Why EA Sports Settled Its Compensation Lawsuits With College Athletes, And Why The NCAA Won’t


(Credit: EA Sports)



EA Sports, the video game company that produces an array of popular sports titles, announced Thursday that it will not make an NCAA Football video game next year after the NCAA backed out of a licensing agreement amid multiple lawsuits from former and current college athletes. EA, which was also a defendant in those cases, also announced that it has reached settlements with all of the athletes over the issues involved in the cases.

The Collegiate Licensing Company, which oversees licenses from most colleges and the NCAA and was also named as a defendant in the suits, also settled its claims. The most prominent of the settled cases is the one brought by former UCLA basketball star Ed O’Bannon and other former athletes. That case, which now includes six current athletes, accuses the NCAA, EA Sports, and the CLC of violating antitrust law by conspiring to fix the value of athletes’ names, images, and likenesses at zero, thereby preventing them from receiving compensation for their use.

The settlements leave the NCAA as the lone defendant in multiple compensation cases, including O’Bannon’s.

The reason for jettisoning the video game is plain: without licenses from the NCAA or most of its schools, there wasn’t much hope of producing a college football video game people would buy. But the relative ease with which EA Sports abandoned the video game also explains its decision to settle — and why the NCAA took a different tack by bolstering its legal defense team and promising Thursday to fight the cases all the way to Supreme Court if it has to.

At its heart, these cases were never about video games, but EA was put in an unfortunate position: it had modeled its virtual players off of real college athletes, a fact top EA officials confirmed in court depositions, and it hadn’t compensated players for it. That wasn’t necessarily EA’s fault, since it wasn’t allowed to compensate the players. NCAA rules prohibit that. It was, as EA’s general manager of American football Cam Weber said in a statement Thursday, largely “stuck in the middle of a dispute between the NCAA and student-athletes who seek compensation for playing college football.”

At the same time, while the NCAA Football title is popular, it’s hardly crucial to EA’s business. It has plenty of other titles, both in its sports division and elsewhere, that make it loads of money. And more than that, it looked like EA Sports was going to lose. It had also already lost on multiple occasions its efforts to get dismissed from the different cases. Going down with the NCAA wasn’t going to get it anywhere — especially since EA viewed its position as simply following NCAA rules — so settling and killing the college football title until everything works itself out is simply a much better business decision than pressing forward. It will still be costly — according to plaintiffs’ attorneys, the settlement will provide compensation to more than 100,000 current and former college athletes — but it won’t be as costly as losing outright. For athletes, EA Sports and the CLC weren’t the major targets, since video games aren’t where the real name, image, and likeness money is. That’s in broadcasting, and that’s under the NCAA’s control. So settling early made sense for EA, the CLC, and the players too.

That isn’t the case for the NCAA. EA’s business model might not be at risk, but the O’Bannon suit strikes right to the core of how the NCAA currently works. Amateurism is its only ideal, and as mythical as it may be, the NCAA is committed to defending it to its last breath. Just last week, NCAA president Mark Emmert said the organization had no interest in viewing athletes as employees (read: paying them for their labor or at least giving them a say in whether a scholarship is fair compensation), and NCAA athletics directors said this week that pay-for-play has “no place” in college sports.

Top NCAA officials are fearful of the O’Bannon case and the others like it, as court documents from the O’Bannon suit prove. But since they’re committed to preserving the business they have going now, they have no choice but to see the O’Bannon case through, at least for now. The NCAA could still walk away from this case relatively clean if Judge Claudia Wilken determines that the plaintiffs don’t constitute a class and thus can’t bring the case as a class-action, a decision she’ll make sometime soon (her previous actions in the case, however, make it seem almost certain that she’ll rule for the athletes). And it’s still possible O’Bannon and the plaintiffs could lose.

It’s also still possible the NCAA and the athletes will reach a settlement, but the NCAA’s actions Thursday make it seem like that won’t happen any time soon. So forward the case goes, potentially all the way to the Supreme Court of the United States. That sort of drama is still years away, but Wilken’s decision is coming soon, and the trial is set to start in June. Assuming we get there — and that now seems a safe assumption — the NCAA will be standing at the defendant’s table alone, mostly because they were the only defendant for which it made any sense to make it that far.