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How much is it common for parks to invest?

Discussion in 'Q&A' started by Pokemaniac, Dec 9, 2017.

  1. Pokemaniac

    Pokemaniac Mountain monkey Staff Member Administrator Moderator Social Media Team

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    This topic idea sprung out from a recent Parques Reunidos discussion, as well as my chronic grudge for that company in general.

    As is usual in this section of the forum, the thread title kind of says everything. How large parts of their profits/revenue is it common for parks to spend on upgrades, new rides, refurbishments, and so on?

    A video linked in this post suggests 20 % of the turnover (revenue) is a common figure, but that seems very high to me. That would suggest that one dollar in five spent by guests at a park is used to upgrade the park itself, and there are plenty of other things for them to spend money on: Running costs, staff wages, maintenance, taxes, shareholder payouts, saving for later, or probably dozens of things I don't remember/know about.

    Do anybody know any better?
     
  2. Sandman

    Sandman Well-Known Member

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    It's a tough estimation - are we talking about all parks in general or highlighting some examples we know of?

    A park like BPB would invest more of their profit into the park than say, Merlin would invest at AT. But their profit margins would be vastly different.
     
  3. Pokemaniac

    Pokemaniac Mountain monkey Staff Member Administrator Moderator Social Media Team

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    If we can't get statistics, example figures would do. One could always use those to make statistics.
     
  4. Coaster Hipster

    Coaster Hipster Well-Known Member

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    Not really answering your question, but I know some chains went with the stategy of selling their less profitable parks to invest. The Compagnie de Alpes did so in recent years, selling parks such as Walibi Sud-Ouest, La Mer de Sable or Fun Fort to invest in their big parks like Walibi Holland or Parc Astérix. That's arguably where the money for the large Walibi Belgium expansion comes from too. I also believe, they haven't made payouts to shareholders for one year or two for that purpose as well.

    I believe Phantasialand used to own Mirabilandia. They made a lot of money in 2007 by selling it (I heard the figure of €100M somewhere) and that in part help funding the crazy Chiapas - Taron - F.L.Y. series of investments we have today.

    A bit off-topic but I thought that could be interesting with your initial question nonetheless.
     
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  5. Mack

    Mack Well-Known Member

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    Most of these are publicly-traded companies, meaning, at least in the United States, you can look them up online and find out exactly where what went.
     
  6. Lofty

    Lofty Social Media Team Staff Member Social Media Team

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    It's really difficult because most parks don't invest with the mindset of prior revenue and instead look at spreading the cost over X amount of years from the revenues of each year. For example, if I owned a park, I would look at investing in a large capex year over 3/4 years, so in essence the money (on paper) isn't coming directly from one single revenue year, and instead the investment is spread. This also allows for a larger profit per year which can help in obtaining extra sponsorships etc.

    I highly doubt any park would say "Ok, so let's invest 25% of revenue on X investment", it just wouldn't happen that way really? Instead, they'd do as the above.

    At the moment, I'm working on an event for the park I work at and due to the large-scale investment, we're spreading the actual investment over three years so our first year is going to see us breaking even, but each year after that loss will transition into higher profit margins.
     
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  7. Hixee

    Hixee Flojector Staff Member Moderator CF Award Winner 2016

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    Playing devils advocate slightly (because I know the point your making is that the accounts don't necessarily say the whole story), but I would argue that regardless of how many years you spread the 'payments' over, you've still invested that money in/for 2018.

    Paying off a $4mil investment over four years ($1mil a year, according to the books), is still a $4mil investment*.

    *But yes, I know that without seeing how these things are breaking down (likely not public information), it would be almost impossible to work out from their public accounts.
     
  8. Pokemaniac

    Pokemaniac Mountain monkey Staff Member Administrator Moderator Social Media Team

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    Adding to @Hixee's advocating, regardless of when the money is paid, the ratio investment:revenue would still be a number, and that's the number I'd like to learn more about.

    True, due to inflation and devaluation and such, it's probably not as straightforward as saying "we earned 5 million every year for four years and paid off a 4 million investment in the same perioid, therefore the ratio is 1:5", but the actual number wouldn't be off by that much. They would still count a certain sum as revenue over a time period, and a certain sum as investments, and the latter would be a percentage of the first (and vice versa, but let's not argue about semantics).

    I get what you are saying, though: without access to the parks' actual accounts and knowing how they do them, that number would be really hard to find.
     
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