Ok gang. Carry on the discussion here. As I said earlier, keep it civil, keep it calm, and lets try not to panic.

CGL Discussion thread, Part 1

Bull

I'll get the ball rolling...

Personally, I'm not asking for sensitive financial data or specific names. But does "confidential information" necessarily include concrete information about the current state of products in the pipeline? I'm talking stages of development, if anything new will be released to playtesters anytime soon, estimates for when things will be sent to printers, or even if finished books made unavailable by the current "unpleasantness" will be restored any time soon.

I think a little transparency regarding the current state of certain products (particularly ones some of us have already paid for) would go a long way toward reassuring us that we should continue to invest our hard-earned money in CGL products. For example: some of us have purchased Dusk but not Midnight yet. Why should we, if the 4 part series will never be finished? Why purchase Missions? Why should anybody with a complete SR3 library buy anything for SR4?

Has Midnight been released yet? I wasn't aware it was...

- J.

Ah, those questions I can answer (and some of this has been going on in a thread about the Sixth World Almanac). As far as products go, DotA 2 was on the verge of being released before things broke open. Management is at GTS this week, so updates from them will be sporadic, but I will hope to hear from them about getting that whole series moving again shortly.

My whole thinking on products is that we're better off finding ways to complete things that have been started rather than throw anything out (it's also better to pay freelancers for work they have done). The DotA series has had a lot of work put into it, so I will be working to find a way to complete it. And let's be honest--DotA 4 would be a ways down the line. If we get to the point where we can think about it coming out, that means that Catalyst still has the Shadowrun license, that at least some freelancers have been paid up, and in general progress is being made. If these things haven't happened, then DotA 4 (or anything else) will be tough to bring out. But as I've mentioned, it only makes sense for me to proceed as if things will come out, so that's what I'm doing--planning on DotA becoming unencumbered so we can make any adjustments that are needed and give the series the finish it deserves.

Other projects: Corp Guide and Sixth World Almanac were in their final stages (text drafted and edited, art done, etc.), but now some adjustments must be made. The past 24 hours have seen an extraordinary contributions from people stepping forward to pitch in in various ways, and that will help make those needed adjustments. These projects will be the focus of my efforts in the near future. Adjustments for Corp Guide aren't all that is needed--some payments will need to be made to get that out. Again, I'll be following up with management on that.

Runner's Toolkit is an interesting project, because it's layout-heavy with the extra things that go into it. Layout has not reviewed where the files stand, so I'll need to wait to see what kind of work needs to go into them. There is also a section of the Toolkit that needs to be rewritten.

Then there's War! and Attitude. I have lots of text for both books in hand. As with DotA4, by the time I around to them, I hope there will be more clarity on the license and freelancer situations so I can move ahead without problems. Much of the text for those books, though, is currently unencumbered.

After that we have some adventures that are drafted, and another thing I need to draw up a proposal for. And there's the unannounced project I've been doing a fair amount of work on, and those details would remain vague right now, no matter what Catalyst's financial status was. You didn't expect me to share everything, did you?

Jason H.

Oh, I forgot to mention the Limited Edition--last I heard, still stands to be shipped out as soon as it arrives.

Jason H.

I have three questions (can understand if you can't answer them):
1) Is CGL management likely to pay the freelancers the balance of outstanding monies?
2) Once those monies are paid, what will happen with the content that was developed but withdrawn with the termination of certain contracts?
3) What is the strategy to mend the relationship with the talented freelancers that have been alienated by the turn of events?

Thanks.

- J.

1. "Likely" is a tricky word, but let me put it this way: If Catalyst can't pay its freelancers, then its future is bad. Management has told me that their intent is to pay the freelancers, and I will continue pushing for that.

2. Material for which the copyright was withheld can be included again if the freelancers so desire; material for which contracts were terminated I cannot believe will be restored, so I am making plans to replace that material. But if people feel satisfied with their treatment and want to offer their material again, I'd listen to what they had to say.

3. Communication with freelancers is part of the strategy, but in the end freelancers are professionals who deserve to be paid, and if Catalyst wants good relations with them, the company has to pay them and begin making payments on time. That has to happen for a significant period of time to build trust with those who have been alienated. Some may choose not to work for Catalyst again, and that would be understandable.

Jason H.

Fair answers to a fair set of questions. This sort of honesty makes me feel a happier about the whole situation. I hope that when I can make my next purchase of SR products that the ones I want are still available for purchase.

I posted this in the other thread.

Thanks Jason. That was very helpful. And I certainly appreciate your efforts here and at CGL.

