Ah right; thanks for the clarification @AT86! In terms of basic maintenance; if that comes out of expenses, would things like what they did under the TLC project come under expenses as well, or would that have been non-essential CAPEX? But it does beg the question; if rides and additions aren't essential CAPEX, what would be considered essential CAPEX?General maintenance to keep assets (rides, buildings, parks etc) in their original condition is not classed as CapEx under accounting rules, it’s classed as an expense.
CapEx is only for buying new assets and increasing the value of existing ones.
This is why Merlin have historically spent quite well on new stuff. But woefully low on maintaining existing rides.
You can spread the cost of CapEx across multiple financial years so the full cost of a £15million new coaster doesn’t come out of profits in the year you build it. Expenses are the opposite - the full cost of general maintenance all comes out of profit in the year you do it.
Ah right; thanks for the clarification @AT86! In terms of basic maintenance; if that comes out of expenses, would things like what they did under the TLC project come under expenses as well, or would that have been non-essential CAPEX? But it does beg the question; if rides and additions aren't essential CAPEX, what would be considered essential CAPEX?
Worse case scenario is merlin doesn't exist in 2025....Ah right, thanks guys!
It's also worth remembering that Merlin still plans to invest 60% of its CAPEX budget; they've only gotten rid of 40% of it. Also, we don't know how long this reduction will be in effect for; for all we know, it could only be in effect for 2021 investments. By this time next year, I'd say that we will have a far clearer picture of the long-term impact this will have on the parks.
My current forecast is that the current crisis won't really have a huge impact on the parks after 2021, with attendance and CAPEX levels returning to normal by 2022-2023 (potentially 2021 if we're being optimistic), maybe by 2025 in a very worst case scenario.
I meant on the theme park industry as a whole.Worse case scenario is merlin doesn't exist in 2025....
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Very good point. I agree they will put the marketing budget first.In reopening I'm sure they'll increase investment hugely. Sadly that'll be investment in marketing and advertising to persuade people it's safe to return and give them their money. It won't include any investment in hardware, maintenance, entertainment or hours to actually deliver a good day out to those taken in by that promotion spend.