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How long can parks survive with zero revenue?

WillPS

TS Member
So there's lots of talk out there currently about how long various airlines can survive with virtually no income stream. Apparently RyanAir could last 3 years, BA has until July but Virgin Atlantic is pretty much out of time.

We all know that Drayton Manor and Pleasure Beach have struggled in recent years, and both have come to rely heavily on hotel revenue. The only saving grace for both parks is that their land is owned outright and thus their biggest cost is staff, which has likely been reduced to 0 with the help of the furlough scheme. It's easy to imagine in both cases they are more useful to the banks alive than dead.

As I understand it, Merlin's parks are all leased (the Tussauds portfolio was sold and leased back almost immediately after it was acquired). How long can those leases be sustained? Is it possible that the leaseholders could foreclose, and if so where does that leave the hardware assets in the various parks?

Merlin declared £110m in cash and equivalents as of December 2018, down from £290m in December 2017. If I'm reading the document correctly their lease payments over that year were £107m. Some of those commitments will reduce in line with the drop in revenue - Blackpool's units in particular are leased on a revenue share basis. Can we expect Kirkbi/Blackstone to protect their investment with a further cash injection? Are both parties able to do such a thing?
 
Merlin still own Chessington outright but the leaseback is interesting in this situation, the cost increases yearly.

You wouldn’t expect any issues with Merlin. But as you say those smaller parks are the worry.
 
I think this is a worry for all business and parks including our regular Themeparks as well as our regular Zoo's. See my post here https://towersstreet.com/talk/threads/m-ds-even-longshots-can-be-transformed.3864/page-3

This crisis is also affecting the charities too.

The only business that are doing well from this is the supermarkets, hand sanitises and loo rolls

I just hope that this country, and all the business including our beloved theme parks come out the other end unscathed.
 
Merlin still own Chessington outright but the leaseback is interesting in this situation, the cost increases yearly.

You wouldn’t expect any issues with Merlin. But as you say those smaller parks are the worry.
Not necessarily true. A small park that financially prepared itself for such a situatuion might be in a stronger position than a chain with a lot more staff and more sites to maintain. Just look at Six Flags in the 90s, they were a big company making lots of investments but they also had a lot of underperforming sites that rapidly pulled down the rest of the company.
 
I think this is a worry for all business and parks including our regular Themeparks as well as our regular Zoo's. See my post here https://towersstreet.com/talk/threads/m-ds-even-longshots-can-be-transformed.3864/page-3

This crisis is also affecting the charities too.

The only business that are doing well from this is the supermarkets, hand sanitises and loo rolls

I just hope that this country, and all the business including our beloved theme parks come out the other end unscathed.
It's important to note that the failure of a business does not necessarily mean the end of a park, as Fantasy Island can happily prove...
 
There are always smaller revenue streams like online shops and monetised YouTube channels. I'd be interested to know how much some parks and resorts make from those, with some likely doing much better than others.
 
The business, that will survive, will be the ones that adapt to the crisis, there are some business that have change tact to allow them to continue to make money, even if they have completely diverse away from their original business, to come up with new venture ideas that will help the community in these dark days

Don't forget that Chessington has open it car park to testing, I'm sure that they are renting the car park out to the government
 
There are always smaller revenue streams like online shops and monetised YouTube channels. I'd be interested to know how much some parks and resorts make from those, with some likely doing much better than others.
I would imagine such revenue streams would be negligible compared to other standard streams for these parks.

Don't forget that Chessington has open it car park to testing, I'm sure that they are renting the car park out to the government
I could be wrong here, but I'd honestly be very, very surprised (shocked) if Chessington were charging for the use of their car park. In fact I'd be surprised if they got a choice in the matter at all - of course not that they'd ever have said no, and the inadvertent good publicity is a bonus.
 
Struggling to fill the schedules...

We’ve already got a replay of Wimbledon vs. Ipswich from 1994 to look forward to on Match of the Day.
 
Tayto Park recently said in an interview they could cover themselves for at least one year with the government's support scheme.

The owner of Tayto Park hopes that the theme park will reopen in August - but fears that it may not until next April due to the coronavirus outbreak.
Prior to the Covid-19 emergency, Tayto Park owner Raymond Coyle had pencilled in this Saturday for the reopening of the park, which generates around €19m in revenues per annum and attracts over 500,000 visitors.
Mr Coyle said in an interview that he hoped that the park may be in a position to reopen in August but conceded that it may now be next April.

He said Tayto Park has already stalled the recruitment of 360 seasonal workers for the park's peak summer months.
Mr Coyle said that he was not qualified to say when the park would reopen.

"We will have to be guided by the HSE, Government and the developments around the coronavirus," he said.
Tayto Park employs 78 year-round workers who are engaged in feeding the animals there, maintenance of the rides and attractions, and office work.
Mr Coyle said that workforce will remain in place.

"We didn't have capital expenditure this winter which was a great help," he said. "We have money to cover ourselves for one year, provided that we can access the Government support scheme in place for company employees.

"What the Government is proposing to put in place is very fair."
https://www.independent.ie/business...ng-but-fears-closure-until-2021-39076724.html
 
The telegraph have an article today (behind paywall) that talks about how Merlin are struggling for cash.
 
The telegraph have an article today (behind paywall) that talks about how Merlin are struggling for cash.

https://www.telegraph.co.uk/busines...r-merlin-forced-seek-cash-closes-attractions/

Madame Tussauds and Alton Towers owner Merlin Entertainments is under pressure to source new capital after the theme park operator closed its sites and delayed the opening of Legoland New York.

Interest charges and operating costs will mean the company – which was taken private last year by a constorium including Blacksone and the billionaire family behind Lego in a £6bn deal – will burn through a considerable amount of cash until parks and attractions reopen, analysts said.

Merlin said it was “engaging with governments to utilise the support packages being put in place”.

Blackstone, CPPIB and Kirkbi, the investment arm of the Kirk Kristiansen family, declined to comment.

Merlin, which was due to open the doors to Legoland New York in July, followed by Legoland Korea in 2020, was expected to generate £300m of operating cash flow before the outbreak of the coronavirus pandemic.

The brand-new parks faced opening costs of around £300m over the next two years on top of £180m needed for the maintenance of Merlin’s 124 existing sites, according to ratings agency Moody’s.

Merlin reported a 3.6pc increase in revenues of £1.7bn last year and attracted around 67 million visitors.

The group has temporarily shut down its other locations, including Chessington World of Adventures, the London Eye, Thorpe Park, Peppa Pig World of Play and Sea Life.
 
Having thought about it a bit, I very much doubt the Kirk Kristiansen family would let their £3bn investment sink over £200-300m in cash flow. I expect they or Blackstone will inject the cash needed to survive.
 
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