Is it over for MMM?

[jon81uk]

This.

If closing MMM means that the park will work with outside companies that will bring fresh new ideas and not just fall back on the old relliance on shipping containers and/or quasi-millitaristic themes then that's not a bad thing at all. Let's see what a different set of minds and eyes can come up with.

I don't think closing Studios North will make any difference as it will be someone else creating the theme and then studios just manufacture what they were told to. They wouldn't decide to use a milatary theme, but they might decide and produce what props convey that theme.

As for the arguments of not making a difference whether projects are outsourced or delivered in house, it’s totally theoretical. If you pay the right amount to the right company, you can of course deliver top quality themed entertainment. Is that what Merlin are doing here? I don’t think so.

I’ll refer you to a direct quote from Merlin in attempting to justify this decision:

“Outsourcing theming production fits with our global strategy - we don’t plan to make it a core area of expertise”.

I think their core area of experitise at MMM will be waxwork production and Lego figure production. In general no one else needs those so they have to produce them in-house, especially the Tussauds waxworks. But themed props for theme parks have multiple other manufacturers and skill sets. As you say if you pay the right amount to the right company they will deliver, but at present studios north aren't the right company as they don't have the machinery required.

 

[owenstreet7]

Seems like they are readying a sale / breakup of assets
Keep the Lego operations sell the rest ?

I'm not confident that Merlin would seek a sale of the theme parks considering their money spinner is the passes.

I'm sure a big chunk of their Annual Passholders will transfer over to the theme parks if they got sold off. I don't think many people buy those annual passes only to go to the midways.

I'm not sure who'd take them on either as each have their own expansion challenges. Alton and Chessington have restrictions on height and noise, Alton is in the middle of nowhere and Thorpe Park are surrounded by a lake which would need infilling to expand.

If Six Flags was to take on Thorpe Park hypothetically, it would be a big investment to bring in the family areas that they have branded to Looney Tunes and DC and offer something to all audiences which they typically aim for.

Merlin have their parks defined for their audiences and seem happy to keep them ticking. Alton Towers for everyone, Chessington for families and Thorpe Park for the thrill seekers.

 

[karl.stubbs]

Problem is, apart from some nonsense private equity who’ll buy it and run it right?

It needs to be privately owned and be able to plan for the long term. Like tussauds used to do.

They’d want to buy back the land and get control of the lot.

I’d rather universal buy Alton, Thorpe and Chessington rather than build a new park.

Hope they spin off Tussauds Group so that Towers is run by them and maybe get some of the original staff involved. The ownership is a mess though as Merlin don't own Towers they just run it.

In 2007, Nick Leslau and his investment firm Prestbury purchased the resort and park, but leased it back to Merlin Entertainments to operate.

Sent from my Pixel 6 Pro using Tapatalk

 

[Islander]

Hope they spin off Tussauds Group so that Towers is run by them and maybe get some of the original staff involved. The ownership is a mess though as Merlin don't own Towers they just run it.

In 2007, Nick Leslau and his investment firm Prestbury purchased the resort and park, but leased it back to Merlin Entertainments to operate.

Sent from my Pixel 6 Pro using Tapatalk

The land is owned by Nick Leslau, the park/resort is owned by Merlin.

 

[GooseOnTheLoose]

The land is owned by Nick Leslau, the park/resort is owned by Merlin.

The land is owned by LondonMetric, after its successful merger and absorption of LXi REIT earlier this year.

Nick Leslau's vehicle, Secure Income Reit, merged with LXi in 2022 to form LXi REIT.

LXi REIT plc was a closed-ended investment company with its IPO in February 2017. In July 2022, LXi REIT completed a merger with Secure Income REIT plc to create a leading UK sector-diversified, long income UK-REIT.

In March 2024, LXi REIT plc merged with LondonMetric Property Plc. LXi REIT shareholders received LondonMetric shares as consideration and further information on LondonMetric can be found at www.londonmetric.com

Source: - https://www.lxireit.com/home-2

Although Nick Leslau is a Non-Executive Director of LondonMetric, and is on the Board of Directors, it's a publicly listed company of which he doesn't have majority (or even minority) control.

Nick Leslau doesn't own the land.

Alton Towers landlord LondonMetric can pep up your profits

Nemesis consistently ranks as one of the most exciting rollercoasters in the world - and its landlord owns everything from theme parks to warehouses.

www.thisismoney.co.uk

 

[Islander]

The land is owned by LondonMetric, after its successful merger and absorption of LXi REIT earlier this year.

