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It’s no secret that Magic: The Gathering Arena opened the game up to an entirely new audience – just having the option to play the game on mobile opened up a lot of opportunities for players who’d never been able to play before. Additionally, the worldwide pandemic led to a lot of tabletop play to cease, and players were looking for another way to play the game which led to the explosion of popularity for Magic Arena.
Wizards of the Coast (WoTC,) the company behind MTG, is owned by Hasbro, and now Hasbro is asking shareholders for help to keep WoTC under the financial control of the company. On April 25, 2022, the massive toy and entertainment company asked shareholders to vote against nominees from a hedge fund called Alta Fox because the group is trying to push WoTC to become more independent.
If Alta Fox’s nominees get through the voting, then there could be dire consequences for WoTC as they would push the idea that WoTC needs to “spin-off” from Hasbro. In order to defend its leadership of WoTC, Hasbro explained all that it’s done for WoTC.
Hasbro’s Investments in Wizards of the Coast
Hasbro explained that it’s invested $1 billion into WoTC over the last five years, and that’s led to a growth of 150% in Magic: The Gathering alone. These two things led to 42% increase in annual revenue for WoTC in 2021, which was $1.28 billion. This statement came as Alta Fox argued that Hasbro has hindered WoTC’s growth.
Additionally, Hasbro pointed out that the company has helped WoTC achieve its five-year goals in just three years. According to the group, this was able to be done because of longtime employee and now CEO Chris Cocks. If Alta Fox gets what it wants, then WoTC is losing the high financial backing and leadership that’s allowed the trading card company to grow as much as it has in recent years.
Hasbro’s Arguments Against Alta Fox’s Nominations
Another major argument from Hasbro discussed the Board member nominees from Alta Fox. In Hasbro’s opinion, none of them have anything significant to add to Hasbro’s Board. The only person with leadership experience offered by Alta Fox was Matthew Calkins. Hasbro cited Calkins previous CEO experience at Appian, where he dropped the stock price of the company by 79% and commented that he doesn’t care about stock prices as they mean nothing.
It’s also worth noting that Hasbro addressed Alta Fox’s nomination of Jon Finkel, saying that Finkel’s just a fan and has zero qualifications to be on the Board. For those who didn’t know, Finkel has been an avid MTG player and supporter since his first Pro Tour in 1996. While he retired from the pro scene in 2004, he’s continued to be part of the community while also being the manager of a hedge fund. Whether that qualifies him for a leadership role on a Board of Directors is still up for debate, and Hasbro thinks that it doesn’t.
Other Alta Fox nominees have business experience in things like telecommunications, business finances, and marketing, all of which Hasbro argued wouldn’t help the company since none of the experiences were related to consumer businesses. Prior to arguing Alta Fox’s nominations, Hasbro defended its own nominations because of their industry experiences that directly apply to Hasbro as a company.
In Alta Fox’s Defense
It’s clear that Hasbro is trying to keep control of WoTC because it doesn’t benefit the company to let go of something that’s performing as well as WoTC has been. While the growth that WoTC has seen these past few years has been outstanding, Alta Fox’s argument is that the company could grow even more without Hasbro in charge. While Hasbro looks to discredit a lot of what Alta Fox’s justifications, it looks like the two just have clashing business ideas.
The concern that Hasbro is hindering WoTC is valid. While Hasbro’s numbers look great, a large part of that is due to the fact that WoTC is doing so well, which may or may not have anything to do with Hasbro’s leadership. This begs the question as to whether or not WoTC is growing because of Hasbro as compared to growing because MTG and even Dungeons & Dragons has attracted its own audiences through the pandemic.
Plus, Alta Fox’s nominations seem like a breath of fresh air — how many people on the current Hasbro board actually play the games from WoTC (or any of Hasbro and Co’s products)? Having an insider like Jon Finkel on the Board could produce even better results than strictly business-minded people who may not be able to fully grasp what players and consumers want.
The vote for nominees will be held on June 8, 2022, and shareholders can vote prior to the meeting through mail. From there, any financial impacts will be easier to predict as Hasbro either continues leadership or more votes and committees are established to let WoTC do its own thing.