Topps Paying Off for Michael Eisner in Collectibles SPAC Merger

Trading card company Topps is finally paying off for Michael Eisner.

Eisner, best known as the longtime CEO of Walt Disney Co., is bringing Topps public in a merger with Mudrick Capital Acquisition Corp. II, a SPAC formed by hedge fund manager Jason Mudrick. The deal, on track to close in about a month, values Topps at $1.6 billion. Three years ago, insiders said the business was worth about $400 million, barely more than Eisner and private equity firm Madison Dearborn Partners paid for the company in 2007.

“We are kind of at a tipping point for Topps. We actually are about the same economically as Disney was when I went there in 1984,” Eisner said during recorded remarks in an April presentation on the going-public merger. “So if we have half, a fifth, a 10th, a 20th of what Disney has done, that would be pretty good.”

Details included in regulatory filings for the merger show Eisner is already getting a “pretty good” payday out of Topps. Based on Mudrick II’s recent share price, the executive, a billionaire stemming from his famously rich pay packages at Disney, is sitting on more than $540 million in shares. That’s according to Eisner’s ownership of about 46 million shares in the entity once Topps goes public, including a supervoting class crafted only for him, granting Eisner 86% of voting power.

By the time Topps is trading on the Nasdaq, Eisner also will have collected the lion’s share of more than $156 million in cash paid out by Topps in the preceding 10 months. In October, Eisner and Madison Dearborn refinanced Topps debt and paid themselves a $100 million special dividend. Probably half of that went to Eisner, based on information that indicates Madison Dearborn and Eisner just about evenly split equity in Topps. (The private equity firm is cashing out its stake for $521 million in the SPAC merger.) In addition to the special dividend, Eisner and Madison Dearborn paid themselves about $2.2 million in management fees annually. Topps is paying $10 million to eliminate that management services deal, with three-quarters of the cash going to Eisner, according to a regulatory filing.

The payments don’t end there. Topps will also issue a special dividend of $28.4 million at the closing and has also agreed to pay up to $16 million to Eisner and Madison Dearborn in a deal where the bulk of the tax savings Topps realizes from going public is returned to the prior owners. All told, Topps has committed to paying out $54.4 million on top of the $102 million paid to Eisner and Madison Dearborn in recent months. That will leave the newly public company with $50 million in cash. The business is now raising $250 million in loans to refinance debt.

A spokesperson for Topps and Mudrick II didn’t respond to an email seeking comment on the payments.

Still, there’s little doubt Topps is coming public in an environment where it could see enthusiastic investor response. The quick rise in Topps’ valuation, from a $400 million to a $1.6 billion company, reflects the fact that the collectibles business has experienced a boom year never before seen in the industry, thanks to a return to collecting by homebound consumers and the emergence of new products, such as fractional card ownership and NFTs, the blockchain-based collectibles. Topps is also a better-run business than it was in 2018, boosting revenue by 25% in three years while its cost of sales have gone up only 16%. Net income surged 851% to $83.7 million on net sales of $567 million in the year ended Jan. 2.

“We are value investors,” said hedge funder Mudrick in the April presentation to investors, “but recognize that the market is putting a premium on growth.”

For Eisner, that growth means collecting a seller’s premium without even selling.

More from