Toy Scout

If You Can't Locate
That Special Plaything,
Call, or Blame, a Scalper

Mr. Barger Buys Scarce Items, Resells Them at a Profit To Collectors and Parents
Power Rangers for Movie Stars

By JOSEPH PEREIRA
Staff Reporter of THE WALL STREET JOURNAL

YPSILANTI, Mich. - It is 8 a.m., and a Target store here has just opened for business. Dennis Barger, who has been waiting in the parking lot since 7:30, races in to buy a toy.

A few minutes later, he is down the road at a Wal-Mart, then on to a Kmart and two Toys "R" Us stores. At 10:30, a weary Mr. Barger finds a coffee shop, sits down to an iced tea, and surveys his haul: one Captain Kirk, three Guinans, two Cygors, one Hamburger Head, one Worf, one Violator- 13 action figures in all, from the world of Star Trek or Spawn comic books. Total price: $55.

Mr. Barger didn't get everything he was looking for, but not to worry. "I'll sell two figures and get my money back," he says. The entire purchase, he reckons, should fetch him more than $200.

Mr. Barger, 24 years old, is a toy scalper. By staying alert to the latest fads, moving fast and using special purchasing channels, he makes his living buying toys that are in short supply and then selling them at huge markups to collectors, other resellers, or parents and children who are desperate to have them.

In the toy business, where shortages are increasing, the role of scalpers is growing. For reasons that are hotly debated, temporary unavailability of certain toys has plagued consumers ever since the big run on Mighty Morphin Power Rangers began three years ago.

Parents agonized when Mattel Inc.'s Happy Holiday Barbie sold out weeks before last Christmas morning. Not long before that, stores were cleaned out of Earring Magic Ken. More recently, Mattel's Treasure Hunt cars, Toy Biz Inc.'s Xena the Warrior, and the Cal Ripken Jr. replica from Hasbro Inc.'s Starting LineUp have been scarce.

Some buyers speculate that shortages are designed by manufacturers seeking to create cachet for toys and stir consumer interest. Others say supply problems are the result of a highly unpredictable market in which toy makers aren't really sure what products will become hot.

"The penalty for overproducing product in the toy industry is so huge - many toy companies have gone out of business. And because of that, manufacturers would rather deal with a shortage than overproduction," says Sean McGowan, an analyst for Gerard Klauer Mattison & Co., a New York investment bank.

Setting Limits

Toy makers say their calculations have been upset by collectors, such as the Barbie devotees who gobbled up so many Happy Holidays last Christmas. Estimates on the number of collectors vary widely, from 200,000 to three million. Judging from ads in toy-collector magazines, there is a thriving business for scalpers as well.

Last week, a Toys "R" Us store in New Hampshire banned a collector - for the first time - from buying any more toys there. The company says the collector had become too frequent a customer, purchasing thousands of dollars of hot figures.

While some stores set limits on the number of certain items each customer can purchase, "it's very hard to police" scalping, says Michael Goldstein, chairman of Toys "R" Us Inc., the nation's largest toy retailer. "Scalpers can easily sidestep the customer limit by having relatives or friends come in to buy for them."

Toys "R" Us has investigated a number of deals made between its employees and scalpers, Mr. Goldstein says, leading to the dismissal of some workers.

Return of the Jedi

One of the biggest current squeezes is on Hasbro's new line of Star Wars figures linked to a coming rerelease of the space-movie trilogy.

At Toys "R" Us stores, characters such as Obi Wan Kenobi and Princess Leia retail for $4 to $5 - if you can find them. Eleven-year-old Kilian Ellison couldn't. After what he calls "an endless search for the Princess," he ran into Mr. Barger at a comic-book store, and paid $55 for one.

"I get $15 for mowing people's lawns," shrugs Kilian, who lives with his mom in Ann Arbor, Mich. "So I'll mow a few more lawns."

Mr. Barger has a wide reputation- and an eclectic clientele. During the Power Ranger drought, he sold scarce versions of the drop-kicking avengers for about $120 apiece to film stars Tim Robbins and Susan Sarandon, who gave them to their children for Christmas. Specialty shops paid plenty for his Earring Magic Kens, which had become a novelty item among gays.

"He's like Indiana Jones," says Rex Schroeder, owner of Total Entertainment, a comic-book and video store in Ypsilanti. "If there's a Holy Grail in toys, he'll find it."

But collectors are outraged at scalpers' prices. Mr. Barger's inventory includes a hard-to-get World War Il G.I. Joe for $150, a replica of Los Angeles Dodgers pitcher Hideo Nomo for $35 and a Commander Riker Star Trek doll at $225. Each has, or had, a retail price of about $5. "When will the escalation end?" asks Sean MacIntre, a Dallas collector. "His type of price inflation we see in Argentina, not America."

