My thoughts on your thoughts...TMP and chapter 11

**Michael Crawford** · December 20th, 2004, 03:13 PM

Yep, I thought I'd start a new thread. Because.

Actually, I wanted to combine comments I had on several threads on one spot, and it just seemed easier.

- can we please stop saying anything as stupid as "this has nothing to do with us so why should we care"? On a toy board that's mostly about one company, the economic fortunes of that company do matter, and do effect us. You might be rich, but I suspect that if McToys suddenly had to follow the rest of the industry on prices, and you had to pay $15 a pop for his figures rather than $10, you'd consider it an effect.

- does chapter 11 mean anything? Of course. Yes, companies these days like to play the "oh, it's really no big deal, we're just restructuring" game, but it is always a big deal. Todd didn't just throw a hissy fit over Twist's law suit and decide this on a whim. The effect on the company's credit rating alone dictates that he thought long and hard about the consequences. Or at least we can hope. And this also means that all significant business decisions - the stuff not day-to-day - has to be approved by a bankruptcy court. That's not the kind of thing I think Todd would do all that willingly just to piss off Twist.

- does that mean the fat lady is signing? No. Hell, the fat lady ain't even a plus size yet. But it does mean trouble. Some places claim only 10% of all companies that file chapter 11 come out the other end, but I think it's more likely to be 25 - 40%.

- but the toys and comics are separate companies, so it doesn't matter. Yea, right. They are privately held companies by the same guy. Publicly held companies are a little different, but with one guy owning them all, if one goes under I wouldn't look for any of the remaining to survive. Ask the guys from Resaurus about that.

It's also important to remember that the toys were never the 'cash cow'. That was the comics. The money from them, and the film side, generated the income to make it possible for Todd to do toys. The margins on his stuff are razor thin, something other toy companies have complained about for years. He can do that because he never looked to the toys to do much more than pay it's own bills. It wasn't supposed to be a big revenue generator, and now that is very likely to change.

- I suspect that while the Twist stuff doesn't help, it is also a smoke screen for bigger issues with the comic industry. Along with it, toys are getting hammered right now, and the companies that make them are sure to feel it. The crunch has at least a couple years left in it, and it will only be the smartest companies that make it through.

- My single biggest concern is that retailers sour on McToys. If that happens, everyone else will get slammed. Retailers have a mindset that if McToys don't sell, no specialty market toys will sell. That wouldn't be a good thing for them to believe.

So is it a good thing? Hell no. Is it the end of the world? Hell no. But it could be an indication of some big changes in 2005.

Michael
MWC

**Joranthalus** · December 20th, 2004, 03:22 PM

thank god you arrived to talk sense to us stupid folks... now i'm gonna go run out and join a religion or something [img]smile.gif[/img]

**SlappyMcNasty** · December 20th, 2004, 03:24 PM

Incredibly accurate and well-spoken

**Michael Crawford** · December 20th, 2004, 03:42 PM

Well Jor, somebody had to save ya!

Michael
MWC

**Dajistano** · December 20th, 2004, 03:44 PM

I'd rather wait and see what happens.

**Joranthalus** · December 20th, 2004, 03:45 PM

on more than one occasion, i'm afraid...

**baimun** · December 20th, 2004, 03:45 PM

Michael... very well said and I agree with 99% of it.

The only place where I might disagree is with the Comics being the major income while the thinly-margined toys just "breaking even".

This may have been the case early on, but over the years, the comic industry has dried up so much (I haven't seen a comic rack in a grocery or drug store in years) that I really think the comic portion has been kept afloat purely for nostalgia and not wanting to "give up" on the Spawn comic (while almost all of the spin offs have come and gone).

The toys may have a much smaller margin (to stay competitive) but the VOLUME is Much MUCH larger than the comics. Meijers, ToysRUs, Target, Walmart, Spencers, Electronics Boutique, Sam Goody & Gamestop, Online vendors, direct sales and so many other places (I see the sports figures in places that don't even carry "toys").

I really think this is a case where the cart has turned into a supercharged off-road vehicle and is carrying the horse in it's glovebox.

**thatchetguy** · December 20th, 2004, 03:57 PM

The comic is selling less than one percent of what it did in the beginning. Yep, 99% drop off in sales, it's not even in the top 50 any more. Toys keep the company afloat, and have for years.

But the toy company has to feel the pinch too. The worst part of Chapter 11 is that it opens the books up... there's a lot of people and other toy companies who can't wait to see how much was paid for what licenses... yes, the toy company is separate, but since it is OWED money by the comic company the books get unsealed...

Fasten your seat belts, it gonna be a bumpy ride!