same decision to overpay for the exclusive license.

Agreed. There will come a time when the Exclusive License will have EA's Madden division operating at a loss. This is when shareholders will demand it be let go.

Until that fateful day, all we can hope for is for Madden to inch itself forward, year after year.

# 191 mestevo @ 02/15/11 04:18 PM

Quote:

Originally Posted by EddieV


	EA's shareholders aren't going to continue to accept hundreds of millions of dollars of loss every quarter -- sooner or later, current management will have to start showing some profit, or else they'll be out on the street. No telling whether new management would make the same decision to overpay for the exclusive license.

I'd love to see your analysis of the income Madden generates vs the licensing fees and how it relates to production costs of their other games and their successes and failures. That data is simply not available to come to that conclusion, so connecting the two is silly. It'd be easier to make an argument that a company losing money would be in bigger trouble if they jeopardized the success of one of their most popular brands. The simplest conclusion is likely true, and that's that EA and the NFL are comfortable with the current arrangement, especially with this recent amendment.

# 192 JayD @ 02/15/11 04:33 PM

well on the plus side it is only one more year.

# 193 Rostee F @ 02/15/11 04:39 PM

Another year without competition! It�s a shame, but only money counts, plain and simple! Sold my Madden 11 today and got back to the only great NFL video game

# 194 mr janny @ 02/15/11 04:40 PM

Quote:

Originally Posted by LiquorLogic


	If sales don't improve, or at least stop declining, why would EA continue to pay the expensive fee ? How is that good business ? If sales don't improve, or stop declining, don't you think EA would finally create a new engine regardless of whether they have a competitor or not ? I don't know why EA re-uped the license last time. Maybe the sales didn't decline enough; maybe EA thought it was an anomaly; maybe EA was scared of 2k. Remember when the retired players were screwed by the NFLPA derailing the plans for APF 2k9 ? That happened in the same year that the exclusive license was extended. Coincidence ? Maybe, or maybe not. The NFL's benefits are obvious, but EA sales have been declining for years. They sell less now, but pay more for the license. I don't see where the benefit, for EA, is.

Well obviously there is still a benefit to EA. They still make money on it. If they weren't, then they wouldn't make a game. It's as simple as that. Even with declining sales, Madden is still profitable for EA. So long as they continue to announce new Madden games each year, you can be confident that EA is making money on the deal.

# 195 DaveDQ @ 02/15/11 04:57 PM

The whole COD thing is a silly comparison. They don't have a lock on making FPS games. In fact, if any field of gaming is an open playing field, it's FPS shooters.

The exclusive thing with EA and the NFL really frustrates me. The main reason being is EA (and the NFL for that matter) completely overlook and care less about how we see this as a negative. And with that comes the blatant hype and gushing they do every year about how wonderful Madden is etc.

Madden isn't wonderful. It's by far one of the worst showings in sports gaming this generation. They have offered nothing to the gaming culture that says, "Wow, that is innovative and worthwhile." But that doesn't matter. They have what they want.

It just doesn't matter anymore.

# 196 ryan36 @ 02/15/11 04:58 PM

Quote:

Originally Posted by EddieV


	Then how do you explain EA, which hasn't had a profitable quarter in years?

First off, I don't know that's true, but Madden is a profitable entity, but would be more so without the license

# 197 JJT @ 02/15/11 05:02 PM

This is good news for me

Just saved me another $75

*plays the show during football season.... again*

# 198 mr janny @ 02/15/11 05:06 PM

Quote:

Originally Posted by EddieV


	How do you know that? EA had a $330 million loss last quarter.

We know that because there is going to be a Madden 12. EA is not making Madden because it loves football so much. They're making it because it's profitable. If it wasn't profitable, there wouldn't be a Madden 12. They wouldn't make it.

# 199 pf8363 @ 02/15/11 05:10 PM

ARE YOU KIDDING ME!!!!!!

# 200 mr janny @ 02/15/11 05:11 PM

Quote:

Originally Posted by DaveDQ


	The whole COD thing is a silly comparison. They don't have a lock on making FPS games. In fact, if any field of gaming is an open playing field, it's FPS shooters.

and yet COD sits on top of the heap, despite being a game that has little change from year to year. COD's success throws a monkey wrench in the argument that if Madden had more competition, the game would change more from year to year.

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