This is something I'd had a lot of questions about, but Gary always answered with a "no comment" when asked about details over on Dragonsfoot.  With the many articles that have been written about Gary's life (particularly the one at wired) I was able to put this timeline together.

Quotes are from the Gamespy Interview with Gary Gygax, the recent article on Gary at Wired.com, and Wikipedia.

QuoteIn 1973, Gygax formed a company called Tactical Studies Rules with childhood buddy Kaye. They didn't ask Arneson to join. "Dave was never considered as a partner," Gygax says."We didn't figure he was the kind of the guy who would be too good at running a business."

Arneson agrees. "Gary was willing to go and make the pitches," he says. "I was having fun."

TSR scraped together $2,400 for startup costs. In January 1974, it ran off a thousand copies of the 150-page booklet titled, Dungeons & Dragons: Rules for Fantastic Medieval Wargame Campaigns Playable with Paper and Pencil and Miniature Figures. The rules cost $10. The extra dice you needed to play the game were $3.50 extra. The base of operations was Gygax's basement, and there wasn't a marketing budget. D&D would live and die by word of mouth.

Okay, so Gary co-creates the game with Arneson and co-founds the company that will publish it with his friend Kaye.  This is something I think a lot of us can relate to... because a lot of us are doing that.  We're individuals or very small groups publishing RPGs from home offices.

QuoteIn 1982, the company saw its annual D&D sales shoot up to $16 million. This game of math, maps, and probability had acquired an aura of the dangerous and forbidden. "We couldn't print the stuff fast enough," Gygax says.

When Gygax went to Hollywood to close the deal on an animated show and explore a possible feature film based on D&D, the day-to-day operations of TSR were overseen by his fellow board members, brothers Kevin and Brian Blume. "They knew that I was in the midst of a divorce, so they figured I would be happy to go out to the West Coast and get away from my ex-wife," Gygax says.

"While I was out there, though, I heard that the company was in severe financial difficulties and one of the guys, the one I was partnered with, was shopping it on the street in New York. I came back and discovered a number of gross mismanagements in all areas of the company. in New York. I came back and discovered a number of gross mismanagements in all areas of the company. The bank was foreclosing and we were a million and a half in debt."

 "There were 70-some odd company cars, something like $1.5 million in furniture."

"We eventually got that straightened out, but I kind of got one of my partners kicked out of office. (Kevin Blume, who was removed as TSR CEO in 1984 - ed.).

QuoteGygax looked for someone with management experience to fix the problem. "I said, we're going to need somebody to get us over this period until we can get positive cash flow again," he says. Lorraine Williams, the mother of a writer he'd met in Hollywood, had management experience, and he brought her on board. "Worst mistake of my life. I think she was losing about $3 million a year. Which is pretty good, even better than the Blumes could do."

Williams soon bought out the shares of the Blumes, and suddenly Gygax no longer had a controlling stake in TSR.

Quote"I tried to block it in court, but in the ensuing legal struggle the judge ruled against me. I lost control of the company"

QuoteGygax sold his remaining stake in TSR in late 1985. "I was so sick of the fucking company at that point, I was glad to get rid of it," Gygax says. "It was getting more and more screwed up all the time."

QuoteTSR faced stiff competition from other tabletop game companies like White Wolf, as well as the growing popularity of collectible card games like Magic: The Gathering. The company became notorious for zealously protecting its intellectual property. TSR was soon referred to by geeks as T$R: They sue regularly.

QuoteI came out with a game called Dangerous Journeys and TSR sued us! Eventually, we settled and I'm pleased to say that I think the amount of money it cost them to sue us and pay out in settlement was what really drove TSR under. A couple years later when Wizards of the Coast took over the company, TSR was over 30 million in debt, 27 million of it secured and the rest unsecured. The woman who took over from me who was gonna show everybody how to run the company lost somewhere between two and three million a year.

