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A recent lawsuit against Magic: The Gathering owner Hasbro claims company executives conducted gross mismanagement, breached their fiduciary duties, and performed unjust enrichment by overproducing cards for the popular game.
Filed in Rhode Island on January 21, the executives—CEO Chris Cocks, several current and past board members, and former Wizards of the Coast president Cynthia Williams—are being sued by Joseph Crocono and Ultan McGlone, who’ve held shares since the early 2020s. The pair claim that comments made during Hasbro’s shareholder calls between 2021 and 2023 were “materially false and misleading…[and] caused the Company substantial harm by causing it to repurchase its own shares at artificially inflated prices.”
Citing Magic’s popularity amongst collectors, the 76-page suit notes that cards can make “upwards of thousands of dollars on the secondary market.” To further back up its claims, the suit highlights a 2022 report from Bank of America which warned the “oversupply” of Magic cards “have propped up Hasbro’s recent results but are destroying the long-term value of the brand.” As such, the company was able to repurchase 1.4 million shares for $125 million between April and July 2022, overpaying itself by $55.9 million.
Magic: The Gathering players have noted Hasbro’s aggressive pushes in recent years, in part due to the Universes Beyond and Secret Lair crossovers with big brands. Hasbro hasn’t been shy in earnings calls about how well these sets have done, like giving a shoutout to Beyond’s Final Fantasy set in 2025 when it was a big revenue driver for the company. It’s believed that overproducing cards (particularly from September 2023 to October 2023) allowed the company to cover up for shortfalls elsewhere in its business, since it would cost less to remake new cards than to create wholly new ones.
This suit comes weeks ahead of Hasbro’s earnings call on February 10, where it’ll reveal the financial performance of Magic: The Gathering during the previous fiscal year and quarter. At time of writing, the company hasn’t publicly remarked on the suit, and io9 has reached out for comment.
[via Polygon and GoLocalProv]
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Source: Gizmodo