Speculator Stashes Cartoon Warehouse

Millions of Saturday morning television cartoon images--super heroes, extraterrestrials, talking animals and characters from traditional folk tales--are tightly packed into numbered cardboard boxes in a nondescript Woodland Hills warehouse next to a railroad track.

One-dimensional, brightly colored paintings on acetate, they depict such well-known characters as the Lone Ranger, Lassie, Tarzan, Pinocchio and Flash Gordon, as well as characters familiar only to cartoon-addicted children. For much of the 80-year history of animation, such paintings--known as cels, because in the early days of animation they were done on celluloid--have been considered valueless scrap, mere raw material from which animated films were made.

Take Over Storage

In fact, Filmation Associates, the Woodland Hills animation company that created many of these cels, was on the verge of destroying them last year when Herman Rush came along. Rush, a former top television marketing executive, agreed to take over storage of the cels, and his company offered to pay Filmation a royalty in return for the right to sell them.

Royal Animated Art of Burbank, owned by Rush and a partner, has acquired rights from other studios as well. It can market nearly 7 million cels--which are stored in warehouses in Japan and Korea, in addition to Woodland Hills--and controls what he said is the world’s largest inventory of animated art.

Royal’s main competitor as a large independent distributor of animation art is Linda Jones, daughter of Chuck Jones, who helped develop such Warner Bros. cartoon characters as Bugs Bunny and Wile E. Coyote. Royal is the sole legitimate source of cels from 43 television series and animated movies depicting 132 principal characters. Although others may possess cels from those series, only Royal has acquired the legal right to sell them.

The original cost of creating the cels, according to Rush, was nearly $200 million. The resale value of even the fraction of the cels considered marketable, he is hoping, could be that much or more.

Wall Decoration?

But whether Rush can find a large enough market for his holdings is a matter of sharp debate. Clearly, to be successful, Rush must reach far beyond the small circle of serious collectors and speculators. Dealers and galleries specializing in animated art are divided on whether a sufficient number of buyers will be willing to pay hundreds of dollars for art that may become decoration for their children’s walls rather than a good investment.

“I believe there is a multimillion-dollar market here, but I have to find a route out to the marketplace,” said Rush, former president of Coca-Cola Television. To do that, he is targeting large galleries but also selling to gift stores and hobby shops, two outlets heretofore untried for animation art. Recently he also arranged for dealers to sell his cels in the United Kingdom.

Early, rare animated art, mostly from Walt Disney Co., is unquestionably soaring in value, doubling in price every six months for the past two years. But the value of recent animation cels, particularly from cartoons featuring less well-known characters, remains largely untested.

“I think there is a mass market for art today in the U.S., if not the world, and I think animated art falls into that category,” Rush said. “Time will tell if I’m right.”

But Stuart Reisbord of Wallingford, Pa., one of the nation’s largest and most respected collectors and dealers of animated art, is skeptical.

“It’s much harder to sell to the masses,” he said of Rush’s strategy. “It’s much harder to sell something for $200 to $300 than it is to sell something for $20,000 to $30,000.”

Reisbord said buyers with less money to spend would rather purchase cels from recent Disney movies and cartoons than cels from a less well-known company such as Filmation. In fact, he said, his gallery has virtually stopped selling Filmation cels.

“There is an awful lot of that art around and . . . the vast quantities might make it harder to sell,” Reisbord said. “Everything will depend on the price he’s going to ask.”

Record Purchase

The top price ever paid for a piece of animated art soared in May to $286,000 for a black-and-white cel from a 1934 Disney film, “The Orphan’s Benefit,” at Christie’s East auction house in New York. That price was five times the record set a year earlier.

But the price of a cel from a broad range of cartoons--such as “The Flintstones,” “The Jetsons,” “Yogi Bear” and most Warner Bros. cartoons--is increasing rapidly as well, although it still is less than $1,000.

Harry Kleiman, a Studio City dealer credited with helping establish a West Coast market for animation art, said all cels will eventually go up in value. But how fast and how much is unknown. “When this stupid market started, Hanna Barbera cels were going for a dollar or two,” he said, referring to the famous producer of such shows as “The Flintstones.” “Now they are $100 or $150. The only problem is that a new cel is going to cost $100 or $150, and where is it going to go from there?”

