Yesterday, GamePolitics broke the news that Madden publisher Electronic Arts paid the National Football League Players Association more than $35 million in licensing fees during 2007.
We asked a couple of financial gurus to comment on the eye-popping figure, which is buried within a massive document filed by the NFLPA with the U.S. Department of Labor.
Wedbush-Morgan financial analyst Michael Pachter told GP:
The [Madden licensing] deal is likely a guarantee of around $50 million total, and $35 million [going] to the players makes sense. The old deal was around $15 million per year, and I know that it went up substantially when renewed in 2005.
[EA sells] around 5.5 million copies a year, so they're burdened with [about] $9/unit in licensing. That's reasonable, on par with the royalty paid to the console manufacturers.
So, Mike, yesterday GP speculated that the league would get at least as much as the NFLPA from EA. Are you saying we were wrong and that the NFLPA actually gets more than the NFL?
Most definitely.
The product is the players, and the league used to get most of the money. The reason the royalty went up was the players, not the league. The league looks at the game as a marketing tool, but the players want to be paid for their likenesses.
Meanwhile, analyst Doug Creutz of Cowen and Company termed the $35 million paid by EA to the NFLPA "a gigantic number," adding:
I’d estimate Madden generates $350-400 million in revenue for EA annually.
Comments
Re: Analysts Weigh in on Madden's Mega Licensing Fees
Those fees are insanely high.. i dont see how they make it
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Re: Analysts Weigh in on Madden's Mega Licensing Fees
Because of the ban on other games on using player likenesses and names, EA has a virtual monopoly on football games. I like Madden Football, but I'd like to have the choice between competing game designs. Lack of competition is not good for anyone - it encourages the sort of stagnation that we've seen in EA's sports line-up in the last few years.
Re: Analysts Weigh in on Madden's Mega Licensing Fees
Of course Madden makes that much. What other NFL choice do people have? None, because of these assholes at EA and their exclusive deal!
When Jack Thompson runs his mouth, does anyone really care what he has to say anymore?
Re: Analysts Weigh in on Madden's Mega Licensing Fees
I don't think giving approximately 10% of revenues from Madden to licensing is too big of a chunk for EA to pay.
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Re: Analysts Weigh in on Madden's Mega Licensing Fees
Keep at it, take down Madden. I am sick of that carbon copy game.
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Re: Analysts Weigh in on Madden's Mega Licensing Fees
Then don't play it? Why are you trying to encurage the prevention of people who ligitimatly like playing the game?
Re: Analysts Weigh in on Madden's Mega Licensing Fees
If they lose the deal, the NFL will likely take some time signing another exclusive deal if they ever do. I want more developers making NFL games, because I actually enjoyed the fact of developers competing to make a good game every year instead of EA only owning it and doing a roster update.
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Re: Analysts Weigh in on Madden's Mega Licensing Fees
But there are people who ligitimatly like Madden (crazy I know!). Why do you want to encurage the death of madden, and as a result people who like the game can no longer play it anymore?
Re: Analysts Weigh in on Madden's Mega Licensing Fees
They won't be losing anything, they will always have the last copy EA made, they just have to make the roster update themselves with the create a player. (or with the last version that has that)
Maybe another company will make football games those people like too, but the majority of Madden fans from years past are sick of this recycling of the game.
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Re: Analysts Weigh in on Madden's Mega Licensing Fees
Madden is the Tony Hawk Pro Skater of football games. People want NFL, there is only one choice. That doesn't mean it was good by any means. I played THPS because I enjoy skateboarding.. not because I like Tony Hawk. Now that I have an option to choose a different game (skate), I certainly will.
Backbreaker looked to be a Madden killer if the NFL would allow the license. But the shitty players in the league demand too much for their likenesses. Horrible role models.
Re: Analysts Weigh in on Madden's Mega Licensing Fees
True, but that's because NFL is an actual license. If people want American football, you can go somewhere else for that. Are you the same person who complains about the fact that Activision is the only company that can make spider-man games?
Re: Analysts Weigh in on Madden's Mega Licensing Fees
"Backbreaker looked to be a Madden killer if the NFL would allow the license. But the shitty players in the league demand too much for their likenesses. Horrible role models."
Yes....how dare they ask to be fairly compensated for using their likenesses....
It wasn't the players. The League gave EA sole video game rights. That means no NFL video games that isn't Madden. You wanna blame anybody, blame EA for asking for such protection.
"You know what I wish? I wish all the scum of the Earth had one throat and I had my hands about it."