Last week, the private acquisition of Electronic Arts finally happened. After months of governmental approval and debate, one of gaming’s largest publishers has gone private, co-owned by a combination of private equity companies and the Kingdom of Saudi Arabia’s Public Investment Fund.
This on its own would likely be a major milestone in the company’s history. However, perhaps what is most important was not the fact EA was bought, but how it was bought. Rather than pay the full sum, EA was acquired through a leveraged buyout. Roughly $20bn was borrowed from Morgan Stanley, and EA is now expected to make interest payments of around $1.8bn a year.
The added pressure brought on by this debt has some predicting major shifts at the company. Word of studio efficiencies have been reported, as have “operational efficiencies”, though these have yet to be announced officially as of writing. For some, this means layoffs.
Eurogamer has contacted EA for comment on whether layoffs are on the cards now that it has gone private, and has yet to receive a response.
To find out more about why EA was bought through a leveraged buyout despite the apparently vast wealth of the PIF, as well as how leveraged buyouts in other industries have gone down, and what this could all mean for EA in the future, I spoke to three experts from different fields of study. Who knows, maybe it’s not such dire news?
First, I spoke to Adrian Fernandez-Perez, a finance professor at the University of Dublin’s Michael Smurfit Graduate Business School. With a lot of speculation about what a leveraged buyout actually means for EA and its newfound owners, I hoped to get a clear idea of what EA has to look forward to.
“The benefits for the company who buys, is they can buy big companies without using all of their own capital. It’s a small investment which allows for a huge profit in the future if they resell the company, or the company makes large profits in the future,” said Fernandez-Perez.
“The bigger issue for the company that is bought is they have to pay the debt back, not the company that made the acquisition. The main goal then becomes paying back this debt. Whatever else they have in mind – making new games, research and R&D – these have to be postponed and the first priority becomes paying that debt.”
While this certainly sounds pretty dire, maybe there were benefits for the company being bought? It turns out there were some, according to Fernandez-Perez, though it was an operational benefit for the company as a business, not necessarily a benefit for those working there.
“Benefits include being streamlined as a business. So, this means cutting unnecessary expenditures. The issue is, this could mean layoffs at the company. It could mean parts that are not profitable they could cut to help make the company as a whole more profitable.
“The buyer of the company could also bring more knowledge into the company and industry, including insight to make things more efficient,” he said. “Plus, for the CEO there could be incentives. They could be paid a substantial bonus if they make the company more profitable. Those are the main benefits. But given the huge amount of money debt, again, the company has to focus on its expenditures to pay this debt.”
But how does a company actually go about streamlining to generate more profit? What could EA do in the short term to get on top of this debt? Fernandez-Perez can’t read the minds of EA’s executives, but he does have some suggestions.
“Specialise in the most profitable product,” Fernandez-Perez said. “If they are planning to create a new video game that is too niche, that won’t generate as much profit, they should stop that one and focus on the big one to make a big profit. Reduce labour if it’s a huge expenditure, reduce unnecessary expenditure, and focus on making the company more profitable.”
As of writing the most profitable ventures for Electronic Arts are undoubtedly its catalogue of live service games. According to its most recent 10-Q financial filing, the company made $1.98bn in revenue last quarter, $1.47bn of that coming from live services. If there is now greater financial pressure, focusing on this live service income, rather than smaller single-player games, would be the outcome that tallies most closely with Fernandez-Perez’s suggestion.
So that’s the financial take, but what can we learn from past examples of this sort of acquisition? From here we leave the world of business and fiscal dealings and dribble over to the world of football. As you may know, there’s a lot of money in the beautiful game. But it’s also no stranger to the financial burdens of a leveraged buyout, and while a different industry entirely, there are parallels which offer some valuable insight into how this type of transaction might go. And it’s a sport EA in particular knows well.
There is perhaps no better example of the potential risks present than the leveraged buyout of Manchester United by the Glazer family in 2005. Back then, the Glazers borrowed between $540m – $550m to acquire the club from hedge funds, including high-interest Payment-in-kind (PIK) loans. This, it’s reported, cost the club around £1.2bn.
Kieran Maguire is a broadcaster and author, and has written extensively about the finances of association football, authoring The Price of Football in 2020. He told me: “A football club is supposed to be part of the community, part of your identity, and so on. To be put at risk as far as the future of the club was concerned, as the amount of debt was considerable.”
He continues: “If you take a look at the PIK notes, they were at 14.25 percent at one stage, which was indicative of the level of risk the market saw for the deal. It did put Manchester United unnecessarily at stake.”
Thankfully, Manchester United survived the financial turmoil brought on by this leveraged buyout, and this could provide some relief to EA workers and fans given its ongoing financial success. Even so, there are costs, as Maguire tells it: “Fortunately, the club was very successful. They had a genius as a manager who managed to offset the damage that was being caused. Over a billion pounds of interest and dividends have gone out of the club since the acquisition from the Glazers, and that money could have been spent on infrastructure, or operational issues in my view.”
For smaller clubs, those who perhaps won’t be as fortunate as Manchester United was, the consequences of a leveraged buyout can be more severe. Maguire points to another club, Burnley F.C, as a modern example.
