"Games Workshop going Bankrupt? " Topic

I must admit – I do find GW very useful for lots of stuff like bases, terrain, etc – and, of course, the Beckies

Lots of companies live on loans – Government Motors springs to mind

If Games Workshop folded my nearest place to buy paints and brushes would be over 25 miles away.

Here's a copy of GW's annual report as of May 2010

PDF link

While not my favorite company looks like there is little danger of them going belly up. However it's very interesting that their future outlook for growth isn't their current customers buying the new edition but the number of 12 and under in the worlds population.

Having read this before going into work today and having had some time to muse on it I'm wondering if someone wasn't planning on doing a little surreptitious market research geared toward the opening of a competing hobby or game shop in the original posters neighborhood?

old guys like us have not been in GW's core Demographic since Bryan Ansell sold up in the eraly 90's.

They do not give a how many of us stay in the hobby after our 18th Birthdays, except as a source of future part time staff.

Pat

Yeah, and Nintendo announced the price for it's new handheld the 3DS at $300 USD and it's stocks plummeted. Nothing is stable these days, what makes GW any different? Would their stocks be higher if they lowered their prices? We can't answer that, but what we do know is in a bad economy a raise in prices can hurt your market share as few or no one is buying.

I know that most companies in the US operate on loans for *short-term* capital (it has to do with our tax structures). However, that's not what GW was doing.

At the time, GW's loans were larger than their annual income (income, *NOT* profit)! *That* is a sucky place to be economically, when the loan market evaporates and/or your financiers call your loans.

At the time, GW's loans were larger than their annual income (income, *NOT* profit)!

For what? For general corporate purposes/operations? And how did they manage to obtain such credit lines, pray tell?

What financials are you looking at? Would be most interested to see them.

Would their stocks be higher if they lowered their prices? We can't answer that, but what we do know is in a bad economy a raise in prices can hurt your market share as few or no one is buying.

Well from the real life example, we can see that GW price rises have saved the company. Prices have risen, turnover has increased – but by less than the % price rise, so some customers have fallen away – the profits (no dividends) have been used to reduce borrowings, reducing costs (and other costs, including staff have been reduced).

So they have a business model, its not the same as Walmart but it works for them. There is no need for someone to buy GW product, it is a purely a choice thing.

At the time, GW's loans were larger than their annual income (income, *NOT* profit)!

Care to specify a year? Their actual debts are mentioned in the financial reports.

As for the share prices on the stock market, they only tell what the investors on the stock market think about the company at the moment.

Well they've just opened a shop here. It means I have a source of hobby stuff I can walk to, and we get some quiet time without the kids.

This was back in the 2005-6-7-8 timeframe, I haven't run their statements recently (got a Finance class next semester, going to do it then).

This information came from their published investor info, straight off their website.

I believe the loans were at least partially to fund stores, and other capital operations (new equipment). When several investment banks own large blocks of your stock, it's possible to get loans when others might not be able to do so.

There is no need for someone to buy GW product, it is a purely a choice thing.

True, but the guys at GW have this idea that people will buy *more* product as the price goes up, not less.

Basic Econ lesson: There are 3 kinds of goods: Inferior goods (demand goes down as income increases), normal goods (demand goes down as Price increases), and Prestige goods (demand goes down as price goes down). GW thinks they have Prestige goods, when their own marketing data shows that to not be the case.

What I meant by I wish they were going under is that they would fail, and then hopefully go under new management. I do not hate the players (I myself play all of their games), I just do not like the company (like most people on TMP).

I'd be sad if they went under. I got my start with GW, and whatever you think of them they make wonderful miniatures. On the product side, their work is first-rate.

My only schadenfreude would come from the fact that they seem to have gone out of their way to kill the independent gaming stores. This has done huge damage to the hobby.

True, but the guys at GW have this idea that people will buy *more* product as the price goes up, not less.

I don't think that they think that – as it would be untrue – but that people who buy will spend more (higher prices, buying about the same amount of product)which has proved to be the case.

Technically I believe that is called a market of inelastic demand. You can see the same sort of market in the supply of illegal drugs.