You mention DotA 2 and DotA 4, but not 3? Did you mean to refer to 3 instead of 2? 2 had already been out as a PDF, and it looks like it came out in print right before this all blew up?

With the talk of numbers, and people focusing on the $850,000 supposedly missing, I thought I'd go back and look at the original post again.

The interesting thing is that the number is a little misleading the way it's presented. Among the numbers claimed...
$850,000 is roughly 40% of sales for last year
but
$850,000 is the amount missing over a three year period

So by those numbers CGL would have brought in $2,125,000 last year.

Frank's numbers put the cost to print a run of books at about 1/3 to 1/5 of what the book brings in, so let's say 1/4 of that $2mil go to printing costs, leaving ~$1.6M.

That $850,000 is over three years. We don't know what the distribution is over that three years. For approximation we'll go with thirds, but roundup, removing another $300,000 from the $1.6M, leaving $1.3M.

So after book costs and the claimed loss, CGL would have brought in $1.3M last year to cover operating expenses.

We're a quarter of the way into the next calendar year, so presumably CGL may have already brought in a quarter of that already.

It doesn't seem like that bad of a place to be.

The problem is we don't know any of the numbers related to what CGL's operating expenses are, how much total is owed to freelancers or partners, and how much the licenses are going to cost. These would be important things to know in order to complete a real picture, and we just don't have them.

For instance, it's possible that aside from this incident, CGL has been doing the sensible thing and setting aside a chunk of money every month in order to cover the license re-up. With the license renewal only a couple months away they may already have the funds needed for renewal, setting that cash aside prior to paying off some freelancers. Another possibility is that a heavier portion of the missing funds came from the past year, and with a set amount being put aside for renewal, that placed additional pressure on the fund to pay off freelancers, resulting in the delays in payment. We just don't know.

Frank's original post focused on Shadowrun, but really Battletech is probably the primary money-maker for CGL. They also have other products that they publish, such as Cthulutech and Eclipse Phase. Presumably since those partners have not immediately jumped ship they have been receiving money owed. Their main complaint would seem to be that because of tight funds CGL's production times have been significantly drawn out. Definitely not a good thing for small companies with single lines who need the money to flow again so print runs can be made more regularly. Have all of the Battletech freelancers been getting paid? Are the partners paid? We just don't know.

So I guess my point is that while Frank's numbers could be accurate or not, the one thing we can say with certainty is that they aren't complete. We really don't know how much CGL has to expend a month just to exist. We don't know who is and isn't paid, other than some Shadowrun freelancers. We don't know how much they might have banked. We don't know how much of the missing funds might be liquid or can be returned in short order. It's a picture that's just incomplete.

Yes, CGL is going to want to present a positive face, but the fact that we haven't seen the lawyers brought out yet, aside from some freelancers who have been waiting for what they're owed, I take as a good thing. Unless we get some sort of spectacular public falling out and the lawsuits start to fly, it's going to be a long couple of months.

I can't believe what suckers you guys are. This is obviously an elaborate ruse to make us to buy more books!

Seriously though, I know it's already been said but I'll say it again. Thank you for taking the time to ease our fears Jason.

I imagine they must be having a 'good time' there this week.

Edit: Was looking around for some GTS news and found a posting about CGL's problem on a blog. What was particularly interesting is one of the commenters is apparently a CPA and he explained, based on the CGL statement and his own professional experience, what might have happened. It was definitely interesting.

http://www.tabletopgamingnews.com/2010/03/...1#comment-48531

There was some reference to enhanced anniversery editions of the core rule books. What about those?

Will the SR4ALE still be brewed?

I'd say from Jason's post that yes it will be.

I don't think I've already heard about Attitude... What will it be about?

"Management is at GTS this week."

Grand theft Shadowrun?

Zing!

I presume you know already but for anyone who doesn't Gama (Game Manufacturer's Assosciation) Trade Show.

re: Dread Moores
Oh.

Well, in Australia that means "you'll get in three months". Hell Vice only came into stores this past week!

I guess its highly dubious whether Midnight will ever grace our shores...

To Jason Hardy - thanks for the honest reply.

- J.

Lessee, quick replies to questions here and there:

1. When I mentioned DotA 4, it was to point out that I wanted to get to the end of the series. That necessitates going through DotA 3, so I'd like that to come out as well. I haven't checked how encumbered it is, because I don't need to worry about it until DotA 2 is settled.

2. There are still plans to re-issue the core rulebooks. Since those plans involve the management, art, and layout people more than they do me, I'm not sure where they stand. There are some front-end costs involved in getting them out, though, so they will likely be at least slowed down.