“If you take a look, Burnley has just been relegated. They will be paying around £10m a year in interest for all the loans. Yes they got parachute payments, yes they’ve got some salable inventory in terms of the players, but again you do a broader business risk assessment. If you take a look at the settlement they had with Everton in terms of the Everton breach of premier league financial rules, that’s a life saver for Burnley as they’ll get £35m. But Everton are appealing the decision, and one of their concerns is that if they win the appeal, Burnley may not have the financial resources to repay the money. That’s as a direct result of a leveraged buyout.”
So, given all this risk, given all the pitfalls, why make a private acquisition this way? Fernandez-Perez says that these sorts of deals are made to sell companies on later down-the-line for considerable profit, but the Saudi Arabian state hasn’t been selling the gaming companies it has gobbled up over the years.
George Osborn might know. The creator of the Video Games Industry memo, and recently published author of Power Play: Video Games, Politics, and the Battle for Global Influence, is an expert on the intersection of governmental interests and the video game industry. He believes for the Kingdom of Saudi Arabia, this deal offers ample opportunities that make the business risks worth it.
Osborn believes EA will stand as the “centrepiece” of the country’s video game strategy. In 2022 the country published its Vision 2030 goals, which included a dedicated segment on its video game industry goals in particular, such as generating 51bn Saudi riyals (roughly £10bn) of economic value, and over 39,000 jobs. While in 2022 this seemed quite ambitious, Osborn believes this EA acquisition could “supercharge” the process.
“While the acquisition of Niantic and Scopely were helpful, EA’s just at a different scale. It had a total net revenue of around $7.5bn last financial year, and it publishes games with a reach of around 700 million people, which happen to fit within what the Saudis want in terms of esports and competitive gaming.”
It could also offer a new avenue of influence for the Saudi Arabian state’s sporting ventures. Over the past few years, the country has invested heavily in golf, football, American football, and more in hopes of improving its reputation on the world stage. In practice this has proven difficult. Liv Golf, as an example, has largely failed in its attempts to eat a chunk of the golfing circuit.
Osborn believes that while Saudi Arabia is growing “lukewarm” on these ventures, the influence EA has on various sports could be the solution to its athletic woes – which brings us back to football.
“The impact of buying Newcastle United isn’t that big, but if you buy up EA, well, EA has to maintain relationships with thousands of professional sports stars, hundreds of clubs and dozens of leagues through its popular games,” Osborn says. “What that means is all of those parties are invested in the success of those games, and that’s why you see all those clubs posting about EA Sports FC when it comes out, or F1 drivers taking part in F1 sim racing challenges.
“I think Saudi Arabia has found it hard to buy itself into traditional sports, its structures were so firmly set. But by buying its way into the layer above it, it gets access to all of those sports teams, professions… Then it can orient things towards Riyadh.”
He also points to an interesting overlap between the parties involved in the EA deal, and those involved in current business proposals surrounding FIFA. “JP Morgan provides the debt for the EA deal, but it also creates the slide deck for FIFA forward enterprises that the FIFA president is due to send out. Jared Kushner is involved in the EA deal, while his brother Joshua Kushner is involved in the proposed FIFA sale to private investors,” Osborn explains.
“With Saudi Arabia set to host the world cup in 2034, I would say probably the most interesting thing to see is whether or not EA FC will see some sort of official licensing agreement in the next five years or so. I’m not sure whether or not it’ll eventually return to the name FIFA – EA has realised it has its own strong brand identity – but potentially a fusing of the two entities in something like an official FIFA World Cup mode in the future is definitely interesting.”
Other gaming companies have expanded into the country following significant Saudi Arabian investment. Scopely opened an office there in 2024, and the ESL Faceit esports group did the same in 2025.
Osborn believes it likely EA follows this trend: “It would be really strange if it didn’t use this influence to encourage EA to open something in the country. What that thing is, it’s difficult to say. It might be more of a commercial base, so more about getting EA more represented in the region and making Riyadh a key business space in the Middle East and North Africa. It may well be to do with esports, I’d be surprised if they didn’t try to relocate some people involved in esports especially given the Esports World Cup generally taking place in Riyadh.”
Osborn also says that, assuming there are layoffs at EA following its privatisation, hiring new talent from Saudi Arabia could even be on the cards. “I wouldn’t be surprised if they make those cuts from regions that are more expensive like the US, particularly in studios where EA’s focus is less likely to be as strong in the future” says Osborn.
“The cost of a Saudi game developer is considerably less than a US one. Saudi Arabia does have a lot of talent coming through too, there are a lot of people with a strong computer science background, so I wouldn’t be surprised to see a new developer base of sorts emerge there.”
So, with all this in mind, it’s clear EA is being pulled into murky waters. With the popularity of its biggest games, it’s entirely likely it can survive the incoming financial burdens this leveraged buyout has placed upon it. How much of the company will remain intact, and how much will be shifted around to different parts of the world or sliced away entirely – that’s the big question. Even setting aside the other huge question surrounding this deal, in the potential impact on EA’s games’ politics and themes – and LGBT+ stories, developers, and fans in particular – it seems unlikely that the EA we know today will be the same company we’ll see in a few years’ time.
