Services Sale of Classic Poker Chips Completed!! (9 Viewers)

[Gunnar]

A fun exercise in any business is to measure the expense against your net profit to sales ratio.

For every $100,000 in sales/revenue at an auto dealership, the store will net profit on average $3,000 so their net to sales ratio is 3%. This is an example of a business with thin margins (hence being extremely cautious to expenses).

Let’s assume this business (CPC) is extremely profitable and is 15% net to sales ratio. Not gross profit. Net profit to sales/revenue.

Take the expense $75,000 / divided by their net to sales ratio .15 (15%) = $500,000

It will take $500,000 in sales (revenue) to absorb a $75,000 net expense.

That would be 100 $5,000 custom CPC sets to absorb the expense of a $75,000 die.

Ps,

Most of those 100 orders would have been made in other molds regardless so you would need the new mold to fetch 100x5000$ orders that otherwise would not have happened with the existing molds. Business wise it is highly unlikely it makes sense to make a new die unless it would be to replace an old worn down one.

 

[mdt11]

Thanks for sharing, and congrats on the sale! You've got a lot of people rooting for you.

 

[Taghkanic]

A fun exercise in any business is to measure the expense against your net profit to sales ratio.

For every $100,000 in sales/revenue at an auto dealership, the store will net profit on average $3,000 so their net to sales ratio is 3%. This is an example of a business with thin margins (hence being extremely cautious to expenses).

Let’s assume this business (CPC) is extremely profitable and is 15% net to sales ratio. Not gross profit. Net profit to sales/revenue.

Take the expense $75,000 / divided by their net to sales ratio .15 (15%) = $500,000

It will take $500,000 in sales (revenue) to absorb a $75,000 net expense.

That would be 100 $5,000 custom CPC sets to absorb the expense of a $75,000 die.

Understood. At the same time my sense (correct someone if I’m wrong) is that these dies last a very long time.

Aren’t some of the dies used at CPC hand-me-downs from predecessors?

So if it’s $75K for something which will still work when the business is passed on to the *next* owners, and maybe the owners after that, you’re looking at more like $5,000 per year or even less.

And an expense which can be recouped when the owner(s) sell, if they have grown the business. Not to mention depreciation per above.

I don’t believe the person I referred to consider buying CPC ever took the tour, and so I never heard any particulars. But I assumed the purchased would be many, many multiples of $75K.

My own experience is more with buying and selling houses, which I’ve done three times. I’ve never bought a house that didn’t need $75K in improvements at *least*.

With two houses I bought, lived in, renovated and eventually sold, both in great condition the buyers put as much into renovation as they paid for the house. And both could still turn a profit if they sold now.

I also don’t know if the buyer is looking to get private equity-level returns, or if this is a labor of love. Either way, I hope the new owner(s) maintain CPC’s existing high standards while also not feeling hidebound to do everything the same way as prior stewards. I’d think there is a lot of room for both continuity and change.

Lastly, per @Gunnar ’s observation, I don’t know that new products would necessarily cut into existing orders, as opposed to generating new revenue. In my own case, I am unlikely to commission a full new set on the old model. But I very well might be a more regular shopper if there were some quick and easy off-the-shelf options which I could customize myself after purchase. (I have at times bought small batches of blanks, but these then need milling. That would be a lot better than buying Key Wests for murder.)

 

[doublebooyah85]

Yeah, theoretically the die is an asset. So you’re definitely adding some value to the perceived value of the business. But I wouldn’t be buying things to one day hope to recover the money when you sell.

And I wouldn’t be so sure the price was that expensive. From the sound of it the operation was not very profitable and I’m just gathering that via random comments by David and unwillingness to spend too much money bc it appeared to be hobby/passion more than a business.

Real Estate isn’t a manufacturing/retail business. Totally different comparison. If we were talking about 1 used car that would be the same comparison. If we’re talking about reconditioning one particular chip set. I buy some used chips, clean them, find some more, make the set playable and sell them, sure. But he’s battling rent, utilities, payroll, clay and dye inventory, wear and tear on machines, advertising, website, CC fees, workers comp, legal fees. Just guessing what his P/L statement looks like. Hence the net to sales exercise and how much it costs to absorb an expense is a telling statement why David didn’t add die molds or new colors. And “I know the takes money to make money expression” etc. just my 2 cents why everyone is saying make new molds make new colors yet David couldn’t do that for years…

 

[Himewad]

If the Roman mold cups were restored / re-made, 100 orders would not be a problem IMO.

 

[chipinla]

If the Roman mold cups were restored / re-made, 100 orders would not be a problem IMO.

Save some sets for the rest of us.

 

[ekricket]

Yeah, theoretically the die is an asset. So you’re definitely adding some value to the perceived value of the business. But I wouldn’t be buying things to one day hope to recover the money when you sell.

