Merlin Entertainments: General Discussion

[GooseOnTheLoose]

I suspect this is nothing but Merlin changed their T&C to accommodate the sale of parks. This tweet makes it look like it’s only Alton Towers, presumably as bait but each of the parks respectively has it.


From: https://x.com/coasterclub/status/1990903250673971468

They changed their terms and conditions, for Annual Passes, to reflect the potential sale or non-operation of their attractions in August 2024. I would have expected the TOS for the parks / attractions to be updated at the same time, and that this is old news being repackaged for bait (as you've already said).

An email notifying Merlin Annual Pass / Membership holders went out today. It sets out changes to their terms & conditions, effective from the start of September, specifically around attraction availability. Upon first glance nothing much seems to have changed, and everything appears standard. Comparing it with the current terms & conditions, available on the pass holder website, reveals a little more. The biggest change is below:

"temporary or permanent closure of Attractions, attractions ceasing to be owned or controlled by Merlin"​

​

Merlin have always had the right to vary the attraction opening times, and could even close or remove rides, events or facilities from the attractions (so it can't be a response to the Alton Towers opening hours debacle). Merlin previously hadn't reserved the right to remove entire attractions from the MAP scheme altogether though, and now they do.

​

Is this a reactionary measure to something, is this a precautionary measure just incase something does get removed at some point in the future, or is this a more immediate change coming after the season close? Feel free to speculate away!

In typical Merlin fashion, and attention to detail, they've also given the wrong clause number for the Membership reference changes. The clause in the current terms, covering admission and access, is 26. The email says that the clause is 27, which actually covers discounted tickets.

Email with Terms & Conditions effective from 31st August 2024:


Terms & Conditions taken from Merlin Annual Pass website, 1st August 2024:

Speaking of Alton Towers closure bait, we've already had that discussion and predicted it in relation to this clause too.

Could we now start a rumour that the Towers is closing in six months please.

Is it March yet?

 

[rob666]

I was, of course, just shouting at the clouds, again.

But me and goosey...two sources...must be true.

 

[havaska]

Just seems to be a sensible addition to the legal blurb to give them future flexibility.

But I do wonder who they could sell to. Wishful thinking or better the devil you know?

 

[owenstreet7]

Just seems to be a sensible addition to the legal blurb to give them future flexibility.

But I do wonder who they could sell to. Wishful thinking or better the devil you know?

My biggest worry is Six Flags to be honest

I'd also imagine the people who own Walibi as well.

Although I'm sure that it is more likely that Merlin will keep hold of their parks.

 

[Leigh]

My biggest worry is Six Flags to be honest

I'd also imagine the people who own Walibi as well.

Although I'm sure that it is more likely that Merlin will keep hold of their parks.

Six Flags won’t be buying anything in their current financial state. Also they attempted Europe once before which didn’t exactly go well…

 

[rob666]

But I do wonder who they could sell to.

I heard Mr Beast.
Twice.

 

[Matt N]

Has anyone else noticed that they’ve called it “Alton Towers Resorts” throughout the T&Cs? I think that might be a good candidate for the Merlin typos thread!

 

[Poisson]

Parques Reunidos and CdA would be the only parties I imagine outside of someone buying it to run solo.

I am expecting it to stay Merlin and this is just them tidying Ts&Cs

 

[Squiggs]

It's an interesting question though, because we did have these discussions a couple of years ago when they changed the MAP T&Cs.... and ultimately it did lead to them starting to (or attempting to) offload attractions.

So whilst this could just be 'tidying up', there is precendent that it could indicate something more.

 

[Steve74]

One for you to digest, pick apart and summarise for us in the only way a goose that's on the loose can do, @GooseOnTheLoose


From: https://youtu.be/a59aMCj1-G8?si=SmUoNt6gohnlI-oD

 

[GooseOnTheLoose]

One for you to digest, pick apart and summarise for us in the only way a goose that's on the loose can do, @GooseOnTheLoose


From: https://youtu.be/a59aMCj1-G8?si=SmUoNt6gohnlI-oD

I have sacrificed 37 minutes of my life, which I will never get back, to listen to a man read a Wikipedia page and misunderstand a balance sheet, so that you don't have to. I have even transcribed it, I am that committed (and sad).

