Quote from: Shasarak on December 08, 2020, 11:20:34 PM

Quote from: soundchaser on December 08, 2020, 11:08:52 PM
Pretty spot on. I teach finance.

The bottom-up valuation of WOTC is high and climbing. A savvy owner like Hasbro wouldn't make the selling mistake now.

I know that I do not teach finance and on the other hand if you want to raise money in a recession then you have to sell the parts of the company that are doing well.

Or just borrow the money via bonds. Interest rates are super low right now - not just for mortgages, but also for investment grade corporate bonds. (A quick Google search shows that Hasbro bonds are paying out from 0.9% to 4.2%, with lengths of time from about 4 years to 23.5 years respectively.)

And Hasbro actually isn't doing too badly on sales. Apparently their board game sales are up since everyone is staying home and needs something to do with their family. Their issues are more to do with their supply chain - which is where they had issues before COVID due to the trade war with China - though COVID turned those issues up to 11.

But - not doing too horribly either. As a less technical example - they've kept paying out their dividends - which they would stop if they were anywhere close to bankruptcy.

Quote from: Shasarak on December 08, 2020, 11:20:34 PM

Quote from: soundchaser on December 08, 2020, 11:08:52 PM
Pretty spot on. I teach finance.

The bottom-up valuation of WOTC is high and climbing. A savvy owner like Hasbro wouldn't make the selling mistake now.

I know that I do not teach finance and on the other hand if you want to raise money in a recession then you have to sell the parts of the company that are doing well.

But, doesn't it sound more like re-structuring? I can see Hasbro outsourcing work for 5E and beyond on the cheap, but I really do think this is a sign of them getting rid of the riff-raff inside WotC. In a depression, you see layoffs and restructuring before you see sell-offs, especially for market leading product. It'll be interesting to see how this pans out, either way.

Quote from: consolcwby on December 09, 2020, 12:00:25 AM

Quote from: Shasarak on December 08, 2020, 11:20:34 PM

Quote from: soundchaser on December 08, 2020, 11:08:52 PM
Pretty spot on. I teach finance.

The bottom-up valuation of WOTC is high and climbing. A savvy owner like Hasbro wouldn't make the selling mistake now.

I know that I do not teach finance and on the other hand if you want to raise money in a recession then you have to sell the parts of the company that are doing well.

But, doesn't it sound more like re-structuring? I can see Hasbro outsourcing work for 5E and beyond on the cheap, but I really do think this is a sign of them getting rid of the riff-raff inside WotC. In a depression, you see layoffs and restructuring before you see sell-offs, especially for market leading product. It'll be interesting to see how this pans out, either way.

Yes - as a general rule sell-offs are more common for products/IPs where the potential is higher than the current value. So the buyers (venture capitalists or just a different company) think that can come in and turn around the business based upon the fundamentals of the product/IP.

Hey finance guys, what does the threat of a big lawsuit do to the valuation of WotC?  Can Hasbro transfer the IP from WotC and leave the remains to be gutted by the court?

Quote from: zircher on December 09, 2020, 09:58:48 AM
Hey finance guys, what does the threat of a big lawsuit do to the valuation of WotC?  Can Hasbro transfer the IP from WotC and leave the remains to be gutted by the court?

That's more of a legal question of trying to avoid liability. But I do know that a pending lawsuit will lower the valuation of a company if investors think there is a decent chance of them losing and the $ amount is large enough proportionally to the company's size.

If you're talking about the Dragonlance thing - I doubt that lawsuit's likely settlement is large enough to matter terribly much to Hasbro's evaluation.

D&D is a license to print money.  Hazards (Hasbro/Wizards) has finally realized that, and, like the crush of Monopoly "variants" over the years, they're selling out and cashing in (finally) on D&D - Rick and Morty D&D, Stranger Things D&D...honestly if it wasn't for the fee fees of "Current Year!" they could do a lot worse than to do a Community D&D.  Or The Goldbergs.  Or Freaks & Geeks.

The reality is this is nothing but clickbait.  D&D's/WotC are going nowhere.  Even if Big Hasbro kicks them out, they (Hasbro) would probably take D&D from WotC as part of the severance package, make it "evergreen", and just keep churning out the current hardbacks, the two box sets (Starter & Essentials), and then have their board-game division keep spinning off things like Ravenloft etc.

Oh, and for the thread rando: die mad, D&D is fantastic.

But as for myself?  Well...y'all know I only play old school, so...I'll let The Who say it for me. 

"I tip my hat to the new revolution/take a bow for the new constitution/smile and grin at the change all around me/then I'll pick up my guitar and play/just like yesterday/and I'll get on my knees and pray/we don't get fooled again."

How much would Hasbro sell WotC for anyway? There's a part of me who wants to try to start a GoFundMe to get the money to buy it so that I can remove the people currently ruining D&D and M:tG with their woke imprinting.

Quote from: Fergurg on December 09, 2020, 01:20:57 PM
How much would Hasbro sell WotC for anyway? There's a part of me who wants to try to start a GoFundMe to get the money to buy it so that I can remove the people currently ruining D&D and M:tG with their woke imprinting.

