HP-2020-000016 - [2025] EWHC 1451 (Ch)

Table 5: Volumes and working capital required to break even in 2017

When considering the competing cost stacks, it should be noted that by the end of the trial there remained significant disputes between the parties on numerous points which led to the very different breakeven figures set out above. The disputed issues included not only the wholesale prices and cost of goods, which I have addressed above, but also a dispute as to the payments that would have been due to Nickelodeon had a TV advertising contract been agreed on the basis discussed by Cabo and Nickelodeon. The latter point had a particularly significant effect on the cost figures, because MGA’s contention was that Cabo would have agreed a profit-share contract which provided for Nickelodeon to receive 6.5% of retail revenue less Cabo’s costs of manufacture and distribution, whereas Cabo contended that the agreement would have been for Nickelodeon to receive 6.5% of wholesale revenue less costs. In addition, there were various other disputes on smaller points such as whether Singleton was entitled to a management charge, and the costs of product test, samples and depreciation. It was not, however, possible to assess the impact of any individual specific disputed cost items on the breakeven analysis, because MGA’s calculations were simply provided on the basis of a binary choice between its cost stack and Cabo’s cost stack.

Fortunately, however, that does not matter, because the figures set out above show that even on assumptions favourable to Cabo, Worldeez would have had to be a highly successful product in order to break even during 2017. The evidence does not, however, indicate that Worldeez could have achieved success of that magnitude. In particular: