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- Here's why the stock for EA Sports is tanking
Here's why the stock for EA Sports is tanking
And no, the college football franchise isn't in trouble.
Matt Brown
January 24, 2025
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Good morning, and thanks for spending part of your time with Extra Points.
If you pay attention at all to Video Game Internet, you might have seen this news story late on Thursday. Electronic Arts, the company that makes College Football 25, Madden, and a bunch of other famous video games, had a terrible day at the office. Their stock dropped nearly 17% in one day, sending shares to their lowest point since 2023.
That might seem strange, right? After all, CFB25 shattered every revenue expectation and largely won critical acclaim. But EA makes more than just American football video games. And it turns out, the markets didn’t love how some of those other titles were performing. Via CNBC:
EA said it expects net bookings for the full fiscal year, ending March 31, of between $7 billion and $7.15 billion, below previous guidance of $7.5 billion to $7.8 billion. EA says net bookings include physical game sales as well as revenue from online games.
The warning reveals weakness in the most prominent soccer video game franchise since 1993. It used to fall under the FIFA branding, but in 2022 EA’s deal with FIFA ended and the last two EA soccer games have been sold as EA Sports FC.
The company also said that “Dragon Age,” a role-playing game for game consoles such as Sony PlayStation and Microsoft Xbox, had 1.5 million players during the quarter, which underperformed the company’s expectations by nearly 50%.
“During Q3, we continued to deliver high-quality games and experiences across our portfolio,” EA CEO Andrew Wilson said in the statement. “However, Dragon Age and EA SPORTS FC 25 underperformed our net bookings expectations.”
The stock tumble was apparently so significant that it even helped move shares of Take-Two, the completely unrelated video game publisher behind the NBA2K series, among others, in a downward direction.
While I’m sure social media, Reddit and other parts of the gaming world are pointing to the earnings miss as a sign that the video games are bad, overly bloated with microtransactions and ripe for a consumer revolt…financial analysts seem to point to different factors.
Sportico and CNBC seem to suggest that part of the decline in EAFC’s financial performance is the loss of the FIFA license. Unlike many other sports video game categories, global soccer also has plenty of other competitors, from Konami’s eFootball, to the spreadsheet-focused Football Manager series.
And hey, if EA spent tens, if not hundreds of millions of dollars to develop Dragon Quest, and it only made half as much money as it was supposed to…there’s no way that won’t impact the stock price. That would be the equivalent of a major box office bomb for a movie studio.
This is just the idle speculation of a sportswriter, but I wonder if part of the issue here is that Electronic Arts might not be as good as predicting software revenue as they used to be…between EACFB wildly crushing expectations, and Dragon Age and their soccer titles substantially missing revenue targets. That’s not the sort of thing consumers would care about, but investors certainly will.
EA’s stock isn’t typically exceptionally volatile, so such a massive price drop is significant, but I don’t think consumers or college sports industry people should overreact. Even with the drop, EA’s stock is about where it was at the start of 2023, and the video game industry, as a whole, is facing very significant challenges. It feels like video game studios lay people almost as often as newspapers and digital media outlets.
I wouldn’t be worried about what this news might do for the development of CFB26. But for fans who wonder why the company isn’t doing XYZ in next year’s game, it is probably worth a reminder that for as successful and important that game is…it’s not close to the impact that their soccer and some non-sports IP have.
I’ll share more, after a quick word from our sponsors:
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EA isn’t the only entity out there facing hard times. Cleveland State just dropped more sports.
The higher education outlook in Northeast Ohio has been brutal for the last few years, as population shifts have made it harder for the multitude of schools in the region to recruit and retain students. Last May, for example, Cleveland State cut 20 academic programs in a cost-savings move. Akron faced similar reductions. Kent State is staring down a significant budget deficit. The beat goes on.
Yesterday, those cuts came to athletics. Cleveland State announced the school is dropping three sports: Softball, Women’s Golf, and Wrestling. Via the press release:
CSU made the difficult decision to discontinue these sport programs at the conclusion of their respective seasons this academic year as part of a strategic effort, which began in 2023, to address budgetary shortfalls across the University. In addition to the discontinued programs, the CSU Board of Trustees approved relocating the University’s Esports program from CSU Athletics to CSU’s Washkewicz College of Engineering.
These recommendations resulted from a thorough review of CSU Athletics programs by a working group comprised of representatives from CSU Athletics, CSU faculty and the Cleveland community. The difficult decision to discontinue programs was made after careful consideration in keeping with the guiding principles that the working group identified, including aligning with CSU’s commitment to upholding a transformational student-athlete experience and positioning CSU Athletics for long-term success in the classroom, in the community and in competition.
The release adds that Cleveland State “is an active, engaged member of the Horizon League athletic conference and is committed to participating in Division I Athletics.”
I don’t know enough about the specifics of the situation to comment about whether Cleveland State made the right decision yet. According to the school’s FY24 budget report, which I obtained via an Open Records Request and uploaded to the Extra Points Library, the department reported a paltry $14.7 million in total athletic expenses, a number that will likely be near the bottom of D1.
The total operating expenses of the three sports, via the numbers reported in the FRS Report, is $1.08 million. How that relates to loss of potential student enrollment and tuition, vs what Cleveland State might spend to recruit and retain a non-athlete, I couldn’t tell you. Or, at least, I couldn’t tell you at press time.
It sucks for Viking athletes and supporters of Cleveland State, no doubt about it. As the deadline for schools to decide if they’re going to opt into the terms of the House settlement is fast approaching, I’m hearing other NE Ohio schools are contemplating other serious moves. Cut sports? Cut scholarships? Contemplate different conference affiliation centered around lower operating costs? More dramatic decisions? All potentially on the table.
I don’t want to insinuate that Cleveland State’s budget problems are related to House. There’s so much here that has nothing to do with athletics. But since you can’t have a healthy athletic department without a healthy school, watch for other schools in demographically troubled areas to at least consider even more dramatic athletic actions over the coming year.
If you want the budget data for other schools, check out Extra Points Library
Institutions across D-I and D-II had to file their itemized athletic budget reports last week, and we’ve already obtained dozens of them via Open Records Request. We’ve added those to our collection of hundreds of budget reports from FY23 and FY22, along with vendor contracts, coach contracts, and much more.
As of today, Extra Points Library has over 5,650 total documents, with more being added daily. If you want the data you need to really understand college sports, you need Library. Grab your subscription here today.
Here’s what else I wrote:
I wrote a story for Front Office Sports about why I don’t think the story of Ohio State’s national championship run should just be about having a team “payroll” of $20 million bucks.
I riffed on that story in greater detail over at Extra Points, and offered a theory on how I think other championship football teams will be built. Namely, with very experienced rosters, supplanted by transfer talent.
While I was in Atlanta, I spoke to some of the athletes who have gotten together with Athletes.org to participate in athlete right’s advocacy. Will this unit become a union at some point? I have no idea, but that wasn’t what I took from the experience.
And of course, I was in Atlanta to cover the National Title Game. In case y’all somehow missed this… I grew up in Columbus and graduated from Ohio State. So what was that experience like?
I can do stuff like travel to Nashville and Atlanta for major college sports industry events, build a huge directory of Open Records contracts, and write four newsletters a week, thanks to your support. Clicking on ads, supporting our partners, and paying for the newsletter make all of that possible.
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I’m looking forward to catching up on some sleep and recovering from that week on the road. Thanks for reading, everybody. I’ll see you on the internet.
Also, if you enjoy baseball news, you might enjoy adding this newsletter to your media diet:
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