FIFA's Multi-Billion-Dollar Licensing Fight

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Hey Friends,

The most popular sports video game in the world is coming to an end.

After nearly three decades of partnership and $20 billion in sales, FIFA announced yesterday that they were ending their partnership with EA Sports.

"FIFA is bullish and optimistic about its long-term future in gaming and esports following a comprehensive and strategic assessment of the gaming and interactive entertainment market," reads FIFA's statement, before adding: "it is clear that this needs to be a space that is occupied by more than one party controlling all rights."

While FIFA says the decision is centered on building out a more comprehensive gaming portfolio, it appears that money ended up being the determining factor.

Last week, the New York Times reported that FIFA was seeking to nearly double its $150 million annual licensing agreement with EA Sports when the current 10-year agreement ends next year. That means they wanted more than $1 billion over each four-year world cup cycle.

EA Sports said no, but this doesn’t mean they are giving up.

Following the success of the Madden video game franchise (NFL) throughout the late 1980s, EA Sports doubled down and launched the FIFA video game series in 1993.

The results speak for themselves. FIFA has sold more than 325 million copies, is translated into 18 different languages, and is sold in more than 50 countries globally. That makes it the best-selling sports video game franchise in the world.

But the consumer isn’t the only one that has benefited.

The licensing agreement between FIFA & EA Sports has grown to become the organization’s single-most valuable commercial agreement, now worth about $150 million annually, while EA Sports has seen its stock price surge 2,550% since the introduction of FIFA in 1993.

The S&P 500 is up roughly 900% during the same period.

Of course, a $40 billion company isn’t just going to throw away one of its highest-revenue producing businesses because of a $100 million to $150 million increase in licensing fees. It’s a lot, but they can afford it.

Instead, EA Sports reportedly plans to re-brand the long-running FIFA series and has already registered trademarks for “EA Sports FC.”

How can they do this without a licensing deal? EA Sports relies on FIFA for rights to the FIFA name and the World Cup, both of which they will lose, but with over 300 different deals in place with individual clubs globally, the game might not look all that much different after all.

We’ll see what happens. EA Sports is essentially placing a bet that their marketing, distribution channels, first-mover advantage, and current market-share dominance will hold more power than the widely-known FIFA name.

FIFA can now team up with multiple partners and increase their annual rights fee. Maybe they approach Epic Games or another EA competition to make the game, but regardless, the multi-billion-dollar battle between soccer’s governing body & EA Sports will be fascinating to watch. As always, I’ll keep you updated.

I hope everyone has a great day, and we’ll talk tomorrow.

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Huddle Up is a daily letter that breaks down the business and money behind sports.

Join more than 48,000 professional athletes, business executives, and casual sports fans that receive it directly in their inbox each morning — it’s free.