The confidence with which The Relevant Media® (throwback for @Bowser) delivers misinformation never ceases to amaze me.

I'm happy to disassemble this "deep dive" before the misinformation becomes forum canon. I've broken it down into sections, making full use of the forum formatting options AND provided a TLDR for @rob666.

1. The "Refinancing is Bad" Fallacy​

Merlin actually secured new funding through debt refinancing in February 2024. Again, I'm not a financial expert, but when you hear the words "debt refinancing," you know there's definitely some problems going on right there.

No, Shawn. Refinancing is standard corporate treasury management. It is what every major company with debt does when bonds mature or when they want to secure better interest rates. It does not mean a company is in trouble; it means they are managing their long-term liabilities. If I remortgage my nest to get a better fixed rate, am I in financial ruin? No. I am being prudent.

2. The "Loss" Misunderstanding​

He cites the pre-tax loss of £492 million as evidence that the company is haemorrhaging cash. As I have explained in this thread previously, this loss was primarily driven by non-cash impairment charges.

Merlin wrote down the value of LEGOLAND New York and LEGOLAND Korea because they aren't performing as well as predicted. This is an accounting adjustment. It is a paper loss. It does not mean that £492 million of actual cash disappeared from the bank account. The operational cash flow (the actual money coming in from tickets and burgers) remains positive. Conflating an impairment charge with "running out of money" is economically illiterate.

3. The "Robbing Peter to Pay Paul" Myth​

that money was starting from all these parks was starting to get spent on other expansions instead of investing in them UK parks.

This is the classic enthusiast fallacy. "If they hadn't built Legoland Korea, we'd have a new coaster at Alton Towers."

CapEx budgets are allocated based on growth potential. The UK market is mature; it has limited growth potential. The Asian and US markets are where the growth is. Investors (Kirkbi and Blackstone) provide capital specifically for growth projects. You do not secure billions in financing to re-tarmac a car park in Staffordshire, you secure it to open new markets.

The UK parks were not "underinvested" because the money was stolen for China. They received the level of investment appropriate for a mature, low growth asset.

4. The "Selling Alton Towers" Nonsense​

There's been a lot of talks about, you know, could Alton Towers get sold off... especially with the amount of lack of investment in recent years...

"There's been a lot of talk" because you (and other vloggers) keep starting the talk, Shawn.

All together now... Merlin does not own the land Alton Towers sits on. They sold the freehold years ago to LXi REIT (now LondonMetric). They own the ride hardware and hold a lease to operate the park. You cannot sell an asset you do not own. They could sell the lease (the right to operate it), but why would they sell their highest revenue generating UK theme park? It makes zero commercial sense. You don't sell the cash cow when you have debt to service. You milk it harder.

5. The S&P Downgrade​

He quotes the downgrade correctly but misunderstands the "insufficient liquidity" warning. Liquidity refers to access to cash and credit lines. Merlin has a Revolving Credit Facility (basically a massive overdraft) of hundreds of millions. The warning is a standard caveat about what could happen if they don't manage their debt pile, not a prediction that the bailiffs are coming next Tuesday.

TLDR​

A vlogger, who has never run anything larger than a YouTube channel, has confused standard corporate restructuring and accounting adjustments for an existential crisis.

Merlin is trimming fat, centralising operations and focussing on high yield investments. This is what grown up companies do. It is not a downfall. It is a pivot.

Now, if you'll excuse me, I need to attend The Feast of the Seven Salads.

🪿

 

[rob666]

Thank you, saved me wasting my time.
Pretty much given up vlog stuff for kittens and puppies for the winter.

 

[Steve74]

I have sacrificed 37 minutes of my life, which I will never get back, to listen to a man read a Wikipedia page and misunderstand a balance sheet, so that you don't have to. I have even transcribed it, I am that committed (and sad).

The confidence with which The Relevant Media® (throwback for @Bowser) delivers misinformation never ceases to amaze me.