Lol - a quick Google search shows that Hasbro paid $325m for WotC back in 1999. Between inflation and the recent success (relative to 1999) of D&D, I'd (pulling out of my wazoo) guess at least a billion.

Is WotC's EBITDA (or operating income) known? Get that and slap a multiple in it, whatever "game" companies trade for. Probably have to zoom out, use a toy company multiple. What's Hasbro's TEV/EBITDA?

Edit: Here's a data point, this article says Asmodee potentially valued at $1.79B for $119MM of EBITDA, so roughly 15x. If someone can get ahold of WotC's EBITDA, maybe estimated in HAS equity report somewhere, you would probably have a good idea of what it would fetch.

Quote from: Chainsaw on December 09, 2020, 03:18:14 PM
Is WotC's EBITDA (or operating income) known? Get that and slap a multiple in it, whatever "game" companies trade for. Probably have to zoom out, use a toy company multiple. What's Hasbro's TEV/EBITDA?

Edit: Here's a data point, this article says Asmodee potentially valued at $1.79B for $119MM of EBITDA, so roughly 15x. If someone can get ahold of WotC's EBITDA, maybe estimated in HAS equity report somewhere, you would probably have a good idea of what it would fetch.

You got me curious so I just took a quick look at Hasbro's 2019 report, but it didn't break out segment or subsidiary financials.  EBITDA's not the kind of thing they would release without reason, and I think making a valid estimate would be difficult.  Usually one finds comparable publicly held independent companies and backs out some ratios for such estimates, but WotC is so much bigger than any similar company that I would be doubtful that they could be true comparables.

I did find various references to WotC in the report though.  They're probably old news, but I'll quote them for anyone like me who hasn't seen them yet.

"Several years ago, we identified gaming, with a renewed emphasis on digital gaming, as a revenue and profit growth opportunity for Hasbro long-term. The team at Wizards of the Coast is on the path to becoming the leading publisher of fantasy games across any platform.

MAGIC: THE GATHERING revenues increased more than 30% in the year, behind double-digit growth in tabletop revenues and a strong first year for Magic: The Gathering Arena, our new digital game. DUNGEONS AND DRAGONS revenues grew for the sixth straight year.

Both are significant brands for us today, but alsomeaningful growth drivers across formats and in storytelling. Last year, we set a target to double the revenues of Wizards of the Coast brands over the coming 5-year period, and we're well on that path to accomplishing this mission. We have a plan to invest $200 million to $300 million over the period across multiple titles and platforms to create unparalleled gaming experiences with superior operating margins.

Within our Hasbro Gaming portfolio, higher revenues from DUNGEONS AND DRAGONS and several classic games titles did not offset other declines, including the contribution of new game launches and difficult comparisons to prior year PIE FACE and SPEAK OUT sales. As people come together to compete and have fun, we have confidence that gaming will remain a mainstay of the industry with Hasbro brands standing out. "


"In addition to film and television initiatives, Hasbro understands the importance of digital content to drive fan engagement, including in gaming and across other media, and of integrating such content with our products. Digital media encompasses digital gaming applications and the creation of digital environments for analog products through the use of complementary digital applications and websites which extend storylines and enhance play. In 2018, the Company launched MAGIC: THE GATHERING ARENA, the free-to-play online adaptation of the MAGIC: THE GATHERING card game, which launched out of open beta late in the third quarter of 2019. During the fourth quarter of 2019, to support the Company's Wizards of the Coast's digital gaming business, the Company acquired Tuque Games ("Tuque"), an independent digital game development studio based in Montreal, Canada. Tuque will focus on the development of digital games for brands such as DUNGEONS & DRAGONS."


"In addition, the Company incurred higher selling and administrative costs in support of the Company's Wizards of the Coast business."
 

Quote from: Mishihari on December 09, 2020, 06:17:58 PM

Quote from: Chainsaw on December 09, 2020, 03:18:14 PM
Is WotC's EBITDA (or operating income) known? Get that and slap a multiple in it, whatever "game" companies trade for. Probably have to zoom out, use a toy company multiple. What's Hasbro's TEV/EBITDA?

Edit: Here's a data point, this article says Asmodee potentially valued at $1.79B for $119MM of EBITDA, so roughly 15x. If someone can get ahold of WotC's EBITDA, maybe estimated in HAS equity report somewhere, you would probably have a good idea of what it would fetch.

You got me curious so I just took a quick look at Hasbro's 2019 report, but it didn't break out segment or subsidiary financials.  EBITDA's not the kind of thing they would release without reason, and I think making a valid estimate would be difficult.  Usually one finds comparable publicly held independent companies and backs out some ratios for such estimates, but WotC is so much bigger than any similar company that I would be doubtful that they could be true comparables.

Many, many companies break out segment EBIT/EBITDA regardless of their size, though brand-level is less common, which is why I suggested finding an equity report. I would be very shocked if one of the Wall Street analysts hasn't already figured it out via "mosaic theory" (aka, off the record conversations). Trust me, nerds on a gaming forum are not the first people to ask what WotC's worth. 

