The NCAA and its member institutions are enjoying unprecedented levels of revenues from media rights fees, corporate sponsorships, and brand licensing royalties. Student-athletes play a prominent role in enhancing the appeal of NCAA sports but are largely left out when it comes to monies generated from intercollegiate sports. Yes, they are getting an education and often have living accommodations provided, but is that fair compensation for the value they create? This question is at the heart of a lawsuit against the NCAA brought by former UCLA basketball player Ed O'Bannon, and concerns about the answer to the question have prompted the NCAA to backpedal from one revenue source that it could be forced to share with athletes. This week, the NCAA announced it was not renewing a licensing agreement with EA Sports for its NCAA Football game when it expires next year. The decision does not appear to be due to lack of market interest; the game has generated an estimated $100 million in sales and represents about 6 percent of the EA Sports revenue pie.
Protecting Brand Interests
Three sets of brand interests are at stake in this issue: The NCAA, its member institutions, and the student-athletes. Licensing ventures like NCAA-branded video games that feature teams and players are beneficial for all involve. NCAA Football video games create exposure for the institution brands and players. Fans can extend their affinity for college football by playing games featuring the teams and players they love... or love to hate. The branding benefits for the NCAA and member institutions must be balanced against the rights of student-athletes and use of their name and likeness. Many brands license their name and logo to be used on products. The difference in this case is that "employees" or people associated with the brand are instrumental to the popularity of the NCAA brand as a license. Should they benefit directly from their contributions? Also, the NCAA is very concerned about protecting its brand image from potentially negative effects lawsuits could have.
New Page in EA Sports Playbook
The NCAA may have decided not to grant a license for an NCAA-branded football game, but that does not mean video game players will not have a college football game to play in the future. Instead, a more generic game that is not associated with the NCAA but still sells college football will be on the market. Inclusion of NCAA member schools will be up to each institution, and future college football video games will likely be developed without incorporating player identities.
The NCAA and EA Sports have taken steps to remove student-athletes and the NCAA itself from video game products, but is it the right decision? Is an avoidance strategy the proper course of action, or should the NCAA figure out how to maximize the popularity of players and at the same time include them in receiving the rewards of building a popular brand?
USA Today - "Legal Risks Raise Questions for Colleges and EA Sports"