3. To re-iterate--LE should be shipped when it arrives.

4. Attitude--Hmmmm . . . I think I'll be mysterious about that one for a time, until I can put a nice summary up on the blog or something . . .

Jason H.

Keep in mind that that is in no way a "fact". Frank doesn't even claim it as a raw number he recieved 2nd hand. It took tidbits of info from different sources and made a conjecture from there. I don't know if he's actually said that here? He has mentioned that though over at rpg.net. So I personally am hanging a "probably within an order of magnitude correct" label on it at this time. Note, I'm not saying "lie!".


P.S. At the same time he also gave some much more detailed example of how he's data mined public info in regards to a entirely different matter to do with WotC and PDFs. His reasoning in that example didn't fill me with a lot of confidence. It was a huge leap.

I have to say, this whole discussion's starting to bore me. The facts - as far as we'll get to know them - are on the table. There's nothing we fans can do about the whole matter. The questions started to go round in circles about 10 pages ago. Just let the ones in charge do their job and wait a few weeks. Howsoever this will end, I'm confident that SR will not only survive, but will be actively published by someone. There's no reason to panic at this time.

Not understanding the organizational structure and tax responsibility for the business you created and are responsible for is an interesting defense.

I look at the financial mess the U.S. is in from a far and I am constantly amazed at how your legal system allows people to get away with murder.

Here in Australia, ignorance of the law is never an excuse.

(PS: I read the link after I posted that but the comment stands).

- J.

Reprints are always nice. Is it really that time already, except for hte core book? SR4a continues, then, to sell better then previous editions!

Thank you, Jason. I'm sorry if I was harsh in the last thread, but this is the type of information that I was looking for. I understand that you can't give hard numbers but it seems from this post that your intentions are in the right place.

Trial by a jury of your peers, burden of proof is on the prosecution, and the proof must be beyond a reasonable doubt--that is how. Note that our judicial system is designed on the premise that we'd sooner have 10 guilty men go free rather than 1 innocent man go to jail. Is it perfect? No. Does it work most of the time? Yes.

It is also to note, that the one owner did not break any laws. He might have violated his business contract (the documents govenrning the distribution of monies CGL generates to its owners--read up on an LLC which is what InMedia is who owns CGL). The other owners that were wronged by this act have a few options, sue for breach of contract (could get expensive), arbitration (slightly less expensive, but still involves lawyers), or negotiate with the offending owner to set up a payment plan.


If they play it smart, my prediction is they will go with 3, and use the proceeds from the settlement to go to the Freelancers and creditors first. Then the other owners would get paid.

There are technical, Latin of course, terms for it but basically there is criminal law and then there is regulatory law. I believe what he was talking about is that it would likely fall under the later. Trying to prove a crime was committed, which does require intent, is a much higher standard. He's not talking about people getting way with murder because, to start with, there hasn't been a murder.....that we know of. Secondly he did mentioned tax consequences, it will cost.

Financial/accounting screw-ups happen, people do it on their tax forms. But you make a mistake on the math adding up the numbers you put on the forms you file (I'm not sure what it's call in the US, I haven't filed one yet)? Extremely unlikely you'll do time. At the most you'll pay a relatively small penalty plus interest on the money you still owe. If you have poor record keeping and don't provide adequate documentation for what you claim? Again, you are just going to get dinged a small penalty + interest, maybe not even the penalty. Thing is if you had fabricated that expense and couldn't provide the documentation it looks a whole lot like a mistake, again nobody's going to jail....(unless you did something really stupid like forge a document, and got caught in that). Then the scale will slide all the way up where they can prove criminal intent [beyond reasonable doubt] in evading taxes in a sizable amount. Then you could very well do time in the poky, it has happened.

So incompetence is a limited criminal defense. But generally the defense can only move you down the punishment scale, potentially into the realm of simply monetary penalties.

That's assuming the other owners will put their own financial damages last to save the company.

Somehow, slight doubts about that much altruism creep up.

True, although an otherwise profitable business does have value. So saving the company does have some objective monetary worth to be balanced out. No way we on the outside know what that is, or what their perception of it is. But it isn't unreasonable to suspect it doesn't require some large measure altruism as motivation.

Spite is a concern though. Really weird emotions can come into play in these situations.

Please note that I did not state in whether it was in defense of mismanagement, or breach of civil or criminal or contractual obligations. There's not enough specific detail to know more precisely. We just know something is wrong.

