By 1996, TSR was experiencing numerous problems, as outlined by Shannon Appelcline: "CCGs were continuing to shrink the RPG industry. Distributors were going out of business. TSR had unbalanced their AD&D game through a series of lucrative supplements that ultimately hurt the long-time viability of the game. Meanwhile, they had developed so many settings – many of them popular and well-received – that they were both cannibalizing their only sales and discouraging players from picking up settings that might be gone in a few years. They may have been cannibalizing their own sales through excessive production of books or supplements too." David M. Ewalt, in his book Of Dice and Men, adds that Spellfire and Dragon Dice "were both expensive to produce, and neither sold very well".
Despite total sales of $40 million, TSR ended 1996 with little in cash reserves. When Random House returned an unexpectedly high percentage of unsold stock, including the year's inventory of unsold novels and sets of Dragon Dice, and charged a fee of several million dollars, TSR found itself in a cash crunch. With no cash, TSR was unable to pay their printing and shipping bills, and the logistics company that handled TSR's pre-press, printing, warehousing, and shipping refused to do any more work. Since the logistics company had the production plates for key products such as core D&D books, there was no means of printing or shipping core products to generate income or secure short-term financing. Despite high sales, the company was deep in debt and not profitable in large part due to returns. [...] TSR was threatened by lawsuits due to unpaid freelancers and missing royalties, but TSR made enough money from products already on the shelves to pay remaining staff through the first half of 1997. With no viable financial plan for TSR's survival, Lorraine Williams sold the company to Wizards of the Coast in 1997.
