<
>

A Developing NFLPA Scandal?

Ben Roethlisberger plays Madden. Is Electronic Arts under-paying NFL legends? Getty Images

Last week in San Francisco, a jury ordered the NFL Players Association to pay $28.1 million in damages to 2,056 retired players for not including them in payouts from software developer Electronic Arts, the maker of Madden NFL video games. Now another group of players, including some of the greatest names in NFL history, is wondering if their union has shortchanged them, too. Their reason? Players, Inc., the licensing arm of the NFLPA, helped Electronic Arts buy rights to the likenesses of nearly 150 Hall of Famers from the Pro Football Hall of Fame for far less than those rights are worth, according to documents obtained by ESPN The Magazine.

For example, in a Feb. 20, 2007, e-mail that was entered into evidence in the just-settled case, Clay Walker, then-senior vice president of Players, Inc., wrote to Joe Nahra, staff attorney for the NFLPA: "I was able to forge this deal with the HOF that provides them with $400K per year (which is significantly below market rate) in exchange for the HOF player rights."

And on Nov. 1, 2007, Andy Feffer, chief operating officer of the NFLPA, e-mailed Paul Cairns, then-vice president for business affairs at Electronic Arts: "[T]he total payment to HOF is $400,000 [per year]. I can tell you that Clay [Walker] and Joe [Nahra]'s negotiation of these discounted items was a significant contribution to EA, as you more than likely would have paid in excess of $1M for these rights without their involvement and assistance."

"When I saw the documents, I almost fell off my chair," says Herb Adderley, the Hall of Fame cornerback for the Packers and Cowboys who was a lead plaintiff in the recent lawsuit. "As far as I am concerned, this is collusion. It's back-room price-fixing to lowball the Hall of Famers."

Through 2005, Electronic Arts guaranteed the NFLPA a minimum of about $500,000 a year for nonexclusive rights to use player images in its games, though its annual payments, based on sales of the hugely popular Madden games, were significantly higher, according to two sources with knowledge of the contracts. EA then secured the exclusive rights to use NFL players by dramatically increasing its guaranteed minimum licensing payments to $25 million a year. In response, Take Two Interactive, a competing video game maker, stepped up offers to retired players to appear in its games. As Walker put it in his February 2007 e-mail, "Take Two went after retired players to create an 'NFL'-style video game after we gave the exclusive to EA."

But Walker, the Players, Inc., executive, helped Electronic Arts, the video game maker, work out a different kind of deal by going through the Hall of Fame. In exchange for the rights to the likenesses of enshrined players, the Hall would get $1.6 million over four years and distribute most of it in equal payments to its members. That arrangement, now in its third year, pays Hall of Famers about $2,000 per year, per player.

The deal has been terrific for Electronic Arts, which not only got the rights to the best players in football history at an apparent discount but also essentially eliminated its competition. Walker claimed in his February 2007 e-mail: "EA owes me a huge favor because that threat [of no longer being able to use Hall of Famers] was enough to persuade Take Two to back off its plans, leaving EA as the only professional football video game manufacturer out there."

On the other hand, things haven't worked out so well for some Hall of Famers, several of whom apparently lost extremely lucrative opportunities to ink rights deals on their own. In a Feb. 22, 2006, e-mail, Walker explained to Paul Cairns, then-vice president for business affairs at Electronic Arts, "The per-player price for most of these guys was tens of thousands of dollars less than what they were guaranteed by Take Two Interactive, so it's a real coup that we were able to pull this off so cheaply…We know that Take Two offered six-figure deals to several former NFL players, so the total cost is millions below market price."

In that message, Walker also indicated that Players, Inc., would keep funneling future Hall of Famers to Electronic Arts for bargain-basement prices. "We'll continue to go after the new inductees for the same price per player…and I think we'll be successful," he wrote. "You aren't going to get Troy Aikman and Warren Moon from any other source for less than that."

For its part, the Hall of Fame has confirmed the basic financial details of its pact with Electronic Arts: It is receiving $1.6 million over the current four-year deal. It will pay out a total of about $1.2 million to players and is spending the rest on a financial assistance fund and other activities to support enshrined players. But Hall spokesman Joe Horrigan says, "I can't comment further on what is a private, commercial deal."

Walker, now executive vice president at Fantasy Sports Ventures, declined comment. NFLPA officials, including Nahra and Feffer, did not return calls seeking comment. Cairns, now a partner at Harbottle & Lewis, a London law firm, also did not return a request for comment. But Jeffrey Kessler, the outside attorney for the NFLPA in the Adderley case, insists the NFLPA played no active role in delivering Hall of Famers to Electronic Arts. "It is absolutely wrong to say the NFLPA secured those players' rights," Kessler told ESPN The Magazine. "The players did this to support the institution of the Hall of Fame. The NFLPA was involved only because it had to approve any changes made to games that used player images."

Kessler further called "inaccurate" any claims that Walker encouraged Electronic Arts to pay below market value for Hall of Famers' rights, saying, "All we've seen are these misleading, out-of-context e-mails."

High-profile Hall of Famers do regularly agree to lower their endorsement or licensing fees in group deals that benefit all members of the Hall of Fame. But with tensions between NFLPA management and retirees running at a fever pitch and beginning to have serious financial consequences, Hall of Famers may now question the Electronic Arts contract. "The EA game is so extremely profitable that all Hall members, including the high-profile members, should have received fair payment," says Ron Mix, the former Chargers great and current president of the Hall of Fame Players Association. "Two thousand dollars a year for four years might be a fair payment for some, but it certainly is not for most Hall members."

Mix isn't the only HOFer to chafe at the agreement."I want to support the Hall of Fame, but I'm going to sit back and look at this," says legendary linebacker Sam Huff, now a Redskins broadcaster. "Every retired ballplayer is angry as hell about all this."

Exactly what did Players, Inc., owe Hall of Famers in the negotiations over their video game rights? That question might land the NFLPA back in federal court, where the union already plans to appeal last week's ruling that it was obligated to include retired players in its overall marketing deal with Electronic Arts. "You see Clay Walker bragging about getting us for a lousy $8,000, saying EA owes him a favor, and you wonder what that favor could be," Adderley says. "Players, Inc., says they were the ones doing us a favor. The Hall of Fame says they were innocent bystanders. I say, let's let a jury decide."