Quote from: Mishihari on December 09, 2020, 06:17:58 PM
"Both are significant brands for us today, but also meaningful growth drivers across formats and in storytelling. Last year, we set a target to double the revenues of Wizards of the Coast brands over the coming 5-year period, and we're well on that path to accomplishing this mission. We have a plan to invest $200 million to $300 million over the period across multiple titles and platforms to create unparalleled gaming experiences with superior operating margins."

To the point of the thread, this bit really does not sound like an imminent sale.

Quote from: zircher on December 09, 2020, 09:58:48 AM
Hey finance guys, what does the threat of a big lawsuit do to the valuation of WotC?  Can Hasbro transfer the IP from WotC and leave the remains to be gutted by the court?

I'm not a finance guy, just know a bit about stocks. Here is a site to answer that question:
https://www.macrotrends.net/stocks/charts/HAS/hasbro/debt-equity-ratio

Scroll down, and you'll see this:
Date              Long Term Debt      Shareholder's Equity       Debt to Equity Ratio
2020-09-30   $7.90B                        $2.81B                       2.81
2020-06-30   $7.58B                        $2.64B                       2.87
2020-03-31   $7.66B                        $2.77B                       2.77
2019-12-31   $5.86B                        $3.00B                       1.96
2019-09-30   $3.71B                        $1.84B                       2.02

If you notice, Long Term Debt went up quite a bit within the last year, BUT Shareholder Equity has gone down. Market Cap is 12.274B and Revenue is $4.720B.  If I was going to invest, I'd be watching how much float is bandying about and who is doing what on the board.

The Quick Ratio (How easily it is to pay back your debt, higher is better):
https://www.macrotrends.net/stocks/charts/HAS/hasbro/quick-ratio

Date   Current Assets - Inventory   Current Liabilities   Quick Ratio
2020-09-30   $3.22B                                     $2.32B             1.39
2020-06-30   $2.62B                                     $1.98B             1.32
2020-03-31   $2.87B                                     $1.74B             1.65
2019-12-31   $6.30B                                     $1.26B             5.01
2019-09-30   $2.82B                                     $1.47B             1.93

As you can see, they have sufficient liquidity, however, they DID take on much long term debt, probably due to COVID. I'd start to worry if the Quick Ratio went below 0.98 though.

And, finally, the assets:
https://www.macrotrends.net/stocks/charts/HAS/hasbro/total-assets
The take-away here is this: Hasbro total assets for the quarter ending September 30, 2020 were $10.703B, a 92.69% increase year-over-year.

So, unless there are massive bank closures, I don't think they will sell IP/Product off to others. What it appears to me, is taking Long Term Debt at these levels will require layoffs/restructuring throughout the next 5 years to adjust paying this off.

Historical daily share price chart and data for Hasbro since 1984 adjusted for splits. The latest closing stock price for Hasbro as of December 09, 2020 is 88.76.
https://www.macrotrends.net/stocks/charts/HAS/hasbro/stock-price-history

I doubt there will be much fluctuation due to lawsuits, the initial news seemed to have caused a big downtick, but it's up again! Everybody's jumpy because of 2020 anyway! 
I'd wait for at least a 20% sale before going in to this though - be warned! (it's already down -15.95% since last year!)

Good news then. Hasbro is pretty much average in its industry segment.

Gross margin is 50%. Unlikely that restructuring is needed. Depends on net staying above 10%.

Plus, that debt has pushed WACC down. The company has a long history of ROI > WACC.

Quote from: Chainsaw on December 09, 2020, 06:27:51 PM

Quote from: Mishihari on December 09, 2020, 06:17:58 PM

Quote from: Chainsaw on December 09, 2020, 03:18:14 PM
Is WotC's EBITDA (or operating income) known? Get that and slap a multiple in it, whatever "game" companies trade for. Probably have to zoom out, use a toy company multiple. What's Hasbro's TEV/EBITDA?

Edit: Here's a data point, this article says Asmodee potentially valued at $1.79B for $119MM of EBITDA, so roughly 15x. If someone can get ahold of WotC's EBITDA, maybe estimated in HAS equity report somewhere, you would probably have a good idea of what it would fetch.

You got me curious so I just took a quick look at Hasbro's 2019 report, but it didn't break out segment or subsidiary financials.  EBITDA's not the kind of thing they would release without reason, and I think making a valid estimate would be difficult.  Usually one finds comparable publicly held independent companies and backs out some ratios for such estimates, but WotC is so much bigger than any similar company that I would be doubtful that they could be true comparables.

Many, many companies break out segment EBIT/EBITDA regardless of their size, though brand-level is less common, which is why I suggested finding an equity report. I would be very shocked if one of the Wall Street analysts hasn't already figured it out via "mosaic theory" (aka, off the record conversations). Trust me, nerds on a gaming forum are not the first people to ask what WotC's worth. 

Even if they did break out WoTC, as the OP articles mention, Hasbro has shifted a lot of things related to the IPs out of the direct control of WoTC - (it looked like things such as having a different group make D&D board games etc) - so a breakout wouldn't show the whole picture of what owning WotC is bringing to Hasbro - as there is no way that anyone would buy WotC without their IPs intact.