Viewpoint: The Case of the Plush Dreams

It’s 1995 and you’re planning for the future. Maybe your dream is a comfortable retirement. Maybe it’s a college fund for your children. Maybe it’s something even more ambitious. While some turned their attention to real estate investments or Wall Street, others cast their lot with another surefire moneymaker: Beanie Babies.

As if made from a distilled essence of the insatiable desire for material novelty and unsustainable growth that defined the 1990s, Beanie Babies came from nowhere to capture the attention of Americans looking for easy money. But it didn’t exactly begin that way.

After a career as a salesman for another toy company, Ty Warner of Chicago went out on his own and in 1986, he started Ty Inc. By 1993, Ty had released the first Beanie Babies. They were a series of small plush animals that were filled a little more loosely than most of their competitors, making them easy to pose. Retailing for approximately $5.99, Beanie Babies began to gather a genuine, organic demand and sold well. They were seen as cute and affordable novelties. Ty Warner became a billionaire and a mixed history of philanthropy and felony tax evasion followed.

In the 1990s Ty Inc. had hit gold with Beanie Babies. Internet usage had just spread into homes across America. The company’s website began the truly novel practice of communicating directly with their audience, updating them on fresh models and brand news. Increasingly, the company began “retiring” new designs after a short production run. Demand quickly grew among collectors as these limited editions (some featuring random production errors or variations on their tags) began to be seen as having serious moneymaking potential in the future.

Plastic storage bins filled up with these small figures throughout the late 90s as families began to obsess over obtaining as many of the next model as a store would allow. Instead of toys to be played with, they had become PVC-filled incarnations of avarice, with ever growing theoretical values. Few seemed to stop and ask why this strange situation was happening. The Beanie Babies wave hit its ebb as the decade ended.

Twenty years later, we have found many insureds with attics and garages full of these plush menageries, from bears and bulls to crabs and unicorns. As fire or water losses come through, we have been called on to inventory these collections and determine their true replacement costs. More than perhaps any item we see, Beanie Babies are consistently overvalued by insureds.

This isn’t to say that Beanie Babies have no value. They do sell on the vintage market. It’s not even to say that there hasn’t been some appreciation over time from the original $5 to $10 retail cost. Sales at $50 to $100 are common for some varieties.

It is not unusual to see a single, ostensibly sought-after, Beanie Baby listed for sale on eBay, Etsy, or elsewhere for tens of thousands of dollars. What is nearly unheard of is a documented sale at these prices. Instead, a review of realized sales and auction results typically shows the subject model selling for pennies on the dollar. The extreme high price listings almost never result in a buyer finding a seller at the price offered. What they do result in, however, is a widespread misperception that a price being asked for on eBay is the same as an item’s value. This idea is commonly (and understandably) used to justify high claimed values for Beanie Babies. But if there is no record of a buyer ever agreeing to such a price; it is merely a seller’s aspiration.

Our research into the actual completed sales between buyer and seller, shows a market that has never truly materialized.

The Situation

Most recently, we received a claim for a small collection of Beanie Babies with a claimed value of tens of thousands of dollars. No photos, sources for the claimed value, or additional details of any kind were available to us. One purple platypus, one black and yellow fish, one green frog, one ladybug with 11 spots, and one teddy bear with a peace sign were the entirety of this collection.

Cracking the Case

These models were all readily available through the usual vintage retail sources. But most importantly, a long list of realized auction results and sales was available for our review. While this set of five Beanie Babies came to us with a claimed value of over $64,000, our research into documented sales showed that the actual vintage retail value of this collection was less than $1,000.

From an objective point of view, hundreds of dollars for a barely vintage handful of stuffed animals sounds incredible. But to many insureds, it is a disappointment.

Beanie Babies are still in production today. But now, they have a new purpose. They are used as toys.