Quote of the Day – Just Say No?

No

–Matthew Karch, in an interview when asked if Embracer Group piling 900 million Euros of debt onto Asmodee as part of the plan to bail Embracer Group out of its financial debacle would pose any problems for table top game publisher Asmodee

I feel like Matt Karch, the former Chief Operating Officer of Embracer Group, is spending a lot more time than necessary trying to salvage the reputation of his former employer.

Embrace This

I mean, we all understand that as part of him being setup and sailing off into the sunset in charge of Sabre Interactive… and it isn’t at all clear how this was in service of the all important “shareholder value” rather than a pat on the back from his bro club… required him to sign all sorts of agreements related to what he could say, including a non-disparagement agreement.  So he cannot say anything bad about Embracer Group or its fumbling CEO Lars Wingefors.

He probably feels some need to burnish his own reputation as, being COO of Embracer Group when all the absolute stupidity was going down points to his complete complicity in the problems the company had.  He was the first officer on the Titanic and cheered the captain on when they wanted to build a reputation on risky assumptions… only in late stage capitalism the boss gets saved by kicking women and children into the icy water.

But I don’t think there is anything in his agreement that says he needs to be the lone, vocal cheerleader out there telling everybody how great Embracer Group is in the face of a mountain of contrary evidence.  I’ve certainly never come across such an agreement before… but maybe it is a thing.  Still, I am sure he could just say “No” to interviews.  That he keeps it up means he has some agenda.

I previously featured Mr. Karch in a bullet points post about video game companies behaving irresponsibly when he was out there telling people we were all being too hard on poor naive Lars Wingefors because CEOs are people too or some such.

What the fuck was Lars being paid to do if not run the company responsibly?  Nobody forced him to do the dumb things he did which looked dumb to many of us looking in from the outside and ended up being dumb in the end.  But, as always, the rich are all in on personal responsibility until somebody tries to apply that standard to them.

But now that Mr. Karch is back for a return round of defending Embracer, this time around the company’s plan to split into three different companies, part of which involved hanging that 900 million Euro milestone around Asmodee’s neck so that Embracer’s executive staff could cover up the mess they made of the company.

Going back to that Titanic metaphor, I said this was akin to re-arranging the deck chairs as far as financial plans went, but really it is worse than that.  Instead they decided to sacrifice Asmodee to save their skins.

Sure, Mr. Karch says that “Asmodee’s a company that can handle debt, and that’s where all the debt’s going to be,” but I would like to continually and repeatedly point out that he was also all in on the gamble that got Embracer screwed up in the first place, so his considered opinion on the viability of a business he helped saddle with that debt might not hold up to close scrutiny.  At best, this is self-serving hogwash. 

He puts up a hand waving defense of the move as he suggests “A company that doesn’t have already a lot of debt will more likely be able to manage a debt,” which is true in the way a human being that doesn’t already have a sucking chest would is more likely to be able to a new sucking chest wound.  It still sucks a lot to be the person with the sucking chest wound and you may not survive.

In the end, the primary justification for saddling Asmodee with this debt is that it would likely kill either of the other two groups in the split, so Asmodee loses and weaker business groups carry on while board games carry the CEO’s debt.

Basically, this is the move least likely to cost the Embracer executives and there will always be somebody willing to take on the leadership of Asmodee knowing that their fellow execs will make sure they have another overpaid position should the debt load prove too much… or they screw things up… and the latter is always the most likely candidate.

Does that mean Asmodee will end up like Red Lobster after getting the “Private Equity” treatment?  I hope not.  But Embracer is certainly working from the capital management playbook, loading up a division with debt and then spinning it off so it isn’t their problem.

And should Asmodee fail I am sure the Wall Street analysts will squawk about how board games weren’t a viable business the way they went after Red Lobster for “all you can eat shrimp.”  The shrimp, however, were not the problem.  The private equity group selling all the real estate… Red Lobster owned most of their restaurants… pocketing the cash then setting the company adrift paying market rate rents was a far bigger blow.  The fix was in with or without the shrimp, and Asmodee might be in the same boat.

Meanwhile, Embracer executives are busy shuffling the org chart to try and evade responsibility.  Nobody at the exec level is losing their job over this, just changing a few titles.

I am not suggesting that c-level roles are not important to a company, just that if you have an epic fiasco like Embracer and the CEO keeps their job and declines to fire ANYBODY at the exec level, the idea of sound corporate governance or actual responsibility for one’s actions seem to be completely off the table.

Because, once again, the developers, the people who make the actual products that are sold to pay the inflated salaries of the c-suite, and all the rest of leadership, those are the people who paid the price to make sure Lars didn’t miss a payment on his yacht or vacation home.

Nobody who made this mess with Embracer, who made the obviously foolhardy decisions, will suffer… unless you consider a smaller bonus suffering.  And they’ll find a way to reward themselves at the expense of the company to make it up later.

In the end, the leadership of Embrace has proven they only care about themselves and what the company can give them, not what the company does, the people who do the work, and certainly not the customers who buy their products.