Monarch Avalon Inc., the Baltimore-based maker of board and computer games such as Diplomacy, Kingmaker and Gettysburg, put itself up for sale yesterday, saying that increased competition in the game business and the costs of starting up a new girls' magazine were draining its cash.
It was the second longtime Baltimore business institution to announce that it needed a purchase or rescue in the past two weeks.
Parks Sausage Co. announced last week that it was seeking an investor or buyer to provide cash needed to pay off mounting debts and to fund new growth.
Monarch Chairman A. Eric Dott said yesterday that he had retained Mercantile Bank & Trust Co. advisers to "explore strategic alternatives" because his company has been losing money for years, and its cash cushion has dropped from $2.3 million to $1.1 million in less than six months.
Although Mr. Dott said the alternatives included sale, merger or "other similar transactions," others inside the company said a sale is likely.
Monarch, which has about 140 employees at its Harford Road headquarters and printing plant, has no significant debt. But the company has reported an annual profit only twice since 1986. In the nine months that ended Jan. 31, the latest period for which it has reported, Monarch Avalon reported losing $109,000 on sales of $5.6 million, compared with a loss of $33,000 on sales of $4.2 million in the same period a year ago.
In the past year, the company, which has long specialized in printing and games, launched Girl's Life magazine at a cost of more than $1 million. Although growing, the magazine is not pulling in enough advertising to be profitable, Mr. Dott said.
Monarch's stock, which traded in the low teens in the mid-1980s, did not trade in the over-the-counter market yesterday, but was priced at $2.50.
Monarch's announcement was greeted with surprise by game players and sellers yesterday.
And it was clearly upsetting to Mr. Dott, who took over the struggling Avalon Hill game maker in 1963 and built it into one of the country's biggest producers of strategic and historic board games.
"This is not Camelot," he said. "I would like anything that would make us profitable."
Terry Lee Coleman, assistant editor of Computer Gaming World magazine, said he was surprised by the move because Monarch had just turned around its long-suffering computer game division.
In the 1980s, Monarch became the butt of industry jokes by turning out poor-quality computer versions of its board games. But Monarch restarted the division two years ago and has turned out a stream of highly acclaimed winners, such as Kingmaker, which has become one of the top-selling computer games, with sales of about 40,000 units.
"The industry in general is excited about the upcoming Beyond Squad Leader. That could be one of the best war game sellers of all time," he said.
William Loomis, a game industry analyst for Ferris, Baker Watts Inc. in Baltimore, said that many game companies are having trouble because the industry is becoming much more competitive, and that game makers are fighting harder for all-important shelf space at retailers.
Brian Garrahy, assistant manager of the Game Keeper store in Owings Mills, said he has noticed that game stores were making less shelf space available in recent months for Avalon Hill games and that the company was doing less advertising than its competitors.
His store has been selling only one or two Avalon Hill games each week and now carries only a few of the company's approximately 200 games, he said.
Avalon Hill makes "excellent games . . . but they are very difficult to find nowadays," Mr. Garrahy said.
Burt Hochberg, a senior editor of Games magazine, said Monarch has taken fliers that the managers should have known would turn into costly mistakes. The girls' magazine, while a good idea, isn't a good fit with the rest of Monarch, he said.