Despite the major blow to EA Sports, a division of Electronic Arts (NASDAQ:EA), when the National Collegiate Athletic Association decided not to renew its contract with the sports game giant, a source told Joystiq on Friday that EA has reached a three year extension with the Collegiate Licensing Company effective July 1, 2014. The CLC, which is the entity responsible for trademark licensing and marketing services for universities, will work directly with schools or leagues to decide whether they want to be included in the popular series of sports games.
The move comes following EA’s proposed $27 million lawsuit settlement with the NCAA from July 2012. NCAA alleges that EA “violated antitrust and consumer protection laws and overcharged consumers” due to its exclusive contracts with the NFL and NCAA, while failing to compensate athletes for using their likeness in games. The NCAA then decided not to renew its contract given the mounting costs of the lawsuit.
“The NCAA has made the decision not to enter a new contract for the license of its name and logo for the EA Sports NCAA Football video game… As a result, the NCAA Football 2014 video game will be the last to include the NCAA’s name and logo,” the NCAA announced on their website. “We are confident in our legal position regarding the use of our trademarks in video games. 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.”
While EA’s college football games will no longer be allowed to have the NCAA logo included, it appears that not much else will change — at least for the time being. Starting in 2014, the game will be called “College Football” rather than “NCAA Football” and schools, conferences and Bowl Games will decide whether they would like to be included in the sports series.
However, the question is whether the NCAA’s decision will affect the choices that schools, conferences and Bowl Games make. USA Today asks: “If the NCAA deemed it to be too big of a legal problem, would schools feel the same way?”
So while EA might be safe for the time being, the looming issue is whether their contract extension in 2017 will be affected by NCAA’s decision. Patrick Dunley, deputy athletic director at Stanford University, told USA Today that he would discuss the issue with the NCAA and see whether Stanford might take a similar stance.
“I want to get the best understanding I can about what they see as the legal risks so we can analyze those risks and any other risks that we think may exist,” Dunley said. “To the extent those risks exist, we want to determine if there’s a way to mitigate them through the agreements. If so, maybe we proceed. If not, maybe we don’t.”
According to Michael Pachter, a stock analyst, the NCAA football game sells about two million units per year while the Madden NFL game sells 5.5 million units. Given how popular the series is, EA is hoping that schools will come down on their side rather than follow in the footsteps of the NCAA.