The buyers are committing $36 billion of their own equity (briefly and inexpertly, “equity” is the value of your assets after you deduct anything you owe), including the value of the PIF’s existing investments in EA. They’re making up the rest of the total thanks to a $20 billion loan from JPMorgan Chase Bank. How will they manage that massive debt? According to the Financial Times, who cite unnamed insiders, they’re gambling on the deployment of generative AI tools as a gigantic cost-saving measure.
“The investors are betting that AI-based cost cuts will significantly boost EA’s profits in the coming years, people involved in the transaction told the Financial Times,” the paper wrote (paywall) in their own coverage of the story. The FT elsewhere commented that the acquisition “is a huge bet that artificial intelligence can significantly cut EA’s operating costs, allowing the equity consortium to manage a large debt load on a company that historically carried limited net debt.”
This is a very longwinded way to say “EA will die in a few years”.
“I don’t care who wins. I just want EA to lose.” Star Wars guy
This, they destroyed the art of US video games because it was promoting bad values like gay marriage in The Sims
Leveraged buyouts are so stupid to me. “Hi, I’d like to buy this company, but since it will be my company, the company needs to have the debt, not me. So if it goes wrong, well, that’s the company’s fault, not mine.” Should be illegal.
It’s like buying a house, and then expecting the house to pay the mortgage.
I mean,isn’t that what a foreclosure sale is?
I’m honestly asking. The world of corporate raiding is a foreign and distasteful place to my arts and sciences brain. The world of home buying is also foreign to my arts and sciences brain, but that’s cause I leaned more into arts than sciences.
That being said, you put up 20 grand of your money for a down payment. The bank loans you 200k. You fail to make your payments. Bank forecloses and sells off the property to cover the remaining debt, or at least claw back whatever they can get from it. Would that be so different than what’s likely to happen if EA fails to pay JP Morgan back? Is it the liability of Kushner et al vs the liability of a homeowner that is the primary difference?
That’s the idea at least, but a corporation is a vastly different thing. A piece of property doesn’t have employees, obligations, etc etc. (Well okay, large properties often do, but they aren’t hired by the buildings themselves.)
This will be fun to watch. Maybe not for 14 500 EA employees. I kindly suggest them to leave as soon as possible.
Indeed. I think it would be in their best interest to find work elsewhere before they end up getting laid off at the most inconvenient time.
Beyond that it should be amusing to watch this company go down in flames.
So ToyRUs 2.0 then?
Maybe private equity will do to EA what they did to Toys’R’Us!
samesies!
Business majors are so incredibly dumb. Why did we as a society decide they were so important?
So now EA has been acquired and will become a shell of it’s former self.
Ironic.
Has it been more than a shell in the last decade or two?
I hope, by some odd twist of fate, that Maxis is spit back out into its formal glory. Most likely it’ll just kill more good game series.
I just uninstalled EA launcher because it’s a fucking cancer and I see this afterwards… If it’s not on Steam it’s piracy material from here on out. Fuck all other launchers/services except GoG, GoG is cool too.
deleted by creator
I’ve not bought an EA game in 11+ years and see no reason to start now.
“And then it got worse” isn’t only a valid description of Russian History.
“The investors are betting that AI-based cost cuts will significantly boost EA’s profits in the coming years"
I’ll take that bet.
So basically procedurally generated everything with no substance?
EA Sports It’s in the slop
Has been for many years
There’s a huge bet that most of us are going to boycott this tomfuckery and do no further business with EA.
Already have.
Unfortunately, will the EA Sports fans and Battlefield fans do the same?
If they hadn’t left already, they never will.
FIFA and Madden have been dog shit iterations for years and years and people keep buying them. Plus Battlefield 6 might actually be good and will test plenty of people (like me) who said “never again” long ago. Luckily I probably won’t actually be tempted because of EA anti cheat and Linux incompatibility.
I was all up for BF6. It releases in two weeks. A bunch of friends are going to get it. I was a bit annoyed that it was the only reason I’d still be using windows11 but I was prepared to wear it. But Jared Kushner, Trump’s son-in-law, fuck.that.noise. No way am I giving that cunt anti-cheat access to my computer.
No… They won’t. But the rest of us free thinkers will. Is it a win? I dunno. I’ll carry that flag tho.
I have an hard time believing multiple investment funds can be so clueless.
They aren’t, they will make money stripping EA for parts and once the husk is spent it will be disposed of.
I don’t see how EA can be that valuable when taken apart. Ok they’ve got the sports licenses and a few good IPs, but idk.
Why not? Were you alive 17 years ago? Have you already forgotten how much money Madoff took? How much money was lost to the subprime ponzi?
I was very alive 17 years ago but on a different continent from where whatever you’re describing happened
Bye EA. Was nice knowing you.
E: just noticed I’ve been playing EA games since M.U.L.E. on the C-64. Say what you want about the company itself, but they have a long history of making games people want to play. Been playing the entire Battlefield franchise since 1942. Sucks that you can’t play 2142 or even Hardline anymore.
Been playing the entire Battlefield franchise since 1942
Note to readers: 1942 is the name of a game, not the year of release
Hence the italics to denote a title and not a generic date.
Italics can also denote emphasis.
They can. But not in this case.
OMG I played so much M.U.L.E on the C64. Archon and Jumpman, also.
‘We bought you, you owe us money’ is theft with more steps.
In the example of Toys’r’us, it ends up being theft against other creditors, suppliers, workers, etc, who end up not getting paid when it collapses.
In bankruptcies the entity who introduced the debt should be liable for it (the new parent company)
Looks like the monopoly on sports video games is ending soon.
