Top 25 Polls Determine Payments in EA Sports' College Game

Want to know what your favorite college football team made from its appearance in EA Sports' NCAA Football series last year? Average its Associated Press poll ranking over the past 10 seasons. If it's 25 or higher, congratulations. They probably earned about $75,000.

But a five-figure royalty check, as I speculated in my column on Sunday, is an amount any institution fielding a major college football team can easily walk away from, which is why EA Sports now finds itself in a perfect storm of PR, litigation, and regular contract renewals that threaten the viability of next year's collegiate football title, even as sources close to the project are adamant in its viability.

To recap, the NCAA—which is being sued, along with EA Sports, for licensing or selling commercial works with college players' uncompensated likenesses in them—said on July 17 it was leaving the video game business for good. The decision is generally accepted as motivated by the potential class action lawsuit that could bring the league to its knees financially. Last week, three major conferences—the Southeastern, Big Ten and Pac-12—all said they were finished with EA Sports, too, though the SEC appears to be under contract through next year's game.

The timing and nature of these announcements have all created a tumbling dominoes perception that EA Sports' college series, which goes back to 1998 as a fully licensed title, will not publish next year. The real reason for this uncertainty is a lot more mundane, and something that doesn't deserve the intrigue or armchair speculation. The only reason we're hearing about it is because of the opportunity for some big-time football shot-callers to score good PR at a time when the sport is losing, badly, the water cooler argument over who gets to make money on college sports.

Litigation or not, EA Sports' deals with more than 128 universities, the 10 conferences they belong to, and dozens of other bowls, awards and trademarks, would have expired this year anyway. EA Sports operates on three-year agreements with a couple of exceptions, the SEC being one, its deal is annual. In all cases the Collegiate Licensing Company handles everything, whether a university is its client or not. If a school wants to appear in the video game, it must opt in to the CLC's system of approvals and payments.

In other words, EA Sports pays royalties to the CLC, the CLC determines a rate, takes its cut, and then sends it along to its clients or to another agency to distribute to the schools appearing in the game. As the game is being built, EA Sports sends its features to the CLC, which contacts each school for approval or feedback.

EA Sports has circulated a proposal and a number of colleges are said to be still considering its terms, even if EA is confident that all but one will sign up. I've seen this proposal and I know what everyone is paid.

A university source I'm not identifying sent me a copy of the latest proposal, whose terms and structure conform to what I know about past royalty payments. Consistent with past agreements, the members of the NCAA's Football Bowl Subdivision—the top division of football—are divided into four tiers. There are 126 FBS teams this year and 128 next year, meaning about 31 teams per tier.

"As you will recall, the current royalty tiering structure is based on each institution's team performance over a rolling ten-year period," says the current proposal, circulated on CLC letterhead. "The greater the success, the higher the tier for the participating university. The football tiering variable is year-end ranking in the AP top 25."

The AP only ranks the top 25 schools, and its "others receiving votes" notation is generally implied to rank schools from No. 26 through the 30s. Whether the CLC is averaging weekly rankings or final season rankings is unknown. It's also not clear how the CLC differentiates lower schools in, say Tier II from Tier III or IV is unknown.

But if your team has been consistently ranked in the AP top 25 poll over the past 10 years, it gets the top payout level—which EA Sports proposes to be a minimum of $78,000 each year through 2017.

It decreases sharply from there. Second-tier teams get $47,000 a year. The third tier get $31,000. The last tier gets $7,500. These amounts are EA Sports' minimum commitment per the contract; the actual payment is usually an odd number above it.

I called my alma mater, N.C. State, to ask what it made in licensing from EA Sports. To my astonishment, we got $74,110 for NCAA Football 13 and the university's director of trademark licensing estimates $76,000 for NCAA Football 14. That is the top tier of pay. Go State!

I then checked with Baylor University, home of the 2011 Heisman Trophy winner, Robert Griffin III, to ask what it was paid. "Tier IV, working our way to III," was the reply, indicating familiarity with these terms. Baylor is not a client of the CLC. Its representation, like N.C. State's, is the Licensing Resource Group, which collects the royalties from the CLC and then distributes the money to its clients, taking no cut.

