How much would D&D cost?

[haakon1]

If Paizo or Goodman buys it, I'd happily put some dough for the IPO.

 

[Dannyalcatraz]

It doesn't have to be bought in one single mass purchase- a deal could be structured in which Hasbro could sell the rights to it piecemeal- the aforementioned IPO, of course, would be an example of this.

Once fan ownership hits 40% or so, things could get very interesting.

 

[Glyfair]

What makes you think they want to sell?

And this is the real sticking point. If they haven't been thinking about it (and there are no indications that they have), then you'll probably have to offer much more that what it's "worth" to get them consider an offer.

 

[Ranger REG]

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.

Whether it's gone up, down, or stayed the same since I heard that (assuming it was accurate to begin with) I couldn't begin to say.

Just the D&D brand, no GH, FR, DL, DS, EB, and connected setting brands? I'd say $30 mil is right.

But they won't let it go because they're linked to the very successful DDM (though they could offer up the Chainmail brand).

 

[Imruphel]

Just the D&D brand, no GH, FR, DL, DS, EB, and connected setting brands? I'd say $30 mil is right. But they won't let it go because they're linked to the very successful DDM (though they could offer up the Chainmail brand).

D&D the game without electronic rights for USD30M? And no miniatures? No way. Absolutely no way. While I am sure Hasbro would be happy to sell it for that I would not want to be the buyer!

How much does the RPG game make a year? I reckon it would be lucky to pull an EDITDA of greater than about USD1.5m to USD2.0m so, assuming that estimate is correct, what multiple should be applied to the EBITDA number to generate a price?

You're not buying tangible assets or recurring annuity-type income streams, and there are no electronic rights attached, so this is not going to attract a high multiple if looked at from a purely business POV. In addition, future income is heavily dependent on the ability of "creatives" to generate new product and possibly a whole new edition as 3.5E reaches the end of its life cycle.

Frankly, this is not the sort of business I would buy... but if I did I would not pay more than about three times EBITDA (and, frankly, that's too much unless the balance sheet has some hidden assets that can be stripped out and sold so as to generate cash). And talking about goodwill that is attached to the brand is meaningless unless that goodwill can be converted to value... and that's where the electronic rights, and possibly even the novels business, would make the transaction more attractive.

All that said, I would like to see the Bill Slavicsek and his team put together an MBO for this. That could be really interesting provided, as with any deal like this, they could get it for the right price (and bring in the Paizo guys for some extra creative juice and Ryan Dancey for strategic business sense).

 

[Kae'Yoss]

I got...5 bucks.

Let Wizards continue on their course for a couple of months and you'll get change back.

 

[RFisher]

Whatever it is, I'm sure it's more than anyone who wants it can pay.

It's crazy the way the megacorps value brands so much when it comes to acquiring or holding them but how little they value them in practice. How much longer before we all agree that D&D--like Avalon Hill--is a zombie brand?

 

[an_idol_mind]

Just the name D&D is worth a heck of a lot of money. The miniatures, rules, settings, et cetera, are pocket change in comparison. Even if Hasbro stopped printing D&D entirely, I'd be willing to bet that they wouldn't sell the license. They'd probably sit on the brand for a while. Remember, D&D is almost a household name, and has been for over 30 years now.

 

[Garnfellow]

If $30 million for the brand is anywhere close to accurate -- and that was the number kicked around a few years back -- the payback period for that investment would be ginormous given the relatively low profits of even a top-selling RPG. It would probably take a decade to make that money back, if even that soon.

It sounds like the incredible initial sales of the 3.0 PHB, which blew away all projections, still only managed to cover the development costs for 3e.

And as Ari has mentioned, most of the multimedia rights to the brand are already tied up for several years.

 

[mmadsen]

How much does the RPG game make a year? I reckon it would be lucky to pull an [EBITDA] of greater than about USD1.5m to USD2.0m so, assuming that estimate is correct, what multiple should be applied to the EBITDA number to generate a price?

By way of comparison, Steve Jackson games brought in $2.4 million in revenue last year, with earnings of roughly $0, but "excellent" cash flow.

Revenues for the entire RPG market were something like $36 million -- I'm citing back-of-the-envelope numbers from Buying D&D, by the way -- implying that D&D RPG sales are on the order of $19 million per year. With margins like SJG's, of course, that's still $0 in earnings, but RPGs scale nicely, so the D&D RPG might bring in $2 million in earnings per year.

You're not buying tangible assets or recurring annuity-type income streams, and there are no electronic rights attached, so this is not going to attract a high multiple if looked at from a purely business POV. In addition, future income is heavily dependent on the ability of "creatives" to generate new product and possibly a whole new edition as 3.5E reaches the end of its life cycle.

Very true -- although I would think that the rights to 4E could be worth quite a bit in the short term.

And talking about goodwill that is attached to the brand is meaningless unless that goodwill can be converted to value... and that's where the electronic rights, and possibly even the novels business, would make the transaction more attractive.

Agreed. I don't think the RPG brand is worth much in and of itself. It's simply a way to influence the hardcore folks and test ideas for the real money-makers, electronic games and novels -- and movies, if they'd get that all figured out.

All that said, I would like to see the Bill Slavicsek and his team put together an MBO for this.

Would you want the current management team to stay in charge? Would they perform better with a fire under their collective rears? Or would you simply be ramping up the leverage on a firm in an already volatile industry?