And I wouldn’t be so sure the price was that expensive. From the sound of it the operation was not very profitable and I’m just gathering that via random comments by David and unwillingness to spend too much money bc it appeared to be hobby/passion more than a business.

Real Estate isn’t a manufacturing/retail business. Totally different comparison. If we were talking about 1 used car that would be the same comparison. If we’re talking about reconditioning one particular chip set. I buy some used chips, clean them, find some more, make the set playable and sell them, sure. But he’s battling rent, utilities, payroll, clay and dye inventory, wear and tear on machines, advertising, website, CC fees, workers comp, legal fees. Just guessing what his P/L statement looks like. Hence the net to sales exercise and how much it costs to absorb an expense is a telling statement why David didn’t add die molds or new colors. And “I know the takes money to make money expression” etc. just my 2 cents why everyone is saying make new molds make new colors yet David couldn’t do that for years…

Nobody is retiring from money they made from making poker chips

 

[ekricket]

If the Roman mold cups were restored / re-made, 100 orders would not be a problem IMO.

Any interest in a cash set of blanks?

 

[doublebooyah85]

Nobody is retiring from money they made from making poker chips

Maybe retire a few years early if u sold some boat chips, RPC or Tigers lol

 

[JMC9389]

Any interest in a cash set of blanks?

Kevin, I might be if James isn't.

 

[Tonysquander]

out with dayglo peach

Dealing in Chinese knockoff color palette's has rotted your brain.

 

[allforcharity]

Is there no potential source for new compression molds that cost less than $75k? Absolutely none?

 

[AlbinoDragon]

Is there no potential source for new compression molds that cost less than $75k? Absolutely none?

Straight from David....

EVERY cup in the mold has completely worn out and the centers have collapsed. The hob and master dies don't exist anymore.
I repeat it is TOTALLY UNFEASIBLE. To recreate from scratch, in hardened machine steel, even if you could find a manufacturer, you are talking $60k and up + the extra $15k worth of stuff that has to go with the cups to make a mold. Then the weeks of lost factory time setting it up and testing it, maybe another $20k cost.
This is hardened machine steel, not something that can be cast or CNC cut. Nothing else will withstand the temperature and pressure needed to extract every last micron of moisture out of the clay. (well maybe the stuff they build space rockets out of would)

You also have to remember we run at 100% capacity. Anything produced on a new mold is at the expense of another order on a different mold. To stand a chance of getting your money back the chips would have to be $20 each

Remember, the chips are produced under high pressure and high temperature in a system that's 100 yeas old requiring steam to provide the heat. My guess a complication is trying to make a mold that works with old equipment. It's not going to be something that gets turned out on a lathe in a couple hours.

 

[Relik]

Exciting News and cant wait to see what is in store.

Thank you Davids for all you have done previously and keeping ASM/CPC alive!

 

[Magic Peter]

Excellent news and congratulations to all !

 

[Taghkanic]

Straight from David....



Remember, the chips are produced under high pressure and high temperature in a system that's 100 yeas old requiring steam to provide the heat. My guess a complication is trying to make a mold that works with old equipment. It's not going to be something that gets turned out on a lathe in a couple hours.

Given that some older molds referred to elsewhere (Roman I think?) have degraded beyond the point of repair, presumably *all* of the molds will fail one by one over time.

What then?

If investing in new ones isn’t an option, does the business just shrivel down to the least popular molds until it finally croaks?

The adamant “it can’t be done” attitude from some corners honestly makes me wonder a bit. Either it really really can’t be done… Or maybe it’s time to think out of the box more. In my own work I’ve sometimes hit a wall, and it required that I reassess all of my assumptions to find a way around the wall. Or choose a new direction entirely.

I suspect something like a GoFundMe for the revival of certain molds (with some modest initial order discount for funders) could defray a lot of upfront costs.

Meanwhile technology has evolved enormously since the time that this classic method was developed. Of course part of why we like these chips is that they are oldschool, using an almost ancient process.

But if I were contemplating getting into the business, from what I’m hearing there may eventually need to be a third way other than CPC’s production process and Tina’s.

Otherwise someday someone else steps in from out of nowhere with a new idea or method and wrecks a business we all appreciate, myself included.

 

[mike32]

Not that it matters, but BCC flame mold blanks were compressed clay with a recess. Different manufacturer and process but it was done. I use the yellows as quarters.

 

[Taghkanic]

Not that it matters, but BCC flame mold blanks were compressed clay with a recess. Different manufacturer and process but it was done. I use the yellows as quarters.
View attachment 1457344

Interesting… How did BCC’s process differ?

 

[Highli99]

Congrats to all, and best of luck with the transition. We are all excited to see you succeed!

 

[mike32]

Interesting… How did BCC’s process differ?

