Card Licensing Deals Examined in NFLPA Class Action Lawsuit

Terms of the licensing deals between trading card manufacturers and the NFL Players Association could play a role in the outcome of a class-action lawsuit filed on behalf of more than 2,000 retired NFL players against the NFL Players Association
in a dispute over royalties from video games, trading cards and other licensed sports products.

Pro Football Hall of Famer Herb Adderley filed the suit in a case that began this week in federal court in California. The suit alleges that the NFLPA intentionally cut retired players out of lucrative licensing deals so active players could receive bigger
royalty payments. The retirees point to a 2001 letter from an NFLPA executive that allegedly tells video-game maker EA Sports to scramble the images of retired players in the Madden NFL game so that the company would not have to pay royalties for
their use.

Among the evidence submitted by the plaintiffs are internal correspondence from NFLPA officials that show EA Sports, the NFLPA’s largest licensee, paid the union $400,000 to market a special edition of Madden NFL featuring Hall of Fame players.
Under that deal, the Hall of Famers each received several thousand dollars in a deal negotiated by the union. The plaintiffs say that an NFLPA employee is quoted in that correspondence as saying the price was “significantly below” what another video game maker might have been willing to pay the Hall of Famers to create a rival game.

The union’s central position is that the vast majority of retired players are not very marketable and that companies pay only for access to active players or for marquee retired players such as Joe Montana. The union claims that EA, the trading card manufacturers and other companies that paid licensing fees “unanimously confirmed that those revenues were paid solely for the rights of active players,’’ according to court documents. Executives from some of the NFLPA’s licensees have already testified
during depositions leading up to the trial and could be called as witnesses during the trial.

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