CrossGen CEO Mark Alessi addresses company financial issues

Wed, August 20th, 2003 at 12:00am PDT

Comic Books
Beau Yarbrough, Columnist

In the hours since this story was initially published, questions continue to swirl around comics forums on the Web. CrossGen contacted CBR News, explaining that they felt that further clarification was necessary on subjects that CrossGen feels may not have been completely covered or initially addressed. We happily gave them this opportunity. The full text of our telephone conversation Thursday afternoon with Mark Alessi can be found below, followed by our original article published on Wednesday.

(Telephone interview by Jonah Weiland)

How do you feel personally about the current status of the freelancers?

Well, I think everybody here at CrossGen, maybe myself in particular, feels tremendously apologetic that we put a lot of incredibly high quality and ethical people through some difficult times. We've been in a tough time for 90 days. They've acted with tremendous honor and restraint and obviously, in this kind of a situation, you feel terrible when the fact that you have to tighten your fiscal belt affects other people that are meeting the commitments that they've made to you. We've taken every possible step that we can to contact every single individual, chat with them at length. I myself, as I stated in the earlier article, have talked to well in excess of 20 at great length and I entertained calls from freelancers who periodically want to touch base with me on this situation or let me know that they're in a unique financial bind to see if there's something we can do to help and in each and every case that I'm personally aware of we've been able to.

There's no doubt about it when actions that result in negative impacts on other people that don't deserve it occur, of course you feel terrible. I think that the entire CrossGen community can't wait for this entire situation to come to an end so that we can settle the score with the people that we have so much respect for and who've shown so much loyalty to us.

What about the perception amongst comics fandom that you are this extraordinarily wealthy guy and that you should just be paying them immediately out of your pocket?

Well, this extraordinarily wealthy guy is a media fiction. Was I a multi-millionaire when I started this company? Yes. The only way you can start a company of this size and substance, stay in business this long, is to have a reasonable amount of money in order to get started. Whether or not I'm Steve Jobs or Bill Gates has now been proven false. You know, to be frank, I've sold property I owned just to pay freelancers. So, you know, we're working together. This is not a situation where there's a rich guy sitting back there, sitting on a ton of money, unwilling to pay a guy $800 bucks for the page rate that he's actually earned. This is more the case of the old chicken and the egg story and they always say that the chicken's involved, but the pig's committed, well, this pig's committed. I'm the bacon! I'm in for pretty much everything I've got and we're busting our humps to turn this in the right direction. And it's going in the right direction, but, you know, I can assure the independents out there that we are not sitting on money, or I am not personally sitting on money that could be forwarded to them in any way shape or form and have in fact gone out of my way to divest some of my personal interests that I'm eligible to, just to make the partial payments that we've made to them thus far.

The word "blackmail" was seized upon by fandom in comics forums. What did you mean when you used that word?

Well, these three people accosted me late at night, pulled a black sock over my head, put a gun to it and threatened me with death and dismemberment unless I paid them, or they were going public. Nah, I'm just kidding!

The concept is that there are a number of people who we owe money to. We intend to pay them. Some people intimated that if we didn't pay them, they were going to go public. In good conscience and in good faith, I was not about to allow that kind of suggestive approach to change the parameters we were using to try and cover as many people as effectively as possible during this time where we were tightening our belts. So, if you basically make it clear you're going to go public unless you're paid, and I know that there's a lot of other people who are quietly and professionally doing their job, who've worked for us for a long time, and have respected the way we pay generally within a week or two of submitting work, I'm not going to put you ahead of them. You're going to go into the same group and I'm going to do the best I can to pay everyone involved, but threatening me, or the company, won't change your position or change the process we're going through to try and compensate everyone fairly. If they felt they needed to go public, then certainly that was their right, but there's a lot of people who could've gone public and didn't. Most of them, I think, didn't because we personally contacted them, we didn't leave them wondering what the situation was. We got in touch with them in advance in most cases, if not all. We explained thoroughly the background of the situation. We discussed the time frames around when we could help them out and in those situations where people felt there was a sense of an immediacy and need, we went to some extraordinary lengths to get them compensation right away.

What steps are you taking to pay the freelancers?

I don't think a lot of people know that members of the senior management team have foregone salaries so we can cut earlier checks to freelancers. Again, I've never taken a penny. I've sold land specifically to gather additional funds to get it out to freelancers. We've cut back on some print runs on books that even though they're being made and will be available, as soon as our situation is a little bit stronger, we've taken those steps to get some money out to freelancers. I don't think we've left any stone unturned reasonably from either a communication or movement of money case. We've gotten some surprise checks in as royalties for things that we've been working that have gone directly out to freelancers because they were extra money that was coming in outside of planned cash flow. If it comes in and it's not allocated to something that's absolutely necessary, it's going out to them.

I feel pretty much terrible about their situation and it's first and foremost on our minds for getting solved.

It's been a long few weeks at CrossGen Comics. In addition to all the work faced by anyone working in the industry, the company in recent weeks has been dogged by growing reports of late payment to freelancers.

While readers of CBR's Lying in the Gutters column have been hearing rumors of this situation since June, and CrossGen spokesman Bill Rosemann actually spoke to LitG writer Rich Johnston about the rumors in July, things came to a head last week, when CrossGen freelancer Robin Riggs and later Will Rosado and Lewis Larosa talked openly about late payment issues. Toss in an another explanation by Rosemann this week that in some ways just got the controversy burning hotter, and you come to a situation where publisher Mark Alessi made himself available to CBR News on Wednesday to clear the air.

And in that clear air, Alessi has breathed one fairly important word when talking about those who broke ranks to accuse the company of wrongdoing in public: blackmail.

More on that in a minute.

On Wednesday, Alessi spoke to CBR News at length about the truth behind the allegations, starting with CrossGen's current financial solvency, or potential lack thereof.