Please don't make the mistake of thinking the IRS will "ding" you with a "small penalty" if you make mistakes on taxes. A friend of mine that owns a small business owed in excess of $100,000 in fines and penalties for a couple years of small mistakes, and this was a little mattress shop. The IRS will come after your first born and then some. Some might say that they represent exactly what we go up against in game

That was talking about personal taxes, the low end. For a small typographical error or even if you run afoul of their standard interpretation of the tax code, if you filed well before deadline and it gets sorted out before the deadline, you might not even get dinged. Just owe what you normally would owe. Penalties start out much smaller than $50K. When you get into businesses, and there you are typically looking at a fair amount more cash moving around than what the net profit is, the relative size of the price of oopsies tends to go up. And if you are a small business doing the taxes yourself, rather than going through a solid accountant, well that's blood in the water. They profile for that because that's where they find people making costly mistakes and/or easily targeted amateur-hour criminals trying to cheat the system.

This is getting way off topic, but even if you let a 'solid' accountant do the work, your still responsible for any mistakes (s)he makes (that's the way it works around here). Also, an accountant can only work with the material he receives, if you forget to give him stuff or mislabel something, your still screwed.

Also keep in mind that all those small businesses you see, aren't run by geniuses, and can't afford a 'solid' accountant. CGL isn't a large business, it's rather small. If it's turning around 2+ million a year, it's still rather small.

I find the amount of $850,000 a tad similar to the whole Paladium mess and that's why I have reservations about the rumor.

"I presume you know already but for anyone who doesn't Gama (Game Manufacturer's Assosciation) Trade Show." - Lurker

Actually I didn't know that.

Ultimately, yes. Although not necessarily criminally so. EDIT: Also, depending on your insurance policy, you might be able to recoup certain portions of it through insurance coverage. Highly situational there.



Absolutely. Fortunately the good account will know what questions to ask and let you know up front what you need to collect [before you've had a chance throw it out].



But compared to the cost of incompetent accounting?



Frank has mentioned, I believe, two tidbits that he's largely based it on. One has to do with a per year number, over 3 years, of cash convention sales that didn't make it into company accounts. Another was some discrepancy in accounts themselves. These came from different sources. He did some multiplying and added it all up to get that number, don't know if he tacked anything onto it. I'm giving it a "order of magnitude" confidence label because sometimes numbers can get mixed up in the Telephone Game. Such as maybe "X$ over 3 years" gets switched to "X$ per year over 3 years". Also sometimes there is the blind men and an elephant issue where the convention money was also expressed, to some extent, within the accounts discrepancy of the double-entry system.

Yeah, the industry trade show for the year, kind of like Toy Fair or CES but for games. It's where companies typically go to give retailers a look at what they'll be coming out with this year. With the two releases CGL put out over the weekend, I imagine it's made their GTS trip a lot more interesting than they would have preferred.

Or the:
"Dude! There's $85 missing from the pizza pot!"
"Mark said there's $850,00 missing!"
"Dwain's claiming there's $850,000 stolen..."
"There's $850.000 being embezzled at CGL."

Us Europeans do mess around with the comma and the dot large in numbers

Delarn is sitting and is watching what comes out of CGL hat !

Let's face it, they are not in such a big pile of dung has we first thought ! So let's watch them roll it in a ball and lay their egg in. Once they hatch we will have some good stuff to talk about. Until then let's wait for devellopement.

Thanks for the update Jason, i'm feeling a bit more confident of buying the books this weekend now.

How is saving your company altruistic?

AAS

It's gambling on the chance of things working out – after other people got the cash.

Or you can take it and see if it works out as well – if it doesn't, well… it's limited liability and at least you got the cash.

The value of a company is the perceived value of the company. This is important. In the normal run of things, the perceived value of the company is closely tied to its profitability, but in the case of fraud for example, a company can be very profitable but still regarded as not something to invest in. So if Catalyst is having financial problems then it may not matter that Shadowrun is profitable because whilst you could normally get credit based on that, if someone at the top appeared to have been embezzling those funds, I can't imagine there are many banks that would extend the credit.

I for one hope everything turns out for the best. Shadowrun is my favorite game.

Question---

How will this effect Eclipse Phase and Shadowrun at the cons?

Last I heard the events had already been registered for Origins and GenCon, so they are on pace to proceed as they should.

Jason H.

I was speaking more generally, thinking about Freddie Mac, Fannie Mae, AIG and the other debacles of Wall St traders losing billions of dollars, getting not only bailed out by the U.S. Federal Government, none of these schmucks going to jail and yet they are actually collecting annual bonuses.

But I digress. This has no relevance in a Shadowrun discussion anyway. My apologies for the tangent.

- J.