Powering Pop Culture: How Ata-Boy Automates Royalty Reporting for the Ultimate Edge

Interview with Jude Albright, CFO and Director of Licensing, Ata-Boy, Inc.

Situation

Ata-Boy is a wholesale gift and novelty company headquartered in Los Angeles, California. Founded in 1984 by Randy Slater, the company operated out of his garage under the Hollywood sign, making pop culture buttons, stickers, magnets, and patches. The company grew organically over the next 10 years, appealing to “nerd culture”. In 1991, they started licensing properties, and since then the company has doubled in size, growing from $2 million to $4 million. Today, licensed properties represent 95% of Ata-Boy’s revenue. The company has built a strong reputation for being reliable and trustworthy, which positions them to secure hot new properties from top licensors including Warner Bros, Paramount, Viz Entertainment, and Crunchy Roll.

“When I joined the company, I learned about licensing from scratch, securing licenses for the Wizard of Oz, Gone with the Wind, Star Trek, and Betty Boop. Now we license more than 200 properties from about 50 licensors. Licensed properties are what make our products unique so our relationship with our licensors is crucial to our success. We make sure we pay on time, send samples, produce merchandise in a timely manner, and do everything we can to be responsive to their processes.”

Challenge

While licensing is clearly the bread and butter of Ata-Boy’s business, over time contracts have become increasingly complex. The evolution of licensing has led to:

• Complicated royalty structures, e.g., different rates on different types of sales
• Difficult-to-track terms, e.g., minimum guarantees, advances, and marketing funding
• Disparate reporting processes, royalty statement formats, and forecast projection requirements for each licensor

Since Ata-Boy outsources warehousing, they would receive raw data from their providers and have to piece it together to formulate their reporting. Spreadsheet management was cumbersome and error-prone, which could come back to haunt them during an audit. Generating royalty statements consumed 2-3 days on a quarterly basis for every contract and every licensor. 

“One of our contracts covers over 50 properties, and each character combination has a different code that needs to be reported with details on who bought it and what it sold for. We have a lot of small items and a lot of customers, so this could add up to 50,000 line items for a single report. This leaves a lot of room for human error when you’re cross-referencing spreadsheets, and penalties can be steep.” 

In addition, compiling information to respond to audits is time-consuming; one of their current audits has dragged on for over a year. Licensors may assert that licensees have underpaid, issuing a claim for millions of dollars in back royalties and penalties. It is up to the licensee to provide the details to defend their royalty statements. 

“One of our licensors contended that we owed them $1.2 million. That would put us out of business. It was reduced to $35 once we provided the documentary proof but that took months—and this effort is in addition to our day-to-day responsibilities.” 

Solution

Using LicenSee by FADEL, Ata-Boy will be able to upload royalty data, select the timeframe and licensor reporting template, and the software will automatically populate the report, delivering a 99% increase in speed by cutting down days of work to just minutes. Centralizing royalty data in a single platform will not only streamline report generation and provide valuable insights for forecasting, but also reduce audit cycles and effort. Most importantly, it will give Ata-Boy the comfort and confidence of maintaining full control over their operations, with easy access to data for more effective tracking and decision-making.

“Strong partnerships with our licensors are a strategic part of our business. We invested in FADEL’s technology to automate and streamline our license tracking. This gives our licensor partners confidence in our reporting and forecasting and frees up so much of our time to get back to creating and selling our products. The onboarding process with FADEL has been great. Everyone is responsive and knowledgeable. I’m really happy with the way things are going.”