Mile High II Collection Part XIII

This column is Chapter #13 of the story of the 1985 purchase of the "Mile High II" collection of 1,500,000 pre-1980 comics.

As much as I hate having to stop relating this bit of history for you, this will be the closing chapter in the Mile High II story. To keep going would be to delve deeply into the history of Mile High Comics, and the Direct Market, during the latter part of the 1980's, and most of that is a story for another day. I can tell you, however, that we continued to generate revenue from the Mile High II inventory on a steady basis for many years. In the beginning, however, the costs were far greater than the benefits. In early 1986, we were forced out of our old mouse-infested headquarters in downtown Denver by the new purchasers of the building. Through a stroke of luck, we were able to purchase a 22,000 square foot two-story building on Denver's Northwest side, for almost no money down. Moving all of our office fixtures and racking, plus our huge comics inventory, required 30 temporary workers, and round trips between our two buildings by 40 tractor trailers! That move cost us tens of thousands of dollars we simply didn't have.

In spite of our moving costs, the debt from the Mile High II deal was retired exactly as promised. Every cent was paid on time. The son never benefited at all, however, as all the payments went directly to his father. When his father passed away six months later, the payments were reassigned to his new wife, leaving the son completely out of the picture. Even worse, the Factor who had fronted the son the huge loan (against the receivables of the family book business) seized not only the family business, but also everything the son owned personally, including his home and car. The last I heard (in late 1985), he was trying to find work in the Miami area, selling cars.

Before you feel entirely sorry for the guy, I need to mention that he did finally figure out a way to burn me on the deal. Three months after the books were delivered at our warehouse, I called him up to let him know that I had, as promised, pulled two copies each of every book in the deal for his kids. There were so many different comics in the deal that pulling just two copies of each comic created a shipment of over 15,000 books. UPS had quoted me a rate of about $550 to ship them to him. Not being completely dim, I asked him to send me the money for the shipping costs up front. Not surprisingly, he had every excuse in the book for why he couldn't send any cash in advance. In all probability, he simply didn't have the money. At that point I had an ethical dilemma. I clearly owed him the books, as I had given my word I would send them to him. He had also promised, however, to pay the freight charges. Since he couldn't send me the money for the freight costs, I could either A) reduce the number of books I was sending him to compensate, or B) go ahead and pay the charges, and simply hope that he would someday reimburse me. Against the advice of my staff, I went with plan B, and sent him all the books at my expense. It should come as no surprise to you that I never ever heard from him again. I asked the stepmother to reimburse me out of her payments, but she just laughed.

The final point that I want to make about the Mile High II deal is that it ended up costing far more than the $240,000 I committed to pay the seller. Aside from the shipping, storage, and handling costs, the Mile High II deal ended up costing my wife her comics distributing company. To explain, in the summer of 1980, I was the catalyst for Marvel opening up their distribution of new comics to anyone who could meet their $3,000/month minimums. As a reward for helping set those events into motion, I was awarded the first new Marvel distributorship that was carved out of Phil Seuling's previous monopoly. While Phil and I normally got along very well, he took serious offense at my helping break his exclusive hold on Marvel distribution. Because I was primarily a retailer, Phil's attorneys pressured Marvel to cut me off, just 90 days after I had started distributing to about 20 stores in the Colorado area. To escape Phil's lawsuit, I sold my distribution business to Alternate Realities Distributing, Inc., a newly-formed corporation solely owned by my wife, Nanette. Since we don't have community property, this created a clear ownership distinction between Mile High Comics, and the distribution company.

By 1987, Alternate Realities had been operating for seven years, and under Nanette's stewardship had grown to well over 100 accounts. Mile High was her largest single customer, but she shipped comics all over the western United States, and had several large International customers. For the first six years, she operated Alternate Realities out of offices in Boulder, but when I purchased the huge new warehouse in Denver in 1986, she agreed to lease some space in our new facility. All went well until the Black and White implosion of 1987. For those of you who don't remember those dark times, 1987 was the year when the comics industry was suddenly inundated with hundreds of new titles of black and white comics. It seemed that every kid out of art school was publishing their own new comics title, hoping to create the next Teenage Mutant Ninja Turtles. The net effect of all these new titles was to overwhelm the inventory control efforts of many retailers. As a result, Nanette suddenly found herself receiving bad checks from previously very reliable accounts. This seriously damaged her cash flow. The final blow was when three of her largest accounts simultaneous bounced checks on her, all in the same week (while we were exhibiting at San Diego...). This caused her check to Marvel bounce. Marvel immediately pulled her 30-day credit line, forcing her to wire funds before they would release any further shipments.

Under normal circumstances, I would have been able to help Nanette through these troubled times. We had taken some losses from the B&W glut at Mile High, but we were actually faring pretty well on an operations basis. Unfortunately, however, we had just finished paying off the last payments Mile High II deal. Paying $140,000 in payments during just 24 months, plus all the accumulated costs of sorting the Mile High II comics, and moving to the new warehouse, had left us without any cash reserves. As it was, we were barely being able to make our weekly payments on our new comics, much less have any ability to pay ahead. So when Marvel pulled Nanette's credit line, I had to watch helplessly as her financial situation spiraled out of control. In the end, Nanette was forced to liquidate her company assets for the benefit of her creditors (they each got about 30 cents on the dollar...), after giving her accounts over to Bud Plant, Inc.. I cannot even begin to express how bitter a pill that was for Nanette to swallow. As much as some people thought otherwise, Nanette had built Alternate Realities on her own. Losing her company was an incredibly painful experience, from which it took her years to recover.

Aside from sharing Nanette's pain and humiliation, the cost to me during that awful period was in being forced to sell many of the last remaining comics I owned from the Mile High I/Edgar Church collection. Because there was the perception that I had an ownership interest in Alternate Realities, I was determined that I would pay my balance with Nanette down to zero before the company was turned over to Bud Plant. To accomplish this, my only option was to sell my personal issues of Crack #1-#26, Captain America #1-#10, Archie #1 & #2, Police #1-#90, as well as several other key issues that I had planned to keep indefinitely. Suffice it to say, losing those particular books stings to this day.

The moral of this story is that the costs of a deal can be far greater than they first appear. While the Mile High II deal ultimately turned out to be a bonanza for us in the long term, the short-tem costs of both paying for the deal, and absorbing it into our inventory, were far greater than just cash. To gain the rewards the Mile High II collection promised, I had to take myself, my family, and my loyal staff through many stages of Cash Flow Hell. We struggled not only to sell the books, but also to simply stay in business. It wasn't until about 1990 that I was able to breathe a little easier, and could finally say that I had pulled off the biggest deal in the history of comics without going broke in the process. It was a long, tough struggle, and one that defined nearly half a decade of my life. Telling all of you this story has been a great reminder to me not only of how wonderful it felt to do the deal, but also how great the price I had to pay in the end. Keep my experience in mind if you ever get a phone call offering you over a million old comics, for only pennies on the dollar...

Next week, I'll review the 2003 Overstreet price Guide!

Mile High Comics, Inc.
Attn: Chuck Rozanski
2151 W. 56th Ave.
Denver, CO 80221