A lawsuit filed earlier this month against Magic: The Gathering owner Hasbro accuses the company of gross mismanagement, breach of fiduciary duties, and the performance of ‘unjust enrichment’ by overproducing cards for the beloved game – to the tune of millions.
Company executives, including CEO Chris Cocks, former Wizards of the Coast president Cynthia Williams, and several board members (past and present) are currently being sued by Joseph Crocono and Ultan McGlone – shareholders since the early 2020s – in a lawsuit filed in Rhode Island on 21st January.
According to Crocono and McGlone, things that were said on Hasbro’s shareholder calls between the period of 2021 to 2023 had been “materially false and misleading…[and] caused the Company substantial harm by causing it to repurchase its own shares at artificially inflated prices.”
The 76-page lawsuit specifically mentions the popularity of Magic: The Gathering cards and the fact they can often make “upwards of thousands of dollars on the secondary market.”
Interestingly, the suit puts the spotlight on a 2022 Bank of America report which at the time warned the ‘oversupply’ of Magic cards “have propped up Hasbro’s recent results but are destroying the long-term value of the brand.”
This apparently enabled the company to repurchase 1.4 million shares for $125 million between April and July 2022 – overpaying itself by $55.9 million. That’s pretty incendiary stuff!
Players of the game have noticed Hasbro’s aggressive approach to pushing the game recently, which included the Universes Beyond and Secret Lair crossovers with big brands. The company has often brought up the financial successes of these sets in earnings calls – for instance giving a shoutout to the Beyond Final Fantasy set last year.
So, what are we looking at here? The main accusation is that the overproduction of cards (in particular between September 2023 to October 2023) meant the company was able to cover for shortfalls found elsewhere in the business, as it’d cost less money to remake new cards rather than the outlay of creating entirely new ones.
This lawsuit was filed just weeks prior to Hasbro’s upcoming earnings call on 10th February, where we’ll hear about the most recent profits of Magic: The Gathering for the last year and quarter.
As of now (as I type this), the company has not issued any comment – we’ll keep you updated.
What do you think of the latest about this Magic: The Gathering lawsuit? Is it going to have an impact on the game? Comment below to have your say.
