EA Sports LBO is BAD for everyone

First, LBO’s use the equity of the company to create debt to buy the company.  In this case, EA is now saddled with $20B in debt.  If this sounds familiar, its a typical Private Equity move and usually results in the eventual end of the company.  Think Toys R Us, K-Mart, Joann Fabrics, etc.  Typical PE investors aren’t interested in long term success, but rather milking the company of any profit they can before it is crushed under all the debt.

 

Second, and this is far more concerning, the LBO was led by Saudi Arabia’s Public Investment Fund (PIF).  Now, this might mean that there is less of a worry about the debt that EA has been saddled with as their coffers are full.   However, it is yet another step in a long series of acquisitions by Saudi Arabia to own the esports and gaming market.  They have already acquired the esports federation, along with significant stakes in Capcom, Nintendo and more.  

 

This is the same Saudi Arabia that severely limits the rights of women and is responsible for the killing of a journalist in cold-blood.  Their human rights violations are well known yet apparently, all of that means nothing when big dollars are involved.  

 

Time will tell how this impacts EA and titles like Madden, the Sims and more.  But, its not great for our world in general.