"Financially, CrossGen is a little tighter than we'd like to be," Alessi said. "We're in the final stages of a new investment round, and that's made the last 30 to 60 days rather tight."

The company had already done this earlier in the year, and thought they had this investment nailed down, but it fell apart at the last minute, leaving them with a cash shortfall.

"Since we thought the initial investment round was rock solid, we moved forward with several initiatives."

After four years in the industry that look to be extremely successful ones for a start-up comic company to an outsider, comic fans might be a little puzzled as to why CrossGen would need another cash infusion.

"Most people don't realize that even Marvel makes only 20 to 22 percent of its income on publishing," Alessi said. "DC even less. Whether or not you like it, most companies survive on ancillary revenue.

"While sales are fine, even better than we thought they'd be," there's still a need for non-publishing income. Alessi expects that the current round of investment will take care of things starting "fourth quarter this year, and then continuing on ad infinitum."

In addition, look for the CrossGen licenses to start producing more revenue for the company, beginning with "The Way of the Rat," which Alessi says is likely to be in production by the end of the year: "In fact, it's extraordinarily likely to be in production.

"We're nearing the completion of a major round in the millions of dollars that will take care of us, frankly, forever," Alessi reiterated. "If we hadn't had this unexpected change in the major investment group at the beginning of the year, none of this would ever have occurred."

CrossGen is in better shape than ever, he said.

"Oddly, today we probably have 10 times as many business opportunities and investments as we did 6 months ago. They'll just come to fruition in 18 months."

So what does that mean for freelancers who were once used to extremely speedy payments from CrossGen who recently have been forced to wait a more considerable length of time?

"We've been in contact with all the freelancers. I've personally spoken to 20-25 of them. [Art Director] Bart Sears has called all the others," Alessi said, noting it's unheard of for a publisher to personally call freelancers to tell them when there's a problem with making payment. "The vast majority of them have released at least partial payment.

"Am I not pleased that we haven't been able to immediately meet every financial obligation? Of course I'm displeased. But I don't think it's a unique thing in this industry."

And while stories of late payment conjure up visions of missed rent checks and creators going hungry, Alessi said the company has bent its own accounting rules to provide emergency funds to those who needed them.

"For those who have had special circumstances, I have taken money out of my own account and paid them."

As for the rest of the payments, Alessi expects to have paid all the freelancers for their work by October first.

And while the three creators who have complained publicly have attracted a great deal of attention, Alessi said the number of creators actually affected numbers closer to 40, most of whom have been satisfied with the explanations and (so far) partial payments they've received from the company.

"I don't think you've seen 30 to 40 people complaining, have you?

"Are we late? Yeah. Are we happy about it? No," he said. "Is this a long-term problem? No."

Life is a little better for those on full-time staff at CrossGen.

"The staff has been paid. Some of the senior management have chosen to forgo wages for a period of time as we tighten our belt. I have never been paid in the history of this company. This problem has been freelancers and some other people to whom we owe money.

"Quite frankly, I hate the fact that I'm in this interview explaining this to you, since it's no one's business but CrossGen's and the people involved. ... They have been spoken to, they know their issues have been addressed as much as humanly possible."

For Alessi, he thinks the silent majority, both of freelancers and staffers, tells the real story.

"I think the fact that this has been a [known] internal issue for 90 days at least, and not that a single person has left the company despite the fact the phones from Marvel and DC seem to have direct lines here to CrossGen ... I think everyone should relax and talk to us after October 1st."

But the current firestorm erupted -- and Alessi spent Wednesday afternoon on the phone talking to CBR News instead of putting out comics -- because of three freelancers going public with their complaints.

Alessi said the move was an attempt on their part to force the company's hand.

"Certain people thought they'd be paid immediately by making it public, and that's not going to happen," he said, noting that they will be paid on the same schedule as the rest of the company's freelancers and creditors. "If the three people who have raised the issue [in public] told the whole story, we wouldn't be having this discussion.

"If they had enough courage to come forward -- which was really blackmail -- they should have the courage to tell the whole story. ... They weren't protecting anyone, they were blackmailing."

As for the fact that the internal financial dealings of his company have become grist for the rumor mill and Internet comic community, Alessi doesn't beat around the bush.

"I'm a little annoyed and insulted that people feel that we're responsible to reporting to them. We're not. ... What we do and how we function internally is none of their business unless they work here.

"There hasn't been even a hint of turnover, and yet the phone has been ringing off the hook from other companies saying that the sky is falling."

As mentioned above, Rosemann issued a statement yesterday, in an attempt to calm speculation. Instead, a comment about how CrossGen will pay "even the three creators who were recently removed from assignments due to unsatisfactory work and blown delivery dates" turned into a mini-firestorm of its own.

"Bill Rosemann's intent in saying that was that, regardless of the fact that we've let go some of these" freelancers, they will be paid. "Whether or not people like the phrasing, I'm not going to apologize for the phrasing, he's apologized for himself."

A surreal moment in the current fracas occurred when former CrossGen writer Mark Waid stepped in, offering to extend interest-free loans to CrossGen freelancers feeling the financial pinch.

"Mark Waid has always struck me as humorous. When Mark Waid left DC, he hated DC and loved CrossGen. When he left DC, he hated DC and loved Marvel. Now he left Marvel and hates Marvel and loves DC.

"It's nice that there's someone out there in the industry with deep pockets who can take care of everyone in need. In fact, I was thinking of calling him up myself and asking for a loan."

Following one more interview he's doing Friday, Allesi said "this particular situation is a closed matter to the public now.

"I refuse to allow it continue, and won't allow it to continue more. ... We're going to try and take the high road to the best of our ability."

Discuss this story here on CBR's CrossGen forum.

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