QuoteBy 1997, the company was deeply in debt, and it was purchased by Wizards of the Coast, the company that made its fortunes with Magic: The Gathering.

Wizards of the Coast regained some goodwill and popularity with the release of the third edition of D&D rules in 2000. Gygax was brought in for a brief and somewhat symbolic consultation on the new rule set, as was Arneson. Gygax didn't approve of the decision to open-source the game. The third edition of the rules was made available under the Open Gaming License, which allowed anyone to modify or write games based on the core system for free. "It pretty much gives the store away," he says. "It ruins the uniqueness of D&D."

It makes me think about things like authorship, personal vs corporate ownership, products vs trademarks, etc.  

I'm assuming that what happened to Gary, D&D, and the various people and companies involved was all perfectly legal -- but the question is:  was it right?

If anyone has any links to more details or insights into any of this, I'd be very interested in reading them.

I believe that Gary Gygax answered much of this at one point and then got tired of asking questions about it.
 
This is from memory, but here are a few more key points:
 
Kaye died unexpectedly. Ownership of half the company went to his wife. She had no interest and sold her half. I believe Gary tried unsuccessfully to buy it. If I remember, this is how the Blumes got involved - buying Kaye's share.
 
Blumes and Gary had uneasy partnership, but the 50/50 split kept things from getting out of hand. That was until Gary's divorce. His wife managed to get part (half? don't know) of Gary's ownership in the company. From this point on, Gary held less than half the company. I believe his wife sold to the Blumes.
 
After the Blumes realized that they had run things into the ground, Gary found Lorraine to buy them out at a fraction of the price of buyers years earlier in Gary's earlier attempts to get rid of the Blumes.
 
 
When you read some of the crazier rants by Gygax in the 80's, keep in mind that, at the time, he was going through a divorce and having his own company ripped out from under him.

Thanks!  That fills in some of the gaps.

Anyone know what month and/or day in 1973 TSR became a company? I'd love to get a jolt of unwarranted pride if it turned out to be October 23rd.

Quote from: StuartI'm assuming that what happened to Gary, D&D, and the various people and companies involved was all perfectly legal -- but the question is:  was it right?

Well, considering how Gary screwed over Arneson, one might call it a karmic balance.

I appreciate Gary's creation of the hobby and by all accounts he was a nice guy, but he was not "Saint Gary", he was a flawed human being like the rest of us.  And that includes the Blumes and even Williams.

And while the Blumes may have not been the creative force behind D&D, they were the economic force behind it.  They may have ultimately fumbled the ball, but they still were partly responsible for getting the game going in the first place.

Same thing with Williams.  In some ways, she's a robber-baron.  But by another POV, without her, TSR may have gone bankrupt far earlier.

My point here is that you have a bunch of actions taking place over many years by a collection of individuals who all have their good and bad points.  It can't really be simplified into a single, simplistic ethical question of "was that right?"  It's just not that cut and dry.

Okay... more details from the Wikipedia entry on TSR

QuoteTactical Studies Rules was formed in 1973 as a partnership between Gary Gygax and Don Kaye as a means to publish formally and sell the rules of Dungeons & Dragons, one of the first modern role-playing games. They first published Cavaliers and Roundheads, a miniature game, to start generating income for TSR. The partnership was subsequently joined by Brian Blume and (temporarily) by Dave Arneson. Blume was admitted to the partnership to fund publishing of D&D instead of waiting for Cavalier and Roundheads to generate enough revenue.[1] When Don Kaye died of a stroke in 1975, the Tactic Study Rules partnership was dissolved.

...

Brian Blume and Gary Gygax, the remaining owners, incorporated a new company, TSR Hobbies, Inc., of which Blume and his father, Melvin Blume, had the larger share. The former assets of the partnership were transferred to TSR Hobbies, Inc. Ownership of Melvin Blume's shares were later transferred to Kevin Blume. With the board of directors consisting of Kevin and Brian Blume plus Gygax, Gygax was primarily a figurehead president & CEO of the corporation with Brian Blume as President of creative affairs and Kevin as President, operations effect in 1981. In 1983, the company was split into four companies, TSR, Inc. (primary successor), TSR International, TSR Ventures and TSR Entertainment, Inc.

