How much would D&D cost?

[Alnag]

The number I heard tossed around three years ago or so--and this is 3rd-hand information, so take it for what it's worth--was $30 million.

I think that's the price of TSR aquisition. Today D&D is in much better shape. You would have to double the number. Which also mean that you will not get you money back in at least 8 years. Too risky investment...

 

[RyanD]

Seriously. I realize few to none will have an accurate clue, but those that might, even if it is ballpark -- what would it cost to buy D&D (the whole brand) from Hasbro?

Assume the combined D&D business generates Hasbro $40 million a year in revenue. (tabletop RPGs, novels, computer license royalties, & mass media license royalties).

Assume that revenue generates a 10% after tax profit ($4 million).

Assume Hasbro's P/E (that's stock price to trailing earnings ratio) is 21 (today it is 20.93). That means that every $1 of after tax profit is worth $21 of Hasbro stock. They CANNOT sell an asset for less than that (unless they have reason to believe the asset has a future net profit problem, which 30+ years into the D&D business would be hard to make a case for barring management incompetence, of which we have no evidence). So $4 million in after tax profit equates to $84 million in Hasbro stock value.

Consider: The Infogrames deal has a limited time horizon. At some point (i.e. 2015), Hasbro will get the electronic gaming rights for D&D back. Do you think that in 2015 there will be a market for an electronic D&D game? Do you think that market will be bigger or smaller than it is today?

Consider: The Dragonlance Animated Feature has not been released. Assuming it is reasonably successful, do you think the chances for more animated (or live action) media for D&D goes up or down? Do you think the rights for those kinds of projects get more or less expensive? When considering this topic, remember that the D&D movies made for and shown on the sci-fi channel were some of the highest rated shows in that channel's history, and that several more have been green-lighted as a result.

Consider, Marvel Entertainment has shown Wall Street how valuable a catalog of intellectual property is when it can be successfully leveraged. Marvel's P/E is 43. The D&D brand (including all sub-brands) has thousands of characters, and several (Drizzt, Elminster, Tanis, Sturm, Tasslehoff) have enormous public brand equity).

Final thing to consider: A company with control of D&D has standing in the hobby gaming industry unlike no other. From that vantage, it can take shots over and over again at Magic. Could Magic be toppled? Unlikely, but always possible. As long as D&D is under the same roof as Magic, that leverage will never be used. Controlling D&D means that Hasbro insures itself against a certain kind of destabilizing attack on it's real cash cow (and source of much of its overall profitability).

D&D, if it is ever purchased, will not be sold cheaply.

Ryan

 

[Reynard]

Assume the combined D&D business generates Hasbro $40 million a year in revenue. (tabletop RPGs, novels, computer license royalties, & mass media license royalties).

Assume that revenue generates a 10% after tax profit ($4 million).

Assume Hasbro's P/E (that's stock price to trailing earnings ratio) is 21 (today it is 20.93). That means that every $1 of after tax profit is worth $21 of Hasbro stock. They CANNOT sell an asset for less than that (unless they have reason to believe the asset has a future net profit problem, which 30+ years into the D&D business would be hard to make a case for barring management incompetence, of which we have no evidence). So $4 million in after tax profit equates to $84 million in Hasbro stock value.

Consider: The Infogrames deal has a limited time horizon. At some point (i.e. 2015), Hasbro will get the electronic gaming rights for D&D back. Do you think that in 2015 there will be a market for an electronic D&D game? Do you think that market will be bigger or smaller than it is today?

Consider: The Dragonlance Animated Feature has not been released. Assuming it is reasonably successful, do you think the chances for more animated (or live action) media for D&D goes up or down? Do you think the rights for those kinds of projects get more or less expensive? When considering this topic, remember that the D&D movies made for and shown on the sci-fi channel were some of the highest rated shows in that channel's history, and that several more have been green-lighted as a result.

Consider, Marvel Entertainment has shown Wall Street how valuable a catalog of intellectual property is when it can be successfully leveraged. Marvel's P/E is 43. The D&D brand (including all sub-brands) has thousands of characters, and several (Drizzt, Elminster, Tanis, Sturm, Tasslehoff) have enormous public brand equity).

Final thing to consider: A company with control of D&D has standing in the hobby gaming industry unlike no other. From that vantage, it can take shots over and over again at Magic. Could Magic be toppled? Unlikely, but always possible. As long as D&D is under the same roof as Magic, that leverage will never be used. Controlling D&D means that Hasbro insures itself against a certain kind of destabilizing attack on it's real cash cow (and source of much of its overall profitability).

D&D, if it is ever purchased, will not be sold cheaply.

Ryan

That's the most informative post ever.

Thanks a ton.