Theme park profitability/capex

[GoGoBoy]

I have been looking over the Village Roadshow 02-03 financial results and found that last year the 3 Warner Village parks made a combined operating profit of a little over $11 million. I was quite surprised by this result as it seems fairly small. I know there has been a negative impact due to SARS, Iraq etc. but the year before the combined total was only a little higher at $13 million. So my question is how can the parks afford to add multi million dollar attractions so regularly? With that sort of capital expenditure wouldn't the parks profits be reduced to virtually nothing? I can certainly see now why they only introduce a major new ride every 2 or so years rather than every year like some international parks.

[joz]

That figure seems very low indeed. The year SW added Polar Bear Shores, the profit was $16million for that park alone, so $11million for all 3 parks is a bit odd. I guess the main thing is the capital expenditure that has gone on in that time. Last year you had Scooby Doo ($13mil), The new Batman Ride, Harry Potter, Splash Zone and Superstars Live in Concert new at Movieworld. Plus Whirlpool, and all the costs with fixing it up. Then the next year (was only a few months lather, but I believe it falls into the next financial year) there was buying of Paradise Country, and Shark Bay which is $12million worth of swimming pool right there and Seaworld's new helicopter fleet. Coupled with the SARS, War on Iraq and circumstances like that effecting attendance, and I guess its fair enough that the parks aren't making that much money. I'm guessing that the results you've seen have the capital expenditure already taken out. I somehow don't believe that the average profit per person entering the park is $3.66 before capital expenditure.

[GoGoBoy]

Yeah that's part of what I'm trying to figure out. Did they come to that total before or after capex? Maybe some of our more financially-minded users can offer their thoughts? Richard? Michael? The reports are at www.villageroadshow.com.au

[Richard]

I'm iffy on the $11 mil figure too. I'm guessing it's out of the latest report which will explain it... You're reading WVTP's totals - taking out absolutely everything that they spent money on. That's the money that Village Roadshow and the shareholders see in dividends (or rather don't see thanks, to some dodgey runnings... but this isn't the place ). I'll say that the $16 mil profits you're talking about for Sea World are not including investments. The fact that it is for the single park alone proves that, as they don't fund their own capital expenditure. Because the money for investment comes out of Warner Village, to Village Roadshow. WVTP will show off all their fancy figures and projections to the Village Roadshow board who will give them the money they want, and that money will be taken out of the figures you read in the reports. While we're in this financial mode, it's also interesting to see that Dreamworld's just announced a 13% increase in income and a total 3.2% increase in attendance, while WVTP are saying that SARS and wars and whatnot are killing them. I hope Warner Village have finally learned that though the local market mightn't be as lucrative, it sure as hell is a safer bet.

[joz]

Just a point, what I quoted was the profit for the 'Seaworld Property Trust', which was half owner in Seaworld Nara and lessor of MW and WNW