June 19 (Bloomberg) -- The National Collegiate Athletic Association refused to lift licensing limits on college football and basketball players when asked by Electronic Arts Inc., an executive of the video-game maker said in a trial seeking to allow student athletes to profit from their images.
Joel Linzner of Electronic Arts, which suspended its successful football video game series after being sued for not paying former players whose images it was accused of using without permission, said yesterday the company would welcome resurrecting the product.
He was called as a witness by athletes who are asking a federal judge in Oakland, California, to order the NCAA to allow them to license their names and images so that they can share in the billions of dollars generated by their games, mostly through television broadcasts.
“If there was an economically efficient way to do it and no rules prohibited it, we would be interested,” Linzner said.
Electronic Arts agreed last year to pay $40 million to settle the lawsuit filed by athletes in 2009. The Redwood City, California-based company, the No. 2 U.S. video-game publisher, reported higher-than-forecast fourth-quarter profit in May as a turnaround under Chief Executive Officer Andrew Wilson gained strength. The company is moving toward its goal of becoming a top provider of titles sold online rather than through retail stores.
The NCAA is defending itself at trial against claims that it conspires with member schools in an illegal cartel that reaps the proceeds from televised college basketball and football games and cuts athletes out of the profit. Under NCAA regulations that treat athletes as amateurs, they can be stripped of their scholarships and barred from playing if they accept payment.
The NCAA had $912 million in total revenue last year, including $838 million from television, championships and marketing-rights fees, according to its financial statement.
The case, which alleges violations of antitrust laws, is part of a movement by current and former college athletes to secure compensation, greater medical benefits and control over their images. U.S. District Judge Claudia Wilken in Oakland, California, will decide the outcome without a jury in a trial now in its second week and scheduled to end around June 27.
Linzner follows former players and sports economists who have testified that the NCAA deprives student athletes of compensation they deserve, even as college athletics has become as commercialized as professional sports.
The NCAA claims the athletes’ lawsuit is baseless because its amateur model is legal and serves players and schools. It also benefits fans, who attract advertisers that pay money to NCAA broadcasting partners and who have said in surveys that they oppose compensating athletes. Paying players would pit schools against each other to attract top talent, and cause some to stop fielding teams and fans to leave in droves, the NCAA contends.
Linzner, the executive vice president of business and legal affairs at Electronic Arts, said his company made $80 million a year on the sale of college sports games, selling about 2 million annually, before canceling the product.
He testified that the NCAA, in rejecting a request to let athletes control their image licensing, ultimately responded that it was up to the member schools to change the rule.
“The NCAA made clear in its agreements with Electronic Arts that the company could not use the name, image or likeness of NCAA football and basketball players in its video games,” Bob Williams, an NCAA spokesman, said in a statement. “Despite repeated requests” by Electronic Arts for permission to use students’ names, images and likenesses, “the NCAA membership refused to change its policy,” he said.
On cross-examination, Linzner was asked if Electronic Arts used the names and likenesses of real student athletes in its games.
“We did not believe we did, but there are plenty of plaintiffs’ attorneys here who believe we did,” he said.
The NCAA said last week that it settled a lawsuit by players who sued over use of their likenesses and images in Electronic Arts games. The $20 million accord resolves claims that depicting players in the products without permission or compensation violated their rights to control and license their identity. The NCAA also resolved a related lawsuit against EA, the organization said on its website.
The case is In Re NCAA Student-Athlete Name and Likeness Licensing Litigation, 09-01967, U.S. District Court, Northern District of California (Oakland).
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