It seems the majority of you who have posted don't play GW or stopped, I think this speaks for there situation. Our group played a lot several years back but the change is rules and codex's turned everyone off. I have to say we just played the new Warhammer Fantasy and the rules are great 100% improvement. Instead of raising there prices which are high now they need to produce new armies so people can get back into it, the same old same old losses it's luster. But I agree with most it would hurt the hobby.

This was back in the 2005-6-7-8 timeframe, I haven't run their statements recently (got a Finance class next semester, going to do it then).

Well, just had a look at their 2007 annual report. You'd said:

At the time, GW's loans were larger than their annual income (income, *NOT* profit)!

… but in 2007, one of the years you'd cited, their revenue was £111.5M and their year end borrowings were £10.2M. Even if you add their current and non-current liabilities from borrowings, derivatives, and similar, and even if you throw trade payables in for fun, those come out to something like £35M.

So I'm still a bit puzzled as to how you came to the conclusion that their loan facilities were greater than their annual income. That in fact is hardly possible, short of mezzanine financing, but their annual report lists only a revolver and a cap x facility, both of modest amounts (a £10M revolving credit agreement is a nice little middle-market facility). Even mezzanine lenders would not extend so much credit to a company unless theire was a credit basis for it -- if you know of lenders who are willing to do such, please send me the names of the loan officers!

I don't think that they think that – as it would be untrue – but that people who buy will spend more (higher prices, buying about the same amount of product)which has proved to be the case.

Technically I believe that is called a market of inelastic demand. You can see the same sort of market in the supply of illegal drugs.

Nope, their profits have increased by a lower percentage than the overall price increase. This means that they are (slowly) driving customers away with the high prices.

Although this does mean that demand for GW product is not *perfectly* inelastic (ie, no matter the price they will sell x quantity), just highly inelastic (quantity sold decreases at a slower rate than the rate of price increase).

A prestige good is something like a Bentley or a Rolls Royce. People who want one don't care about the cost, other than it being the most expensive item of X on the market. Conspicuous consumption, like the guys who get their suits tailored to show their Rolex.

@Porfirio: my bad… I must have killed too many brain cells since the last time I looked at the statements. I could have sworn that GW's loans were larger than their income… maybe it was profit?

Expendable income is almost non existent for many of us, due to the economy, so it wouldn't surprise me if GW and other companies for that matter, where having financial problems.

However, I don't believe GW is having any. If anything with the release of WFB 8th Edition, and the price hike before that, I would bet good money that this quarter was probably the best for them yet.

When price hikes are announced the core customers stock up at the old prices as fast as they can, forcing impulse buyers to crap, or get off the toilet essentially too. Stores and online retailers also rush to buy as much as they can at the old prices, before any hikes, so if anything price hikes sell product like hotcakes. They likely sold 10x more product than normal with the announcement of the hike alone.

Add to that the release of 8th Edition Warhammer Fantasy Battles and all the new flashy models and this has to be THE quarter that is probably better than any over the past year or so.

So I doubt they're having trouble at present, even with economy being crap.

On the other hand IF they did go under, gamers would be looking elsewhere for gaming fun, and so many other REALLY good games would get the attention they deserved. So if they went away, there would be some good to come of it, as gamers would be forced to look elsewhere, and there would be more Warmachine, Flames of War, Kings of War, Freebooters Fate, Heavy Gear, BattleTech and other solid games being played by the former 40k and WFB crowds.

So that wouldn't entirely be a bad thing. As much as many don't want to admit it, there are many other great game options out there, most of which are less expensive to dig into.

LitS wrote,

>>Conspicuous consumption, like the guys who get their >>suits tailored to show their Rolex.

Firstly, your suit cuffs should always show your shirt sleeve cuffs. Second, if your suit sleeve or shirt sleeve cuffs are too long, they not only look untidy but will eventually fray on whatever watch you're wearing. It's somewhat worse with a Rolex due to the design of the case and band.

DM

But when one sleeve of your suit is several inches shorter than the other, it just looks stupid. That's what I was talking about.

Besides, I prefer pocketwatches due to too much time working with my hands.

Never seen that one but if I did, yes indeed, a .

DM

Well, if nothing else, this thread at least clearly demonstrates why most gamers should not run a gaming business.