BooMT
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We've been discussing the state of Merlin on our travels; I was interested in my partners take on it as an MD for a thriving national company that has been through various sales/acquisition processes - whilst I have business operational knowledge, he knows far more about this on a larger scale than I! The conclusion we came to is that Merlin is absolutely showing the warning signs of a potentially unstable business based on the available data; With their unfavorable borrowing conditions, spending to get out of the position they are in would in itself be a huge risk, dependent on their available liquid CAPEX funding. What we also need to consider in regards to a 'spend your way out/invest' scenario is that shiny new attractions are somewhat blighted by the following: substantial increase (around 25-40% vs 5 years ago) in cost of raw materials & a decline in disposable income, leading to changed personal spending habits in the UK - perhaps meaning an elongated ROI payback period.
Normally, primary focus in this *assumed* business position (aside from any already live projects) would be, as discussed throughout the thread, on cost & efficiencies: head count reduction and asset sweating (often just running a business on as little as possible for as long as possible before considering disposals). In terms of sale, investors rarely invest in unstable businesses, preferentially businesses with stability & capacity for growth. The potential new Universal project would likely be a major red flag for investors also, however, the iconic status of some of Merlins UK portfolio could be an attractive opportunity to any potential investors or competitors (the latter usually buy struggling assets below market price).
I've said for some time now that I wouldn't be surprised if Merlin eventually disposed of Towers/midways and focused on its London cluster. Legoland is pretty popular, Chessington is receiving planned investment with a strong IP library and Thorpe could benefit from UGB tourism with some improvement. The seismic expansion Merlin had in a relatively small window of time was probably too ambitious, especially when they had to deal with big challenges such as 2016 and the Pandemic. I was working for the company during 2016-beyond, anyone else who was, may have also have felt the inevitable fall out in every corner of the company
It feels like they were juggling too many balls and started to drop them all one-by-one.
There is no denying that Merlin UK has been innovative or that it has some great, much loved assets. Yet, there is already night and day between our UK parks (with exception of my beloved Paultons which I will never accept ANY slander of
) and other European offerings in terms of quality, experience & operations, even the pride in which they deliver the product. With this and the presumed financial whirlpool they are currently navigating, I wouldn't want to be the one trying to plan the company out of it!
Normally, primary focus in this *assumed* business position (aside from any already live projects) would be, as discussed throughout the thread, on cost & efficiencies: head count reduction and asset sweating (often just running a business on as little as possible for as long as possible before considering disposals). In terms of sale, investors rarely invest in unstable businesses, preferentially businesses with stability & capacity for growth. The potential new Universal project would likely be a major red flag for investors also, however, the iconic status of some of Merlins UK portfolio could be an attractive opportunity to any potential investors or competitors (the latter usually buy struggling assets below market price).
I've said for some time now that I wouldn't be surprised if Merlin eventually disposed of Towers/midways and focused on its London cluster. Legoland is pretty popular, Chessington is receiving planned investment with a strong IP library and Thorpe could benefit from UGB tourism with some improvement. The seismic expansion Merlin had in a relatively small window of time was probably too ambitious, especially when they had to deal with big challenges such as 2016 and the Pandemic. I was working for the company during 2016-beyond, anyone else who was, may have also have felt the inevitable fall out in every corner of the company
It feels like they were juggling too many balls and started to drop them all one-by-one. There is no denying that Merlin UK has been innovative or that it has some great, much loved assets. Yet, there is already night and day between our UK parks (with exception of my beloved Paultons which I will never accept ANY slander of
) and other European offerings in terms of quality, experience & operations, even the pride in which they deliver the product. With this and the presumed financial whirlpool they are currently navigating, I wouldn't want to be the one trying to plan the company out of it!
