Although the Supreme Court today refused to give the NFL an antitrust exemption in negotiating exclusive licenses â and the league sold one to EA Sportsâ Madden series â the decision doesnât necessarily jeopardize such deals for video games.
As the case title suggests, American Needle vs. NFL is about apparel licensing, specifically hats. But because it involves an exclusive deal the league struck with Reebok, thereâs plenty of talk that this might cover the one the NFL reached with EA Sports back in 2005, making Madden the only NFL video game until at least 2012.
American Needle had argued that the leagueâs 10-year deal with Reebok amounted to collusion among 32 businesses. The Supreme Court itself did not make such a finding, nor invalidate the leagueâs Reebok deal, but it did hold that the NFL is not a single entity but 32 separate teams when it comes to such marketing. So a lower court ruling was overturned and the case was sent back to be retried.
As of now, itâs hardly a direct threat to EA Sportsâ existing exclusive position. It may have some ramifications for how such a deal might be negotiated after 2012. But Michael Pachter, the well known games sector analyst for Wedbush, and himself a lawyer, believes that video games ultimately wonât be involved.
âThe logic could be extended to the Madden license, and if carried to conclusion, one could argue that it would limit the ability of the league to negotiate an exclusive for a game,â Pachter told Kotaku. He thinks this decision is âsufficiently narrow to limit to apparel licenses.â
And thereâs a big difference between apparel licenses and licenses for things like video games or television broadcasts, Pachter says. âIt furthers the interest of the league to have cooperation in game (and television) contracts, where it doesnât necessarily further the well-being of the league to have one hat contract,â he said.
âGames (like television) require the participation of all teams to select the distribution channel, while hats can be made by several vendors with several different licenses,â he said. âHaving each team negotiate the terms of a video game license would mean that there could be 32 separate games, and that potentially, only one team would appear in each.â
Nothing under that scenario could be a straight-up competitor to any title with all 32 teams participating. However, a company with a license to make Indianapolis Colts hats, and no other, can still do a good enough business because any consumer interested in buying a Colts hat doesnât need the other 31 to get full value. That was American Needleâs position, and the individual deals it lost to the exclusive pact were robust enough to fight for all the way to the highest level of court.
But there could be niche or alternative football games that could see an opening; one that comes to mind is Quick Hit Football, the free-to-play browser-based simulation. Quick Hit has struck dozens of individual deals to use coaches and retired NFL playersâ likenesses in its roster, and has permission to negotiate contracts with up to five active players to use theirs. The sprinkling of real names among randomly-generated players hasnât diminished the game, which is more focused on strategy and player development than realism or arcade action.
Adding in the current Chicago Bears as the only real team in that league might not make sense to some; but striking a deal with the Bears to use their official colors and logos and bring in the 1985 team as a classic squad might appeal to players.
Kotaku contacted Quick Hit for comment. It declined. An EA Sports spokesman said the studio was aware of the Supreme Courtâs decision but expected no changes to Madden âThe NFL has been a great partner for nearly two decades,â said the statement. âTodayâs Supreme Court decision does not impact that relationship or the agreements we have in place to make great NFL-branded games.â
Even in a worst case scenario, where exclusive licenses are found to comprehensively violate antitrust law, itâs not clear that would give rise to a competing fully licensed title. Although burdensome, surely Electronic Arts has the means and the motivation to individually negotiate 32 licenses. 2K Sports, the last NFL licensee before the Madden deal, could use the guts of itâs All-Pro Football series, but it would still be rebuilding a title it hasnât worked on in this console generation.
Pachter doubts itâll even come to that, believing this matter will remain where it started, as a matter of apparel marketing. âI would say the Madden exclusive is safe,â Pachter said.
