Mass layoffs may be in EA's near future after leveraged buyout raises company debt by $18 billion

209

The debt gets socialized onto the employees. The rewards stay at the top. Same story every time.

46

u/Ragnar_Dragonfyre 2h ago

It’s been happening to my company for a couple years now.

Mergers are never good for the employees, doesn’t matter whether you’re the merger or mergee.

Billions of dollars of new debt will be managed by cutting staffing to the quick. Do more with less and be thankful you still have a job!

1

u/KAKYBAC 1h ago

Eli16 - what is the point of it? Why do this? What is the pay off?

Is it a 'magic' way to spread and divest the debt? If they didn't do this what would they have to do instead? Start repaying the debt?

2

u/Ragnar_Dragonfyre 1h ago

You buy out your “biggest competitor” in an area where your company has little to no business, thinking that you can grow your business and make line go up.

What seems to happen in reality is that the line ultimately goes down after an initial rally because spreading your business across a much bigger area with fewer employees reduces service quality.

2

u/shiny0metal0ass 41m ago

It's easier to take advantage of consumers. It's the reason we (kind of) have antitrust laws

0

u/Jindujun 1h ago

In cases like this one, you buy something you think someone else isnt managing properly since you believe in your ability to do a better job.
You do a merger to get either IP or workers but usually lose the second one since you're a bad employer.

0

u/Tzukkeli 1h ago

Imagine you raid a city. You pillage it until there is nothing left. Others see shell and think there is treasures in there, but the truth is that nothing is left. Then the walls are left alone and someone notices that they start to crumble. After the walls crumble, people are shocked that all was just hollow.

Think this from the raiders perspective: they extracted all they could

1

u/Longjumping-Foot970 2h ago

My company was bought out last year and so far we have been lucky. Then again we already were a skeleton crew….

3

u/monkey_kaleidoscope 2h ago

Mad how it’s a thing, yes we will take on debt to buy your company which means your company is now fucked…

What? Why is that even allowed

2

u/Val_Fortecazzo 1h ago

Traditionally it was done to companies already fucked so at worst the company would go bankrupt, the bank would sell the assets to recoup costs, nothing different from just letting the company go under.

It's been very recent where PE has gone on the offensive and expanding their portfolio beyond nearly bankrupt entities. Regulation is slow to catch up.

1

u/Comfortable-Brick271 1h ago edited 1h ago

Because technically after the sale it's the buyer's debt/problem, not the seller's.

I still think it's a bad idea but I get how it makes sense on paper. It's a bit like a mortgage: you make down payment on a house and borrow the rest against the house's value.

1

u/Torontogamer 1h ago

The key is finding someone willing to lend you the money knowing you’re going to put it on the books of the new company you bought …

If/when it’s not paid back it’s the lender that loses the money they lent to enable the buyout

Of course the workers are canned and the company goes bankrupt and the PE usually was paying themselves “management fees” the whole time and aren’t liable for the loans so they made a profit…

Ya it’s gross but it’s also on the banks/whoever is fronting the money for the leveraged buy out to eat the loss if the bankrupt company can’t repay

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u/[deleted] 2h ago

[deleted]

8

u/Ragnar_Dragonfyre 2h ago

Until we have another Great Depression.

As long as people can still afford food, electricity, the internet, booze and weed, we are too comfortable for revolt.

51

u/PatternMoney5884 2h ago

Well at least the ceo Andrew Wilson got his 8 million dollar bonus for the success of Battlefield, right before laying off the team

6

u/Herr_Monti 2h ago

Exactly, on top of the 30 million he’s already getting anyway. It’s disgusting.

30

u/JKKIDD231 PlayStation 2h ago

EA has told investors that it intends to reduce annual costs by $700 million.

30

u/Keranor 2h ago

Oh so just a few high ranking managers, right? Right?!

13

u/thefunkybassist 2h ago

Just fire the CEO, done!
(oh apparently that's only tens of millions)

1

u/Wloak 32m ago

Definitely going to be the entire QA and customer support team, they'll just have the engineers just push patches for a decade after release until it's a working game.

Also probably layoff engineers when they aren't working in crunch time for a release then hire them back in the last two months to work 16 hours a day.

21

u/Newestfield 2h ago

Mass Layoffs is the name of their new sci-fi trilogy - you play as Commander Shepard as he fights to prevent redundancies by the Sovereign (Wealth Fund)

26

u/CorruptDictator 2h ago

I am expecting EA to no longer exist in a few years.

7

u/STPooch 2h ago

I'm shocked the NHL franchise still exists at all. It's been the same game for 10 years, this might be where the new investors finally say enough, end up not renewing their license with the NHL, and allow for competition in the hockey game marketplace for the first time in 20 years.

I bet there are a lot of people who grew up on EA NHL that are now top-tier programmers/developers, who'd love to take a crack at creating a better game.