...

Gygax left for Hollywood to found TSR Entertainment, Inc. (later Dungeons & Dragons Entertainment Corp.), which attempted to license D&D products to movie and television executives. His work would eventually lead to only a single license for what later became the Dungeons & Dragons cartoon.[2] The Blumes were forced to leave after being accused of misusing corporate funds and accumulating large debts in the pursuit of acquisitions such as latchhook rug kits that were thought to be too broadly targeted.[3] Within a year of the ascension of the Blumes, the company was forced to post a net loss of 1.5 million US dollars, resulting in layoffs for approximately 75% of the staff. Some of these staff members went on to form other prominent game companies such as Pacesetter Games, Mayfair Games and to work with Coleco's video game division.

...

Gygax, who at that time owned only approximately 30% of the stock, requested that the Board of Directors remove the Blumes as a way of restoring financial health to the company. In an act many saw as retaliation, the Blumes sold their stock to Lorraine Williams.[4] Gygax tried to have the sale declared illegal; after that failed, Gygax sold his remaining stock to Williams and used the capital to form New Infinity Productions.

...

Williams was a financial planner who saw the potential for transforming the debt-plagued company into a highly profitable one. However, she disdained the gaming field, viewing herself as superior to gamers.[5][6] Williams implemented an internal policy under which playing games was forbidden at the company.[citation needed] This resulted in many products being released without being playtested (some were playtested "on the sly") and a large number of products being released that were incompatible with the existing game system.

Quote from: jgantsWell, considering how Gary screwed over Arneson, one might call it a karmic balance.

I'm curious.  How much did he really screw him?  I have no idea what kind of cut Arneson was getting as second author. Certainly some of the key early ideas were Arneson's but it appears that most of the writing work and most of the sweat of running the business was Gygax.  
 
I've read (on a forum - grain of salt) that one of the motivations behind the AD&D books was to be able to take Arneson out of the loop.

Quote from: StuartI'm assuming that what happened to Gary, D&D, and the various people and companies involved was all perfectly legal -- but the question is:  was it right?

Shrug. Before I tried to determine whether or not I thought what happened was right, I'd want an account I can trust. So much of what I've heard over the years varies from account to account that it's hard to know what actually happened...

Seanchai

Quote from: SeanchaiShrug. Before I tried to determine whether or not I thought what happened was right, I'd want an account I can trust. So much of what I've heard over the years varies from account to account that it's hard to know what actually happened...
 
Seanchai

It's also almost all recollection from decades later.

Quote from: jgantsSame thing with Williams.  In some ways, she's a robber-baron.  But by another POV, without her, TSR may have gone bankrupt far earlier.

I'm sorry, but I don't have much sympathy for Williams. If TSR had gone bankrupt in 1985, D&D would have found a buyer - because, just like when TSR did go bankrupt, it was the hottest game on the market. Heck, in 1985 there were probably more game companies around who could afford to buy it up.

As it is, Williams has said herself that she was not interested in the gaming angle, and only cared about developing intellectual properties (like the novel line). Did you know that she was so irritated by gaming she refused to allow playtesting on company time?

I'm sure there are a few people who could potentially have done a worse job than Williams of managing D&D, but by the same token I can think of companies who could have done much better.

Quote from: jgantsMy point here is that you have a bunch of actions taking place over many years by a collection of individuals who all have their good and bad points.  It can't really be simplified into a single, simplistic ethical question of "was that right?"  It's just not that cut and dry.

I agree.  Legally it might be cut and dry, but that's entirely dependent on the legal system of the country you live in.  It's not the same thing as ethically "right".

I'm also more interested in "How Gary Gygax Lost D&D" than "How Gary Gygax Lost TSR".

