Take-Two Strikes Deal With Baseball Union

Updated from 12:45 p.m. EST

Take-Two Interactive (TTWO) struck back at Electronic Arts (ERTS) on Monday, reaching an agreement that could lock its rival out of the baseball game market.

Take-Two has reached an agreement in principle with the Major League Baseball Players Association that would give Take-Two the right to market and develop games based on players' names and likenesses for seven years. While the deal would leave open the possibility that console manufacturers such as Sony (SNE) and Microsoft (MSFT) would also be able to develop such games, it would bar other third-party developers such as EA from the market.

"The upcoming change in technology makes this the perfect time for us to implement our plan for growing the business, and we have no doubt that Take2's proven creativity and innovation ... will add real excitement and depth to the video game marketplace," said John Olshan, category director for interactive games for the MLBPA, in a statement.

A Take-Two representative did not immediately return a call seeking comment. The two sides did not give any financial details on the deal, which will begin in 2006, although the Wall Street Journal reported on Monday that the deal is worth between $80 million and $150 million.

The deal is "mildly positive" for Take-Two, one that should allow it to turn a modest profit, Wedbush Morgan Securities analyst Michael Pachter said in a research note on Monday. However, he noted that the deal will have no material effect the company's near-term earnings.

(Take-Two has not been a recent investment banking client of Wedbush Morgan.)

Because the tentative deal is with the players union and not with Major League Baseball, other game publishers could ostensibly develop games based on team names and logos, if not their players. But Take-Two is reportedly working to close that loophole. The company is currently in negotiations with MLB, according to the Journal.