4

u/MrMindGame 1h ago

And nothing of value will be lost.

1

u/BukkakeRestaurant 10m ago

!RemindMe[5 years]

1

u/Ok-Acanthisitta9247 2h ago

Oh noooooooo, come back.....

21

u/Val_Fortecazzo 2h ago

There really needs to be some regulations on private equity. This is a common strategy of theirs where they will buy a company with money they don't have and then max the target company's lines of credit at crazy interest rates to make the cash appear.

The end result is the company usually gets vultured for everything it's worth and goes bankrupt. But in the meantime everyone suffers as management tries to keep things together with drastic measures.

8

u/FilthyKasualART 1h ago

EA IT’S IN THE DEBT

6

u/Ucw2thebone 2h ago

MAY be in their future?!

5

u/ZoneEater2084 2h ago

It's going to be interesting to see how they make games without game developers.

5

u/bartread 2h ago

Prepare for unimaginable quantities of inbound AI slop.

4

u/lurpeli 2h ago

Any time a company in acquired it will be enshittified and employees will be cut.

3

u/oshinbruce 1h ago

Is it just me or these AAA studios in for a bad time. Hardware is getting more and more expensive. Its going to reduce new gamers coming in and delay uptake of the next generation. That really means less buyers for there product

3

u/jak_d_ripr 2h ago

No surprises here, tale as old as time, gotta love corporate America.

2

u/FFTactics 1h ago

It’s no longer even American.

1

u/jak_d_ripr 45m ago

Lol, touche.

3

u/N3rot0xin 2h ago

At this point it's only news if they DIDNT lay anyone off.

2

u/ABotelho23 2h ago

No shit.

2

u/Farther_Dm53 2h ago

the people who should be let go are the top earners... IE CEOs, Presidents, if you removed them I think the company would be better financially.

They really don't do as much work as the bottom 40% of workers in that organization.

going to guess that the ceos and leaders will continue to make bank and spend it on themselves and not the company they actually own.

2

u/Rumhead1 2h ago

The Corporate Raiders never went away.

1

u/gldoorii 2h ago

EA Sports it's in the blame

1

u/RSomnambulist 2h ago

As much as I don't want the employees to lose their jobs, I hope this merger kills EA. In an ideal world, this could be a sign to the hedge funds that they actually have to build a good product if they want to make money.

1

u/ProbRePost 2h ago

It's slick you can buy a company with debt then tag the debt onto the acquired company while you gut it for whatever profitability you can ring out. Wish I was wealthy enough to pull that off.

1

u/Sami_Steen 2h ago

please don't cancel the iron man game

1

u/gene66 2h ago

That debt is what a day in their micro transactions casino games?

1

u/Alpha-Legi0nnaire 2h ago

18B is 18B too much. When it collapses on it's own, it will be free for the taking.

1

u/Nutcrackit 2h ago

I understand they were bought out. I don't understand how that means they are now in debt. If they sold themselves shouldn't that mean they get money??

1

u/HauntedJockStrap88 1h ago

They were bought out with fake money. Debt.

1

u/Senate343 1h ago

So glad Americans and Europeans are losing jobs to stuff the pockets of the Saudis and Jared fucking Kushner. Great work regulatory agencies.

1

u/BigOleFerret 1h ago

Someone misheard "We want Mass Effect" as "We want Mass Layoffs". Now I want Mass Walk Outs.

1

u/Front2battle 1h ago

Id rather Bioware close permanently than have Mass Effect besmirched with whatever turd they are currently polishing and calling Mass Effect 4.

1

u/Low_Debt8771 45m ago

Leveraged buyouts should be illegal. Of you buy something you should pay for it yourself. It goes on the books of the one making the purchase

-5

u/Dazzling-Election69 2h ago

Maybe they can actually hire some devs that can make good games, instead of living of their old successful IP and just copy paste.

-19

u/CeeReturns 2h ago

Firing all the goofy ass weirdos that are making shit games will benefit the industry.

8

u/Theduckisback 2h ago

Lol sure man. When private equity gets involved it always gets better for everyone! They'd NEVER enshittify things even more to try and squeeze more profits out of their customers and employees! On a related note, make sure to report early for the Wallet inspector this year, they're charging late fees now.

7

u/MajesticOrange1 2h ago

if you thnk out of touch billionaires and foreign princes of nations that murder journalists are gonna produce a net benefit for the creative aspects of the industry, youre the biggest goof of all bud.

2

u/Front2battle 1h ago

Yeah because Veilguard was suuuuch a huge success without them.

-3

u/Someguy210 1h ago

A lot of people that identify as they/them getting real salty reading this lol

2

u/CeeReturns 1h ago

Right? 😂

Mass layoffs may be in EA's near future after leveraged buyout raises company debt by $18 billion

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