I'm happy to disassemble this "deep dive" before the misinformation becomes forum canon. I've broken it down into sections, making full use of the forum formatting options AND provided a TLDR for @rob666.

1. The "Refinancing is Bad" Fallacy​

No, Shawn. Refinancing is standard corporate treasury management. It is what every major company with debt does when bonds mature or when they want to secure better interest rates. It does not mean a company is in trouble; it means they are managing their long-term liabilities. If I remortgage my nest to get a better fixed rate, am I in financial ruin? No. I am being prudent.

2. The "Loss" Misunderstanding​

He cites the pre-tax loss of £492 million as evidence that the company is haemorrhaging cash. As I have explained in this thread previously, this loss was primarily driven by non-cash impairment charges.

Merlin wrote down the value of LEGOLAND New York and LEGOLAND Korea because they aren't performing as well as predicted. This is an accounting adjustment. It is a paper loss. It does not mean that £492 million of actual cash disappeared from the bank account. The operational cash flow (the actual money coming in from tickets and burgers) remains positive. Conflating an impairment charge with "running out of money" is economically illiterate.

3. The "Robbing Peter to Pay Paul" Myth​

This is the classic enthusiast fallacy. "If they hadn't built Legoland Korea, we'd have a new coaster at Alton Towers."

CapEx budgets are allocated based on growth potential. The UK market is mature; it has limited growth potential. The Asian and US markets are where the growth is. Investors (Kirkbi and Blackstone) provide capital specifically for growth projects. You do not secure billions in financing to re-tarmac a car park in Staffordshire, you secure it to open new markets.

The UK parks were not "underinvested" because the money was stolen for China. They received the level of investment appropriate for a mature, low growth asset.

4. The "Selling Alton Towers" Nonsense​

"There's been a lot of talk" because you (and other vloggers) keep starting the talk, Shawn.

All together now... Merlin does not own the land Alton Towers sits on. They sold the freehold years ago to LXi REIT (now LondonMetric). They own the ride hardware and hold a lease to operate the park. You cannot sell an asset you do not own. They could sell the lease (the right to operate it), but why would they sell their highest revenue generating UK theme park? It makes zero commercial sense. You don't sell the cash cow when you have debt to service. You milk it harder.

5. The S&P Downgrade​

He quotes the downgrade correctly but misunderstands the "insufficient liquidity" warning. Liquidity refers to access to cash and credit lines. Merlin has a Revolving Credit Facility (basically a massive overdraft) of hundreds of millions. The warning is a standard caveat about what could happen if they don't manage their debt pile, not a prediction that the bailiffs are coming next Tuesday.

TLDR​

A vlogger, who has never run anything larger than a YouTube channel, has confused standard corporate restructuring and accounting adjustments for an existential crisis.

Merlin is trimming fat, centralising operations and focussing on high yield investments. This is what grown up companies do. It is not a downfall. It is a pivot.

Now, if you'll excuse me, I need to attend The Feast of the Seven Salads.

🪿

Now please post that as a comment everywhere he advertises this video!

Thank you Mr Goose, you did not disappoint!

 

[Hid]

I have sacrificed 37 minutes of my life, which I will never get back, to listen to a man read a Wikipedia page and misunderstand a balance sheet, so that you don't have to. I have even transcribed it, I am that committed (and sad).

The confidence with which The Relevant Media® (throwback for @Bowser) delivers misinformation never ceases to amaze me.

I'm happy to disassemble this "deep dive" before the misinformation becomes forum canon. I've broken it down into sections, making full use of the forum formatting options AND provided a TLDR for @rob666.

1. The "Refinancing is Bad" Fallacy​

No, Shawn. Refinancing is standard corporate treasury management. It is what every major company with debt does when bonds mature or when they want to secure better interest rates. It does not mean a company is in trouble; it means they are managing their long-term liabilities. If I remortgage my nest to get a better fixed rate, am I in financial ruin? No. I am being prudent.

2. The "Loss" Misunderstanding​

He cites the pre-tax loss of £492 million as evidence that the company is haemorrhaging cash. As I have explained in this thread previously, this loss was primarily driven by non-cash impairment charges.

