It’s down but not quite out. THQ, the publisher of many of the last decade’s bigger franchises, including WWE, Dawn of War, Saint’s Row and Company of Heroes, has filed a suit against both EA Games and UFC owners Zuffa, claiming that EA used internal THQ documents to undermine its position with the fight firm, leading to a smaller offer for a UFC game contract buyout.
How did EA get these documents? According to the suit, THQ showed it to the publishing giant when it was proposed that EA would buy up the struggling powerhouse. It’s been postulated that EA then took this information to Zuffa and made it clear what financial and developmental trouble THQ was facing. At this point Zuffa bought out THQ’s contract and handed it over to EA, for $10 million. In the suit, THQ alleges that it should have received at least $20 million and would have done so without all the alleged back room dealing.
The court document reads (via Eurogamer): “Throughout 2011, THQ’s financial fortunes continued to decline. It dedicated significant, dwindling capital to expanding the platforms for its uDraw hardware gaming tablet, which was a failure in holiday 2011 sales.””By the end of November 2011, THQ projected that it would run out of capital within several months and thereafter be unable to support its major pipeline projects, including the next games in the UFC franchise.”
With real trouble brewing at THQ, it then began pursuing alternatives to extend the life of the company. Selling out to a bigger one was a viable approach and EA was one of those considered for a potential takeover. Of course, this would include the handing over of internal financial information, which can’t have painted THQ in the best light. Ultimately EA ended negotiations, citing “disinterest” in the purchase opportunity.
Within two weeks, Zuffa, not having been informed of THQ’s financial status, threatened termination of the ongoing UFC contract based on monetary problems with the publisher. Ultimately the UFC owner handed over $10 million to buy out THQ’s contract and hand it off to someone else – ultimately EA – but THQ feels that it would have been able to negotiate a better deal for itself, if it had never talked to EA in the first place.
It is now demanding remuneration and interest on the value of the franchise.
EA denies the allegations.
KitGuru Says: I wouldn’t put it past Zuffa or EA to take part in something like this and it perhaps seems a bit too much of a coincidence, but maybe that’s all it is? What do you guys think?