$5m cost for E3 to quit LA

The Entertainment Software Association paid over $5 million last year to move its annual expo from Los Angeles to Santa Monica – only to bring the show back to the city’s Convention Center for this year.

That’s according to IRS documents obtained by games news blog Kotaku, which show that the ESA paid $5, 377, 808 in cancellation fees in order to break a contract that tied E3 to the Convention Center until 2012.

The forms also show that the association’s membership dues more than quadrupled in its 2006 fiscal year, which ended on March 31st, 2007 – increasing from just over $1 million in fiscal 2005 to more than $4.5 million in fiscal 2006.

Rich Taylor, Entertainment Software Association senior vice president of communications and research told Kotaku that the ESA Board members knew the move would incur sizable fees, and they also realized that it would mean what they called a shift the annual show from a "profit generating E3 to a revenue neutral summit."

"In the past the membership dues here were deflated significantly because of income that was coming from other sources including the summit," Taylor said. "Now we’re closer to what other trade associations charge."