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<blockquote data-quote="Sacrosanct" data-source="post: 8587831" data-attributes="member: 15700"><p>It was the deal with Random House* that did this. Lorraine use that deal to "borrow" money to pay the bills. It was a downward spiral of hemorrhaging money.</p><p></p><p>*TSR had a deal where Random House would pay them for all products shipped to Random House whether they sold or not, which was unusual because normally the publisher gets money based on units sold. So when Lorraine saw, "Hey we need another million dollars to pay for bills", she ordered a book or dice or whatever and order a million dollars worth of product and shipped that to Random House.</p><p></p><p>Inevitably, the product didn't sell, and Random House sent all the stuff back and came to collect on the debt. Thus the downfall. At one point, TSR owed $10 million to debtors and even during their best year only had $40 million in sales. So even during the best year, after costs (eating into most of that $40 mil), they couldn't pay their debts back. It was even worse since their best year was long behind them at that point. </p><p></p><p>Then when you factor in how TSR drafted all of their products (and thus took all the money for products) at the start of the year, they couldn't react to market changes for an entire year. My beloved CD Core rules CD rom is an example of this. They made a deal with babbages to sell it. Created the CD ROM and took the money for all of those sets at the beginning of the deal. Then Babbages went bankrupt. TSR took money based on the MSRP of that product at the beginning, but they all were immediately liquidated with Babbages stuff as soon as they were released, so no one was buying them anywhere else. TSR had to eat that cost difference. It was a complete disaster.</p></blockquote><p></p>
[QUOTE="Sacrosanct, post: 8587831, member: 15700"] It was the deal with Random House* that did this. Lorraine use that deal to "borrow" money to pay the bills. It was a downward spiral of hemorrhaging money. *TSR had a deal where Random House would pay them for all products shipped to Random House whether they sold or not, which was unusual because normally the publisher gets money based on units sold. So when Lorraine saw, "Hey we need another million dollars to pay for bills", she ordered a book or dice or whatever and order a million dollars worth of product and shipped that to Random House. Inevitably, the product didn't sell, and Random House sent all the stuff back and came to collect on the debt. Thus the downfall. At one point, TSR owed $10 million to debtors and even during their best year only had $40 million in sales. So even during the best year, after costs (eating into most of that $40 mil), they couldn't pay their debts back. It was even worse since their best year was long behind them at that point. Then when you factor in how TSR drafted all of their products (and thus took all the money for products) at the start of the year, they couldn't react to market changes for an entire year. My beloved CD Core rules CD rom is an example of this. They made a deal with babbages to sell it. Created the CD ROM and took the money for all of those sets at the beginning of the deal. Then Babbages went bankrupt. TSR took money based on the MSRP of that product at the beginning, but they all were immediately liquidated with Babbages stuff as soon as they were released, so no one was buying them anywhere else. TSR had to eat that cost difference. It was a complete disaster. [/QUOTE]
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