The new management team at US games company Atari, which we thought might be tempted to simply sell off the assets, has instead wasted little time in resurrecting the fortunes of the once mighty games publisher and producer.
It has borrowed a further $4 million and used it to get rid of a potentially disastrous legal action, paying off FUNimation $2.7 million in back and royalties for its Dragon Ball Z game, and managing to keep the game on its books for the next few years. Atari has also moved more staff to its parent Infogrames which should save it a further $1.3 million a year, and reversed a burdensome $3 million management charge in favor of Infogrames, to one where it gets paid $2.6 million for looking after Infogrames work for the next 10 months.
But the most important change announced is a completely transparent two way deal with its parent, where it gets 30% of revenues for exclusively selling Infogrames games in the US, and offers a 30% sales commission to Infogrames to do the same with its games outside the US. Whatever the prior arrangements were, they must have been stacked heavily in favor of the French parent company.
The legal settlement with FUNimation was made up of a cash payment of $2.7 million as well as a reduction of $800,000 in advance royalties made to FUNimation. Atari originally paid $10 million in 2004 to secure US rights for Dragon Ball Z through to 2010.
The money to pay for this came from BlueBay High Yield Investments, the same company that gave it a lifeline a few weeks back offering a $10 million facility. BlueBay is a shareholder in Infogrames.
Atari has now also licensed the name of Atari to parent Infogrames for the www.atari.com URL, which will be used as a global online initiative.
This may all sound like light paperwork, but getting the parent to agree to these moves may well mean that the name Atari emerges from the cloud its been under for the past 3 years, and returns to something approaching its former glory.
In total now Atari has reduced its workforce costs by around $5.3 million a year.
Three years ago Atari amassed sales of $343 million, which fell to $206 million last year and $122 million for the year just gone. Its belated quarterly figures to June 30 were filed a few weeks ago, at a revenue level closer to a $40 million run rate for the coming year and if something hadn’t been done, the company was on the verge of running out of money, ideas and games to sell.
New Infogrames CEO Patrick Leleu acted in October to slash the board an management team of Atari, and brought in high powered replacements to turn the business around.