Nick Leslau's vehicle, Secure Income Reit, merged with LXi in 2022 to form LXi REIT.

Source: - https://www.lxireit.com/home-2

Although Nick Leslau is a Non-Executive Director of LondonMetric, and is on the Board of Directors, it's a publicly listed company of which he doesn't have majority (or even minority) control.

Nick Leslau doesn't own the land.

Alton Towers landlord LondonMetric can pep up your profits

Nemesis consistently ranks as one of the most exciting rollercoasters in the world - and its landlord owns everything from theme parks to warehouses.

www.thisismoney.co.uk

I stand corrected - good to know.

My point anyway was more about how Merlin own Alton Towers as an entity/Resort (they aren’t merely operators); it’s the land itself that’s not owned by them.

 

[Ash]

Awful long term business decision.

Losing a long term asset.

It’s not a funfair so dependent on the agreement they can’t exactly pack up and leave.

What have they put back in for the sale? Have they reinvested all that money?

Now they have another mouth to feed that will want their percentage, taking possible investment money away in the future.

There’s no way the place couldn’t raise capital if it needed too given its assets. It’s just woeful.

 

[BarryZola]

According to this article from 2007, sold for £622 million with a view to paying off debts and for investment. They'd only just bought the four sites in the article for £1 billion before selling the property for the price listed. Probably rewarded themselves with some nice bonuses along the way, as you do. Basically just playing a game of can we make enough money each year to pay the rent and operating costs, plus have a little bit of profit to keep for ourselves. Maybe struggled to do that at the likes of Towers this year if later season cut-backs are anything to go by.

BBC NEWS | Business | Alton Towers sold in £622m deal

 

[jon81uk]

What have they put back in for the sale? Have they reinvested all that money?

It gave Blackstone/Merlin the money they needed to buy Tussauds.

 

[Islander]

It gave Blackstone/Merlin the money they needed to buy Tussauds.

That can’t be right surely, as they’ll have had to own Tussauds before they could sell its land

 

[jon81uk]

That can’t be right surely, as they’ll have had to own Tussauds before they could sell its land

They got into debt to buy it and then used the land sale to pay off some of the debt. But without the sale, I expect the group was too far into debt.

 

[Ash]

They got into debt to buy it and then used the land sale to pay off some of the debt. But without the sale, I expect the group was too far into debt.

Indeed, similar to how the glaziers bought Man Utd.

Still seems an odd long term decision, but it is what it is. Hopefully if they ever sold the lot somebody would buy the whole shooting match.

 

[GooseOnTheLoose]

That can’t be right surely, as they’ll have had to own Tussauds before they could sell its land

This is exactly how leveraged buyouts work and it's a very common practice.

Leveraged buyout - Wikipedia

en.m.wikipedia.org

You take a loan out to purchase the company you want to acquire, and you leverage it against the assets you're acquiring. Once you've completed the purchase, you then sell off assets from the company you've bought to fund the purchase.

It's a classic Blackstone move.

If the sale collapses, you just pay back the loan. It won't have accrued much interest by then, so nothing ventured, nothing gained.

 

[Benjsh]

A business in decline.

Sent from my SM-G991B using Tapatalk

It's an industry in decline not just a business. Parks all over the world are experiencing difficulties with rising running costs and the battle for customers who are struggling to pay bills let alone pay for expensive days out.

 

[venny]

I’m not sure you can label the entire industry as in decline.

Some successful parks are seeing record attendances as a result of the excellent product they are providing. Efteling are actually trying to argue that their visitor numbers should be counted in a different way such that they comply with local authority limits. Europa continue to have bumper seasons.

Merlin (specifically Alton Towers) are not in decline primarily because of the surrounding market, their RTPs are in decline because of the decisions they are making.

 

[Dave]

There are certainly headwinds at the moment, notably cost of living and what has been a bad year weather wise but that’s not the core problem.

If they had a more long term strategy (5 year budget cycles) then the parks would likely be a lot better off. This year by year short termism is the root of Merlins problems and it was hoped Kirkby would have had a longer term strategy but I suspect Blackstones continued involvement is not allowing any sort of long term business planning to occur. They always want a return on investment and they want it quickly.