I'm certainly no expert! I remember hearing they were lower compression, probably similar to Paulson because the Endy family started Paulson then moved on to BCC. But honestly I know very little about the process. They did make a kick ass yellow though!

 

[FS21]

Given that some older molds referred to elsewhere (Roman I think?) have degraded beyond the point of repair, presumably *all* of the molds will fail one by one over time.

What then?

If investing in new ones isn’t an option, does the business just shrivel down to the least popular molds until it finally croaks?

The adamant “it can’t be done” attitude from some corners honestly makes me wonder a bit. Either it really really can’t be done… Or maybe it’s time to think out of the box more. In my own work I’ve sometimes hit a wall, and it required that I reassess all of my assumptions to find a way around the wall. Or choose a new direction entirely.

I suspect something like a GoFundMe for the revival of certain molds (with some modest initial order discount for funders) could defray a lot of upfront costs.

Meanwhile technology has evolved enormously since the time that this classic method was developed. Of course part of why we like these chips is that they are oldschool, using an almost ancient process.

But if I were contemplating getting into the business, from what I’m hearing there may eventually need to be a third way other than CPC’s production process and Tina’s.

Otherwise someday someone else steps in from out of nowhere with a new idea or method and wrecks a business we all appreciate, myself included.

I agree with this comment, but I also have a lot of questions. If it is not feasible, I’m curious what is the alternative?

Why would someone purchase a company/process that has an indefinite expiration date if there was no alternative? What/where is the value in that - how do you achieve an acceptable ROI?

I’ve seen enough refrigerators, old starters. motorcycles, automobiles and aircraft that have been restored, rebuilt, reengineered from scrap, new parts made from scratch, and returning once again to functional machines.

How is it impossible for a mold to be re-manufactured? Is it a matter of money? A lack of knowledge and expertise? What is the real answer here?

 

[ekricket]

I agree with this comment, but I also have a lot of questions. If it is not feasible, I’m curious what is the alternative?

Why would someone purchase a company/process that has an indefinite expiration date if there was no alternative? What/where is the value in that - how do you achieve an acceptable ROI?

I’ve seen enough refrigerators, old starters. motorcycles, automobiles and aircraft that have been restored, rebuilt, reengineered from scrap, new parts made from scratch, and returning once again to functional machines.

How is it impossible for a mold to be re-manufactured? Is it a matter of money? A lack of knowledge and expertise? What is the real answer here?

Buy your own poker chip company and find out.

Or, start your own company and get out there and solve these unsolvable problems, start making dies and hubs and molds for everyone.

 

[ThinkingFold]

Interesting… How did BCC’s process differ?

I heard their process focused on split spots and color variation.

 

[mike32]

I heard their process focused on split spots and color variation.

Dont forget off center and egg shaped inlays. Also I have 200 $1's and 199 of them are the same shade of blue lol. And my $5's are at least 3 different reds, but I still love them.

 

[SteveEH]

I heard their process focused on split spots and color variation.

You forgot stretched/warped inlays and excessive spinners.

 

[superchromix]

All right, since you demanded so nicely.... But now that I own the Chocolate Factory I'll have to revert to being the mysterious Willy Wonka.
Here were the first chips I had made 11 years ago. Our cash game chips in front and tournament chips behind. The chips are fairly basic and design isn't my specialty. Fortunately, I'm now a manufacture and not a designer! We've used these chips weekly for about a decade and they still look brand new.

View attachment 1456159

We play in a barn at my house that I renovated so the home game is called the Poker Barn. There's a ghosted image of the Barn on the inlay. As you can tell, the 5000 tournament chip and $100 cash chip don't match the sets. I had these done recently to test out some ideas. I absolutely love the pink dayglo color and I think I like the 7/8 inlay size better as well.

Here's some of the other things I built. As you'll quickly realize, yes, I'm obsessive. I believe if somethings worth doing it's worth overdoing.

This was the first poker table I built almost 20 years ago. Yes, those are Bicycle cards and chips. We now only use Copag cards.

View attachment 1456165

While I loved the look of the racetrack I quickly learned to hate the utility of it. It made way too much noise when people shuffled chips on it and I certainly didn't want to encourage drinks on the table with the cup holders. But I made the center section so it could be replaced with different surfaces to try out. I'm not sure what felt this one was in the picture but I eventually settled on 'gaming suede'. There's nothing better. I also designed it so the entire railing can be replaced and I built a bunch of different railings with different fabric to find the best.

View attachment 1456170

This was with the 'speed cloth' center section. Speed Cloth has too rough a feel for me.
The next version got rid of the racetrack, widened the rail, and used better material, added a card shuffler and added LED lights. The lights are fully configurable with software I wrote and in tournaments I can have them automatically flash at the end of levels, etc.

View attachment 1456171

But the shuffler was too loud, had to be constantly filled, and got in the way of the cards so I removed it.