Kristi Dosh, ESPN's sports business reporter, published figures today that also align roughly with this tiering structure. For last year's game, Louisville received $85,845, which fits a team that went to the Orange Bowl last season and the Sugar Bowl in 2006. Clemson got the exact same amount: $85,845. It's been to a bowl in each of the last eight seasons. That was under the terms of the previous agreement, which gave schools an 8.5 percent cut of NCAA Football's sales. The new proposal is 7.0 percent, probably reflecting the uncertainty of the litigation and a series whose sales and critical acceptance have plateaued.

So if EA Sports is insisting on a lower payout, and requires any university to go through an agency that may not be the one it uses, which also takes 15 percent of the cut, why are these schools participating?

Well, there's no market alternative, for starters. EA Sports may have had an exclusive agreement with the NCAA from 2005 through this year (which it agreed not to extend in settling a class-action lawsuit brought against its deal with the NFL, which remains unaffected), but in any case, no competing college title has been published since 2002.

Most schools went in on NCAA Football more for what marketers call "brand extension," than the amount of money paid out. EA Sports is a global brand, and having your university's stadium, mascot, and everything down to the bell tower and ROTC firing the end zone cannon in a video game is a huge and almost necessary component of big-time football status. Getting this kind of widespread publicity, fan and alumni outreach in any other medium would require a university to pay a lot of money, rather than being paid it, however small the amounts may seem.

Universities are reconsidering their participation now thanks to lawsuits brought by two former college quarterbacks and one basketball all-America allege that the NCAA and the CLC tolerated EA Sports' practice (of which both were aware) of basing the games' rosters on real-world players, but then stripping out the names. No player's likeness has ever been licensed to EA's college football or its defunct college basketball series, even if roster editing and sharing features helped make it commonly accepted to gamers that real-world amateurs were de facto features within.

While no university has been named in any of three lawsuits connected to the matter, the NCAA and, last week, three conferences all pulled out and, in carefully worded statements, loaded the liability for appearing in these games onto their member institutions. The message is clear—they're the ones creating this impression that real-world players are running around out there.

At Baylor, Nicholas Joos, executive associate athletic director for external affairs, told me they "do not anticipate participating beyond this year unless we are bound to, which we are working to confirm." At N.C. State, Gregg Zarnstorff, the director of trademark licensing, told me the university "is not against doing future video games, we just haven't heard anything back from EA Sports on what a game would look like, and we still need to clear up agency representation issues."

As I have reported, I have a source with direct ties to EA Sports' college football project who has seen a list of the licensors for next years game. Relaying all of this latest knowledge, this person remained adamant that all but one of the 128 FBS teams next year (three will be promoted from FCS) are under contract to be present in the game. This source still would not name the holdout school.

The SEC is one of the few licensors who get an annual contract with EA Sports, rather than a three year deal. Most everyone else works on the three-year terms offered by the CLC. Despite everything that has been said, all but one school are connected to the game through 2017—as Texas A&M itself confirmed last week. A&M, according to Dosh, got $57,000 last year from NCAA Football 13.

The upcoming College Football Playoff is also not yet under contract to EA Sports, and that has a couple of interesting ramifications. Of course, EA Sports wants first to make a game with the four-team national football semifinal that will be played in real life. If it can't get licensing, though, that would allow the video game to create its own postseason, up to and including a six-round tournament featuring 64 teams—a long demanded feature stymied by the presence of the NCAA and Bowl Championship Series.

The bottom line is that the uncertainty the game faces this year is, largely, the same uncertainty it faced three years ago, and three years before that, and so on. The difference is in 2014, who's in and who's out is an issue because of the political climate surrounding big-money college sports and the ongoing lawsuits, which look to have a real shot at forcing the NCAA to change the way it does business.

Still, the Big Ten is out of next year's game. The Pac-12 is out of next year's game. The conference logos and names—not their member schools. That is confirmed. But no matter who else says they are evaluating their options, or leaving the game going forward, they are in for "College Football 15" or whatever it will be called, if not two more years after that.

Except for one university. And it could be a big one.