 

[QTXAdsy]

There are certainly headwinds at the moment, notably cost of living and what has been a bad year weather wise but that’s not the core problem.

If they had a more long term strategy (5 year budget cycles) then the parks would likely be a lot better off. This year by year short termism is the root of Merlins problems and it was hoped Kirkby would have had a longer term strategy but I suspect Blackstones continued involvement is not allowing any sort of long term business planning to occur. They always want a return on investment and they want it quickly.

The lack of a long term plan for not just Towers but perhaps for Chessington and Thorpe is damning and has really made those parks fail to reach their potential.

Why we look back on the 90s fondly for Towers is that from Tussauds acquiring the park to perhaps the building of the ATH is that there had always been a long term plan for the park there which I feel were it not for the Thorpe buy out would have carried on.

Though TBF, Merlin did have a LTDP a few years ago which was scrapped following the Smiler incident and had the latter never happened it would have been interesting to see if they would have committed to such a long term plan. Alas, they are literally paying the consequences of their actions in which they can only try and fix things on park which honestly should have been done years ago.

 

[Dave]

The lack of a long term plan for not just Towers but perhaps for Chessington and Thorpe is damning and has really made those parks fail to reach their potential.

Why we look back on the 90s fondly for Towers is that from Tussauds acquiring the park to perhaps the building of the ATH is that there had always been a long term plan for the park there which I feel were it not for the Thorpe buy out would have carried on.

Though TBF, Merlin did have a LTDP a few years ago which was scrapped following the Smiler incident and had the latter never happened it would have been interesting to see if they would have committed to such a long term plan. Alas, they are literally paying the consequences of their actions in which they can only try and fix things on park which honestly should have been done years ago.

I was more meaning operating budget, if it was a five year cycle then one bad year like this year wouldn’t cause the sort of panic we see these days.

Capex planning is average at Merlin, some stuff has been well done, other stuff not so much.

 

[Squiggs]

The lack of a long term plan for not just Towers but perhaps for Chessington and Thorpe is damning and has really made those parks fail to reach their potential.

Why we look back on the 90s fondly for Towers is that from Tussauds acquiring the park to perhaps the building of the ATH is that there had always been a long term plan for the park there which I feel were it not for the Thorpe buy out would have carried on.

Though TBF, Merlin did have a LTDP a few years ago which was scrapped following the Smiler incident and had the latter never happened it would have been interesting to see if they would have committed to such a long term plan. Alas, they are literally paying the consequences of their actions in which they can only try and fix things on park which honestly should have been done years ago.

The LTDP wasn't scrapped. The majority of it was achieved, but maybe over a slightly longer period than originally intended.

A couple of the more outlandish elements of the plan didn't come to fruition, but that's to be expected with these sorts of plans.

 

[Ben Anderson]

It's also worth noting Merlin was on the stock exchange operating as a public company a few years back, and that didn't go too well.

Their whole business just seems a mess. Servicing debt, sell-off of the parks, the buyouts after the public company disaster. It's just a continuation of more complications and more costs.

Looking at the facts, attendance doesn't seem to be a major issue in the UK Merlin parks overall over the last few years (I understand some of the new legal and abroad have not performed well). It looks like food and fast-track upgrades will dip through as everyone cuts back(and people are getting fed up with paying £80 to feed their family some prison food).

I personally think where these businesses try and do all this fancy stuff like private equity deals, selling off assets, etc. It all comes back to bite you in the end. No one is going to buy Alton Towers land without thinking they can make a pretty penny in the long term. We have seen the debt-fuelled disaster buyout of Asda by Eurogarages. I've never seen an example of this type of business tactic that goes well in the long term. You can make some nice money in the short term, but if you're trying to leave a legacy and run a long-term business, this strategy seems to have a 99% failure rate.

I still believe you can't beat a business that's ran efficiently, takes sensible risk, has a long term plan and leaves some money back for a rainy day.

Closing MMM doesnt surprise me. The latest government budget will just add fuel to the fire on that one.

Also, in terms of general staffing, no one will open on quiet days, as it won't be worth staffing. That applies to everyone including thene parks, restaurants and independent shops. I wouldn't bother opening on a Monday/Tuesday anymore if a ran a restruant.

Merlin must have so many consultants and accountants just to keep their complicated machine of a business rolling. It's just a total mess now. You need to sweat the small details, to get the big results. I don't know how you could even start to do that with their current setup.