View attachment 1456173

Still wasn't perfect. Too many folks at my home game suck at dealing and would have a lot of trouble dealing from seats at the end. So I built a round table.

View attachment 1456175

This is what we currently use. It can hold about 10 people but it gets uncomfortable with more than 8. I built it around the max size of gaming suede I could get. It's much simpler for folks to deal and pots are generally within arms length for folks. the biggest thing it's missing is a Poker Barn logo. Like I said, design ain't my thing.

Okay, the Mustang. Classic Mustangs are my favorite cars. When I turned 50 my wife bought me a 1968 Mustang as a restoration project. I had never welded, done any real automotive work and had never painted.

I stripped it down to nothing and cut out all of the rusted parts.

View attachment 1456177

Then rebuilt it completely

View attachment 1456178

It took me about 5 different choices of red before I found one that liked. Remember this when I'm crafting a new yellow!

View attachment 1456179

Then I did infinite spray outs to perfect my technique and learn the best methods for sanding that would give the best shine

View attachment 1456180

The result:

View attachment 1456182View attachment 1456183View attachment 1456184View attachment 1456185

View attachment 1456186View attachment 1456187

Okay, that's all you get. Back to being Willy Wonka!

Absolutely epic post

ps. If you have a spare weekend, I have a 95 chevy pickup that needs the same treatment

 

[David Spragg]

While many people think there still aren't enough options etc. etc. please remember that in our 11 year tenure...

We reintroduced 3 old colors, added 4 new and brightened the dayglo's.
We reintroduced 1 mold and added 7 new ones.
We added around 60 new spot patterns.
We introduced stock designs, 8 options currently available, and sold over 400,000 of these.
We've had maybe 12-15 complaints or issues to fix out of over 8,000 orders.
We introduced a comprehensive range of samples and the current Chip Design Tool.
We manufactured over 2 million chips.

 

[cpac54]

While many people think there still aren't enough options etc. etc. please remember that in our 11 year tenure...

We reintroduced 3 old colors, added 4 new and brightened the dayglo's.
We reintroduced 1 mold and added 7 new ones.
We added around 60 new spot patterns.
We introduced stock designs, 8 options currently available, and sold over 400,000 of these.
We've had maybe 12-15 complaints or issues to fix out of over 8,000 orders.
We introduced a comprehensive range of samples and the current Chip Design Tool.
We manufactured over 2 million chips.

 

[Taghkanic]

While many people think there still aren't enough options etc. etc. please remember that in our 11 year tenure...

We reintroduced 3 old colors, added 4 new and brightened the dayglo's.
We reintroduced 1 mold and added 7 new ones.
We added around 60 new spot patterns.
We introduced stock designs, 8 options currently available, and sold over 400,000 of these.
We've had maybe 12-15 complaints or issues to fix out of over 8,000 orders.
We introduced a comprehensive range of samples and the current Chip Design Tool.
We manufactured over 2 million chips.

You’ve done great work. And having lots of options is nice.

But all those options (except the premade sets whose inlay designs honestly don’t do it for me) involve a lot of waiting for the queue to get to your mold. It’s a big part of why I never pulled the trigger on a custom set and built one myself from vintage Paulsons.

So I am suggesting that the new owners build on what has been accomplished by exploring ways to either speed up production or (since that is likely difficult) figuring out ways to provide some chips that can be bought off the shelf then customized by the user.

Right now that can only be done AFAIK by either buying a stock chip and murdering it, or third-party milling.

If a mold with inlays isn’t possible, I guess in-factory milling of blanks is another way to get there. I assume a jig doesn’t cost $75K, but a salary for a full-time miller might.

P.S. Suggestions are directed at the new owner. If the seller is going to treat all suggestions as implied criticisms, maybe a new thread is needed.

 

[David Spragg]

You’ve done great work. And having lots of options is nice.

But all those options (except the premade sets whose inlay designs honestly don’t do it for me) involve a lot of waiting for the queue to get to your mold. It’s a big part of why I never pulled the trigger on a custom set and built one myself from vintage Paulsons.

So I am suggesting that the new owners build on what has been accomplished by exploring ways to either speed up production or (since that is likely difficult) figuring out ways to provide some chips that can be bought off the shelf then customized by the user.

Right now that can only be done AFAIK by either buying a stock chip and murdering it, or third-party milling.

If a mold with inlays isn’t possible, I guess in-factory milling of blanks is another way to get there. I assume a jig doesn’t cost $75K, but a salary for a full-time miller might.

P.S. Suggestions are directed at the new owner. If the seller is going to treat all suggestions as implied criticisms, maybe a new thread is needed.

Obviously any potential changes rest with Mike. I know he will make improvements but some things that are unfeasible may have to remain so. I'm also pretty sure Mike will discuss things with me. I might be retiring as owner but I'm not disappearing.