There is nothing illegal about what Mr. Barger does, but that doesn't make kids any happier when they can't find their favorites. "The adults beat us to the store every time," says Jon Iwata, 10, combing shelves for Star Wars and Hercules figures at a Caldor store in Braintree, Mass. "It's like little kids racing against these big adults in a 100-yard dash or something."

An Apology

Mr. Barger says he doesn't feel guilty, reasoning that he deals mostly with adult collectors and owners of small toy stores. He blames toy makers for shortages, saying they don't make enough toys to go around. He adds that he makes donations to Toys for Tots and other children's charities as "a way of saying to kids: 'I'm sorry for buying up all your toys."

A stocky figure with a penchant for black T-shirts and baseball caps worn backward, Mr. Barger graduated from Eastern Michigan University earlier this month with a major in marketing. He declines to discuss his income, but says he paid for college with scalping profits.

"I almost never sell my stuff for less than a 100% markup," he says. "What stock on any of the exchanges offers that kind of return in just a few weeks?" Industry estimates are that a good scalper can make upward of $50,000 a year.

Mr. Barger's biggest concern at the moment is moving his bulging inventory which he values at $200,000 in street prices - to a larger home. Except for the Victorian architecture, his three-bedroom apartment might be mistaken for a toy store. Customers may, by appointment only, stop in to peruse thousands of action figures that hang five to ten-deep on foot-long metal spikes, just like the ones seen at check-out counters. Thousands more are stacked to the rafters in his garage.

"There's a real retail atmosphere to the place," he says, adjusting the merchandise on his racks.

Hot Tips

Mr. Barger cultivates a labyrinth of contacts, from moles in toy factories to clerks in stockrooms and warehouses of toy stores. For a fee, usually $50 per tip, informants alert him of incoming shipments. Some will even put an order on hold for him.

During visits to stores, Mr. Barger introduces himself to back-room crews and hands out business cards. On one outing, he beckons a stockroom clerk at a Toys "R" Us outside Detroit to a quiet corner.

"I'm a toy dealer," he whispers, "I buy and sell toys, lots of toys. I was wondering if you could, like, give me a call, you know, when something hot comes in. I could make it worthwhile for you."

The clerk listens carefully, nods, and after a moment's hesitation, says, "No problem, man, I'll let you know." Such propositions are common, says Anthony Daniels, an Eastern Michigan student who once worked at Toys "R" Us. "I got a few myself," he says.

Much of Mr. Barger's time is spent in parking lots, waiting for stores to open in the morning and for delivery trucks at night. He also works the phones, pumping sources for such arcane facts as the distribution ratios of figurines in new deliveries. Action figures generally come 16 to 24 to a carton, in mixed assortments. If there are more than two copies of a single character in a box, chances are that figure won't be worth much on the street.

Heading North

Once every few weeks, Mr. Barger rises before dawn and heads across the border to Canada, where fads don't always catch on as they do in the U.S. In October 1993, Power Rangers were scarce here. But the Rangers TV show was banned then in parts of Canada over the issue of screen violence, so Mr. Barger drove to Toronto, on the hunch that would damp demand.

"I walked into a Toys "R" Us and my eyes just about popped out," he says. "There, staring me in the face was a shelf full."

Hitting a number of other stores nearby, Mr. Barger was soon headed back to the U.S. with a friend after spending $10,000. At a 3 a.m. crossing, border guards weighed and shook the toys, looking for drugs. "What would you do if you saw two men drive up with a vanload of plastic dolls in the middle of the night?" asks a border patrol officer on route 402, recalling the incident.

Mr. Barger's hottest current holding is a lone copy of a coveted Tapestry Picard, a likeness of actor Patrick Stewart as Star Trek Captain Jean-Luc Picard. Playmates Inc. has made about a half-dozen different versions of Capt. Picard since 1992. But only the Tapestry version sports a distinctive red uniform the character wore at the Star Fleet Academy.

Playmates, based in La Mirada, Calif., concedes that some of its Star Trek figures have been in short supply, but denies the shortages were intentional. "We were simply trying to spark interest by introducing a few items in limited quantifies earlier this year," a spokesman says. "What we didn't know was that it was going to spark that much interest."

The Tapestry Picards sold out for about $5.99 at retail outlets earlier this year, and Playmates has stopped making them. In computer on-line services, they are quoted at between $625 and $1,000. Mr. Barger says he paid about $100 for his, obtained, he will only say with a wink, "from a source at Target."

The Wall Street Journal, June 24, 1996.

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