Kleiman said many of the characters represented by Rush--including the Archies, Fat Albert and the Cosby Kids, Ghostbusters and others--are overpriced, given present demand. Others agreed, but said that demand--and the cels’ value--may eventually increase dramatically, especially if the number of collectors continues to build and the present supply of older cels is snapped up.

Indeed, publicity about the high prices brought by a few cels--including a selection of 560 from the 1988 “Adventures of Roger Rabbit” auctioned in June for $1.6 million, nearly twice pre-sale expectations--is drawing new enthusiasts to the art form.

‘Gold Mine’

The June sale of Roger Rabbit cels amazed some collectors. Jerry Muller, a longtime collector based in Costa Mesa, said: “That was one film’s cels that were cranked out a year or two ago, and not all of the cels were the best. If that is any indication of where the market for recent animation art is going, then Herman is sitting on a gold mine.”

The circulation of Animation Magazine, a 1-year-old Los Angeles publication that covers the animation art market, already has reached 20,000 and is increasing rapidly, editors said. Christie’s recently became the first art auction house to establish an animation art department, and four auctions of cartoon cels are planned for this year. Christie’s top animation art buyer will be in Los Angeles for a week in August to appraise older cels.

The higher prices are drawing valuable cels out of storage in basements and garages. Several dealers said former animators frequently have large caches of their work, with or without a studio’s permission. “A lot of the time, these cels were going to be thrown away,” said Arnold Kowan, a dealer who works out of his home in Van Nuys. “I try to find these people.”

Kowan said he tries to be sure that people from whom he buys cels actually own then. But he and a number of dealers across the country failed to detect that numerous cels they purchased last year and this year probably had been stolen from a Warner Bros. warehouse in Toluca Lake.

Anonymous Tip

An anonymous letter received by the Burbank Police Department in April, 1988, tipped off Warner Bros. that several boxes of cels and drawings may have been taken from the warehouse. A studio investigation discovered that cels worth an estimated $275,000 had disappeared. Disney officials believe that cels worth $200,000 were taken from a warehouse in Glendale.

In February, FBI agents and Burbank police raided galleries and dealers’ homes in Los Angeles, Studio City and Van Nuys--including Kowan’s--and seized hundreds of cels featuring such characters as Bugs Bunny, Foghorn Leghorn, Porky Pig and even a few forged cels of Disney’s Roger Rabbit. Cels were also seized from collectors in Virginia and were believed to have been sold in Boston, New York, Atlanta, Guam and Europe.

Federal authorities are investigating whether at least one San Fernando Valley dealer engaged in interstate commerce in stolen property.

Determining who owns cels is but one hurdle facing the novice collector. Cels are easily faked, dealers said. And even legitimate production cels--those actually used to make an animated film--may be worthless if they only contain partial images.

Because Rush deals almost solely in recent cels obtained from their producers, he is able to certify to purchasers that he has the legal right to sell them. That approach, Rush believes, legitimizes a market that has thrived on underground sources of cels slipped out of studios surreptitiously.

Guarantees Downplayed

Several dealers said serious collectors do not need such assurances. They know whether older cels are legitimate. And they usually do not fear that a studio will try to reclaim ownership of cels taken by animators or given or thrown away by studios many years ago.

Recent cels, however, have been much more closely guarded. And, dealers said, that is where Rush’s completely aboveboard approach is already paying dividends.

According to several dealers, Rush’s aggressive enforcement of his legal rights to be the sole source of cels depicting certain characters is having an impact on the market. Kowan said he stopped selling cels from DIC Enterprises, a large studio based in Burbank that markets its cels through Rush, after receiving a letter from Rush threatening to sue him. Others agreed that Rush has also succeeded in becoming the sole source of Filmation cels.

“I’m all for what Herman is doing and ultimately the market . . . will have to be 100% legitimate,” Muller said. “But there are always going to be gray areas because most of this stuff has never been officially released.”

To distinguish his company from speculators and underground dealers, Rush said he will not offer cels to galleries that market cels from unofficial sources. But Kleiman, the Studio City dealer, was scornful. “He should be promoting the cels on their . . . quality, rather than trying to scare people with the certificates,” he said.

Eventually, said Leonard Surico, a downtown Los Angeles dealer, the underground sources of cels are going to dry up. And when they do, Rush will be in a good position.

“I think what Herman is doing is the future,” Surico said. “It’s a good business move, if he can hold on long enough.”