World POG Federation, the company that made Orange County the center of the craze over a bottle caps game, is getting a much needed cash infusion from a Beverly Hills company--but is paying a hefty price.
The company's dynamic founder, Alan Rypinski, will give up controlling interest in the company that he founded two years ago as the milk cap fad was booming. He also will step down as chief executive.
Rypinski said he had little choice. The Irvine company had become so strapped for cash that it would have been forced into bankruptcy without an outside rescuer.
Rypinski, 56, said he simply failed to set aside enough cash to weather market downturns.
"I [should] have warchested enough capital to see us through this lull," he said.
He announced Monday that he had lined up Pacific Capital Group Inc. of Beverly Hills to invest in his World POG Federation. The amount of the investment was not revealed. As part of the arrangement, Rypinski's stake in the company will shrink from 78% to about 25%, officials said. He will become chairman emeritus as Pacific Capital assembles an executive team to run the company's daily operations. The management committee will include one or two executives appointed by Pacific Capital, but Pacific officials declined to identify their representatives.
Rypinski started World POG in 1993 after seeing a television report about a frenzy over the milk caps in Hawaii. Within a few months, he had acquired the POG trademark from a Hawaiian dairy that has been marketing POG--it stands for Passion Orange Guava--juice for 25 years.
Last year, he won a long legal battle giving his company exclusive rights to the POG name, arguably the oldest and best-known trademark name in the milk cap industry, observers said.
The Irvine company capitalized on a popular game featuring silver-dollar-size cardboard milk bottle caps bearing glossy, colorful displays with bright graphics, holograms and the likenesses of media favorites ranging from NBA star Shaquille O'Neal to well-known comic book characters. But in recent months, the company has been saddled with heavy inventories as imitators flooded the market and the demand for Pogs dropped. The company's work force was slashed from 55 to 15, and Rypinski began looking for outside investors.
Although he no longer will be handling the company's daily operations, he said he still believes that the company has a great chance of rebounding.
"Kids still love the game," he said.
He pointed out that the company still has marketing agreements with several major companies, including Warner Bros., Kraft General Foods Inc., McDonald's and Coca-Cola. But the company may have even greater potential in the international markets, he said. World POG Federation has licensing agreements in 17 countries, including Japan, England and Canada.
"If we just keep doing what we are good at, we will be in good shape," Rypinski said.
Other industry executives, however, said they believe it may be a while before the market opens up. Bill Hodson, president of TROV USA, a Corona bottle cap maker, says that because of the easy market entry, hundreds of companies have flooded the market with imitations.
"It would have had greater potential for staying power if so many people hadn't jumped into the game," he said. "The [demand] is flat line right now."
Hodson said that he doesn't expect demand to pick up until at least 1997 when a new group of youngsters can be introduced to the products.
Rypinski, who in the 1970s turned Armor All into the leading marketer of car-care goods, said he sees some positive aspects in giving up his top position at World POG.
"I am very proud of my accomplishments," he said. "I spent the last several years working 80-hour weeks. Now I can spend more time with my wife and family."