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Bankruptcy to Billions, The Marvel Story.

By Sampree Babu.

With the release of Avengers: Endgame the Marvel Cinematic Universe (MCU) has reached the end of its penultimate plan. With 22 movies spread over three “phases” and billions taken in at the box office, its impact on modern cinema cannot be denied. However things for Marvel were not always so stellar, with the company struggling to survive during the 90’s. So how did Marvel manage turn things around from declaring bankruptcy to re-establishing itself as a global megabrand worth billions? The man widely credited with its success is Kevin Feige who has served as the President of Marvel’s film division Marvel Studios since 2007 and has also served as a producer on every Marvel film since X-men in 2000. However the truth behind Marvel Studios phenomenal success is really the continuing vision of several figures throughout Marvel’s history.

The story behind this turn around involves an extremely turbulent time in Marvels history that began with a man named Ron Perelman who purchased Marvel in 1989. A well-established businessman, Perelman's takeover came at a time where comic books were considered to be valuable investments as collectibles. This led to the rise of speculators who believed they could make thousands off vintage issue comics. In order to capitalise on this Perelman began to try and appeal directly to these consumers by reproducing the same comics featuring special covers such as glow-in-the-dark covers, foil covers and hologram covers.

This lead to a period of relative prosperity for Marvel. However Perelman as sought to satisfy shareholders expecting bigger returns, he began allowing the marketing team began to dictate content of the comics. This led to a decline in the overall quality of the comics while prices continued to rise. It wasn’t long until things turned bad, as even the “speculators” began to tire of the overpriced and oversaturated market. Things became so bad that in the span of three years the share price dropped from $35 a share to just over $2 a share and left Marvel with a debt of more than $610 million.

Seeing the writing on the wall Perelman sought to move into the film industry by merging with toy manufacturer Toybiz in order to launch a Marvel movie studio. However the shareholders feared that this could cause even further losses and moved to block his efforts. So in 1996 Perelman filed for bankruptcy in order to get around the shareholders. What followed was years of vicious and very public court battles, especially with one share holder Carl Ichan who sought to wrest control of the company from Perelman.

After years of legal wrangling both Ichan and Perelman were cut loose and Marvel came under the control of two Toybiz executives Isaac Perlmutter and Avi Arad. Perlmutter and Arad were quick to also realise the value of Marvels characters in film and promptly sold off the rights of many of the characters in order to keep the company afloat. They sold the rights to studios like New Line Cinema, 20th Century Fox, and Sony Pictures for quick cash. Perlmutter was even reported to have offered Sony not just Spider-Man, but also pretty much every other character in the current MCU, including Iron Man, Thor, Ant-Man, and Black Panther for just 25 million dollars. Sony luckily turned down the deal and took only Spider-Man for $10 million, plus 5% of any movies' gross revenue.

The result was a string Marvel movie franchises that began to make a lot of money with numerous sequels, for everyone that is except Marvel. New Line had reasonable success with Blade in 1998, Fox hit a home run with Bryan Singer’s X-Men in 2000, and Sony had an even more massive hit with Spider-Man in 2002. . The problem was that because of Marvels situation they were forced into very bad deals which saw them take only 25,000 dollars from Blade and just 62 million from the first two Spiderman movies which made a staggering 3 billion dollars in the box-office. Despite this the company was emboldened by the success of these movies and began talks to license Captain America to Warner Bros and Thor to Sony.

Luckily for Marvel a man named David Maisel approached the Perlmutter and Arad with a bold proposition that would define the superhero film genre for the next decade. Maisel suggested that Marvel make their own movies with all the characters existing within a single franchise. This would in turn allow for characters to cross over following storylines that already existed in the comics, providing them with material for an untold number of sequels. After some discussion Perlmutter, Avad and the board agreed to Maisel’s plan, however they were adamant that Marvel shouldn't have to put up a dime of its own money.

Astonishingly despite that stipulation a deal was made with Merril Lynch, an American Investment firm, for $525 million dollars to create a film studio where Marvel would be allowed to produce any film that they wanted. It was an amazing deal that seemed almost too good to be true. There of course was a huge catch in the deal. Marvel had to offer up the rights to 10 characters: Captain America, Nick Fury, Shang-Chi and Power Pack, as well as some random collection of characters called the Avengers.

The stage was now set, but first Marvel had to reacquire some of its existing characters such as Iron Man, Black Widow, and also Hulk. They were able to get Black Widow and Iron man but Universal still had the rights to the Hulk. However after the poor performance of Ang Lee’s 2003 movie they had no plans to make a sequel. Maisel called Universal and brokered a unique deal where would regain Marvel the rights back. He promised to make at least one more Hulk movie and to pay Universal to distribute any future Hulk films. However in a stroke of genius and foresight a clause was added that Universal could distribute the films only if Hulk were the central char­acter. If Hulk were to appear in, say, an Avengers movie then Marvel would owe Universal nothing.

With all the pieces in place the first film Iron Man was greenlit in 2005. It was a huge risk for company had never produced a film itself and a flop could have cost it millions. It also took another risk by casting Robert Downey Jr, better known for his addictions at the time than his acting. The film was a box office smash hit taking in almost 600 million from a budget of 140 million. Following this would be 21 more films that to date have grossed over $20 billion worldwide. In 2009 Disney bought the company for US$4 billion, an almost impossible imagining from a company once of the verge of collapse.

Written for Gaming Australia by Sampree Babu.

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