For example:

QuoteIn Civil Code countries all moral rights and some economic rights are granted exclusively to flesh and blood individuals, or so-called 'natural persons'. Such creator's rights, to quote the Tunis Model Law, are: "perpetual, inalienable and imprescriptible". Furthermore, most "may not be transferred" to another individual (except as an heir) nor to a corporation.

Under that legal system (which I think may apply to Quebec) Gary would have lost the company -- but not the game he created.

Quote from: NicephorusI'm curious.  How much did he really screw him?  I have no idea what kind of cut Arneson was getting as second author. Certainly some of the key early ideas were Arneson's but it appears that most of the writing work and most of the sweat of running the business was Gygax.  
 
I've read (on a forum - grain of salt) that one of the motivations behind the AD&D books was to be able to take Arneson out of the loop.

I suspect that that list item is what Jeff is talking about. Attempting to manuever to get out of a prior deal. Although I haven't seen all the documents of Arneson vs Gygax and Gygax vs Arneson.

IMO in the end Gary lost control of of TSR, and therefore D&D, because:
1) divorce
2) the scraps he got in
3) he wasn't so much the astute businessman
4) his poor judge of character, maybe he didn't understand Williams or maybe he thought he could control Williams to beat off the Blumes? *shrug*
5) mostly though because he walked away, to LA; if you given up the reigns like that your heart isn't in it anyway, and you probably aren't the person for the job

Maybe things would have been different if he'd found a different partner after the death of Kaye. It is my understanding that Kaye's widow did sell to him but Gary got the Blumes to invest because of cash crunch ( and this is just a guess but probably a combination caused by growth and the drain of having to buy out the widow, assuming TSR didn't have life insurance policy on Kaye).

Quote from: blakkie5) mostly though because he walked away, to LA; if you given up the reigns like that your heart isn't in it anyway, and you probably aren't the person for the job

No he didn't walked away. What happened prior to LA was the first round of the Gygax-Blumes dispute. The Williams incident was round 2.

http://www.dragonsfoot.org/files/pdf/ODD09.pdf

QuoteAs it's written in your biography, from
1976 to 1983 you were President of
TSR Hobbies despite Brian and Melvin
Blume having the 65% and then the
70% of company's shares. Were the
relations between you and the Blumes
good or at least tolerable? Did they
give you directions about the
company's evolution and business
strategy or did you set them by
yourself?

Melvin Blume was Brian's father. He
purchased shares in the corporation.
Then, at Brian's insistence, I agreed that
Kevin, a younger brother of Brian then
managing the accounting and fulfilment
operations at TSR, be allowed to own
those shares. They were duly transferred
and then Kevin became a member of the
Board of Directors.
I have spoken earlier of the structure
that the Blumes imposed on TSR in 1981.
As another example of things before then,
late 1979 or early 1980, I issued some
instructions. When Brian heard what I had
ordered he shouted loudly for all to hear:
«I don't care what Gary said. I own
controlling interest in this company and it
will be done the way I say!». I should have
parted ways with TSR then and there, but
I still had a lot of loyalty to the company
and the vision upon which it had been
created. Anyway, from that point on, I had
little control, and in general what I desired
be done was ignored or the exact
opposite was put in place.

Quote from: estarNo he didn't walked away. What happened prior to LA was the first round of the Gygax-Blumes dispute. The Williams incident was round 2.

Oh to be sure he walked away from a situation that he didn't like. A crappy situation, and the divorce on top of it. And yeah, he eventually came back and went atomic in round 2 bringing in Williams.

I don't know exactly what happened but from everything I have read and heard for years, it seems like the typical story of unprepared amateurs making it big and things spiralling out of control as they reach success.

There seems to be a mix of ego clashes, personality changes, crappy management, bad legal counseling, plain laziness and several screw jobs by numerous parties involved.

I've seen that sort of stuff often when I worked in the music industry.