Merlin wrote down the value of LEGOLAND New York and LEGOLAND Korea because they aren't performing as well as predicted. This is an accounting adjustment. It is a paper loss. It does not mean that £492 million of actual cash disappeared from the bank account. The operational cash flow (the actual money coming in from tickets and burgers) remains positive. Conflating an impairment charge with "running out of money" is economically illiterate.

3. The "Robbing Peter to Pay Paul" Myth​

This is the classic enthusiast fallacy. "If they hadn't built Legoland Korea, we'd have a new coaster at Alton Towers."

CapEx budgets are allocated based on growth potential. The UK market is mature; it has limited growth potential. The Asian and US markets are where the growth is. Investors (Kirkbi and Blackstone) provide capital specifically for growth projects. You do not secure billions in financing to re-tarmac a car park in Staffordshire, you secure it to open new markets.

The UK parks were not "underinvested" because the money was stolen for China. They received the level of investment appropriate for a mature, low growth asset.

4. The "Selling Alton Towers" Nonsense​

"There's been a lot of talk" because you (and other vloggers) keep starting the talk, Shawn.

All together now... Merlin does not own the land Alton Towers sits on. They sold the freehold years ago to LXi REIT (now LondonMetric). They own the ride hardware and hold a lease to operate the park. You cannot sell an asset you do not own. They could sell the lease (the right to operate it), but why would they sell their highest revenue generating UK theme park? It makes zero commercial sense. You don't sell the cash cow when you have debt to service. You milk it harder.

5. The S&P Downgrade​

He quotes the downgrade correctly but misunderstands the "insufficient liquidity" warning. Liquidity refers to access to cash and credit lines. Merlin has a Revolving Credit Facility (basically a massive overdraft) of hundreds of millions. The warning is a standard caveat about what could happen if they don't manage their debt pile, not a prediction that the bailiffs are coming next Tuesday.

TLDR​

A vlogger, who has never run anything larger than a YouTube channel, has confused standard corporate restructuring and accounting adjustments for an existential crisis.

Merlin is trimming fat, centralising operations and focussing on high yield investments. This is what grown up companies do. It is not a downfall. It is a pivot.

Now, if you'll excuse me, I need to attend The Feast of the Seven Salads.

🪿

I don't like Merlin however I do feel they need start fighting back against these vloggers correcting the misinformation, their communication is really **** to the public explaining why they do things they do and shine more on the positive stuff and future plans if you don't feed the vloggers information they will create their own

 

[Benzin]

I am shocked that any vlogger would repeat misinformation on a subject they know zero about in a video that earns them money and follows the current Merlin narrative.

Plenty of stuff to complain about without this "Towers will be sold" suggestion based off some changed T&Cs which changed months ago and no one cared. Almost as if the off-season is tricky time to feed the algorithm and be paid for it.

 

[Poisson]

We're currently writing off assets at work as we have done well this year so can afford to and the depreciation stops, so doesn't affect next year's figures. Writing off certain things doesn't mean a company is struggling.

 

[Squiggs]

I suppose the one thing we can all agree on is that this is very much a golden age for Merlin, and everything is A-OK!

 

[Tom]

We're currently writing off assets at work as we have done well this year so can afford to and the depreciation stops, so doesn't affect next year's figures. Writing off certain things doesn't mean a company is struggling.

What percentage of the company's asset book value were those write offs? How are you doing in the debt markets right now? Also, are you burning cash in addition to the write offs?

 

[Osaka12]

I used to laugh at Shawn back in the day queueing up and he'd have his camera out being loud. But I agree with him and his opinion on Merlin and the prioritisation of investment overseas instead of being passionate about the properties and guests that made them what they are.

 

[Hid]

I used to laugh at Shawn back in the day queueing up and he'd have his camera out being loud. But I agree with him and his opinion on Merlin and the prioritisation of investment overseas instead of being passionate about the properties and guests that made them what they are.

That's the main difference between a company owned park and a family owned park. Family Owned you can tell the passion and natural care.

I would like Alton to become self reliant again or brough back into public ownership