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Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
Iaapa Presentation 2009
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Iaapa Presentation 2009

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Presentation given at IAAPA convention in Las Vegas, November 2009

Presentation given at IAAPA convention in Las Vegas, November 2009

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  1. IAAPA Small Parks and Attractions Committee What’s Next for Your Small Park or Attraction?
  2. IAAPA <ul><li>Difficult Economic Times </li></ul><ul><li>Still a challenge to find financing </li></ul><ul><li>Traditional vehicles may not be available </li></ul><ul><li>What alternatives do you really have? </li></ul>
  3. IAAPA <ul><li>Three speakers today </li></ul><ul><li>Leave about 20 minutes for Q&A at end </li></ul><ul><li>Enjoy the coffee and refreshments </li></ul><ul><li>Session is being recorded </li></ul><ul><li>Available for purchase later </li></ul>
  4. IAAPA <ul><li>Introductions </li></ul><ul><ul><li>Paul Nelson </li></ul></ul><ul><ul><ul><li>CEO of Waldameer Park </li></ul></ul></ul><ul><ul><ul><ul><li>Started as dishwasher at 11 years old </li></ul></ul></ul></ul><ul><ul><ul><li>Several terms as IAAPA Board Member </li></ul></ul></ul><ul><ul><ul><li>Former President of PAPA </li></ul></ul></ul><ul><ul><ul><li>President of Erie Chamber of Commerce </li></ul></ul></ul><ul><ul><ul><li>Sits on the Board of two hospitals </li></ul></ul></ul>
  5. IAAPA <ul><li>Introductions </li></ul><ul><ul><li>Edward Bolluijt </li></ul></ul><ul><ul><ul><li>CFO Great City Attractions </li></ul></ul></ul><ul><ul><ul><li>Formerly Managing Director of Fitraco </li></ul></ul></ul><ul><ul><ul><ul><li>Long time financing source for the industry </li></ul></ul></ul></ul>
  6. IAAPA <ul><li>Introductions </li></ul><ul><ul><li>Dan Aylward </li></ul></ul><ul><ul><ul><li>Currently, President and CEO of Worldwide Leisure Management LLC </li></ul></ul></ul><ul><ul><ul><ul><li>Consulting for operations and Wall Street firms </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Contract operations management </li></ul></ul></ul></ul><ul><ul><ul><li>Started at Kings Island </li></ul></ul></ul><ul><ul><ul><ul><li>Great time in industry </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Breaking new ground </li></ul></ul></ul></ul><ul><ul><ul><li>My experience primarily in domestic and international turn around projects </li></ul></ul></ul>
  7. IAAPA
  8. IAAPA <ul><li>Items we have addressed </li></ul><ul><ul><li>Conventional Financing </li></ul></ul><ul><ul><ul><li>Banks </li></ul></ul></ul><ul><ul><ul><li>Other </li></ul></ul></ul><ul><ul><li>Rental / Leasing </li></ul></ul><ul><ul><ul><li>Leasing companies </li></ul></ul></ul>
  9. IAAPA <ul><li>Address several unconventional approaches </li></ul><ul><ul><li>Revenue Sharing </li></ul></ul><ul><ul><li>Sale / Leaseback </li></ul></ul><ul><ul><li>Outright Sale </li></ul></ul>
  10. IAAPA <ul><li>Revenue Sharing </li></ul><ul><ul><li>Supplier provides asset </li></ul></ul><ul><ul><ul><li>May split installation cost </li></ul></ul></ul><ul><ul><li>Operating costs offset against revenue </li></ul></ul><ul><ul><li>Profits are split </li></ul></ul>
  11. IAAPA <ul><li>Benefits of Revenue Sharing </li></ul><ul><ul><li>New attraction without cash outlay </li></ul></ul><ul><ul><li>Attraction maintenance included in operating cost </li></ul></ul><ul><ul><li>Labor charged against operating cost of attraction </li></ul></ul><ul><ul><li>No direct cash outlay for operations </li></ul></ul><ul><ul><ul><li>Depending on how it is structured </li></ul></ul></ul>
  12. IAAPA <ul><li>Drawbacks of Revenue Sharing </li></ul><ul><ul><li>Control of operations can be compromised </li></ul></ul><ul><ul><li>Reduces operating profit for park </li></ul></ul><ul><ul><li>Requires careful negotiation and consideration </li></ul></ul>
  13. IAAPA <ul><li>Challenges of Revenue Sharing </li></ul><ul><ul><li>Does not work with rides in a pay one price environment </li></ul></ul><ul><ul><ul><li>POP parks typically lease or rent </li></ul></ul></ul><ul><ul><li>Requires ability to promote the attraction internally and/or externally </li></ul></ul><ul><ul><li>Ideal for add-on charge attractions </li></ul></ul>
  14. IAAPA <ul><li>Protections for Owner </li></ul><ul><ul><li>Clearly define contract </li></ul></ul><ul><ul><li>Contractually mandate that you are in control </li></ul></ul><ul><ul><li>Require supplier staff to follow park rules </li></ul></ul><ul><ul><li>Assign supervisors and management to monitor supplier compliance </li></ul></ul>
  15. IAAPA <ul><li>Sale / Leaseback </li></ul><ul><ul><li>Sell asset to investor </li></ul></ul><ul><ul><li>Lease back assets for operations </li></ul></ul><ul><ul><li>Typically, pay 8 to 11% of purchase price as lease </li></ul></ul><ul><ul><li>Typically, have controls for maintenance and lease payments </li></ul></ul>
  16. IAAPA <ul><li>Benefits of Sale / Leaseback </li></ul><ul><ul><li>Investors / owners get their money out </li></ul></ul><ul><ul><li>Keep operation and benefit from the upside </li></ul></ul><ul><ul><li>Free cash for other purposes </li></ul></ul><ul><ul><li>Can negotiate future capital into purchase contract </li></ul></ul><ul><ul><li>Can sell lease in future </li></ul></ul>
  17. IAAPA <ul><li>Drawbacks of Sale / Leaseback </li></ul><ul><ul><li>Lose control of asset </li></ul></ul><ul><ul><li>Significant deposits are required </li></ul></ul><ul><ul><li>Subject to outside influence on operations </li></ul></ul><ul><ul><li>Non-industry personnel often involved in transactions </li></ul></ul><ul><ul><li>Lease payments may be higher than traditional financing </li></ul></ul>
  18. IAAPA <ul><li>Challenges of Sale / Leaseback </li></ul><ul><ul><li>Must make payments on regular schedule </li></ul></ul><ul><ul><li>Must hold funds on deposit </li></ul></ul><ul><ul><ul><li>Lease payments </li></ul></ul></ul><ul><ul><li>Must set up capital maintenance fund </li></ul></ul><ul><ul><li>May be required to maintain a level of equity in the company </li></ul></ul><ul><ul><li>Lease amount never drops </li></ul></ul><ul><ul><li>Subject to covenants of lease forever </li></ul></ul>
  19. IAAPA <ul><li>Protections for Seller </li></ul><ul><ul><li>Insist on financial statements of buyer </li></ul></ul><ul><ul><li>Require long term capital commitment </li></ul></ul><ul><ul><li>Minimize buyers approval rights in event you sell the lease </li></ul></ul><ul><ul><li>Eliminate long term payments on purchase price, if possible </li></ul></ul><ul><ul><li>Minimize deposit and equity requirements on operator </li></ul></ul><ul><ul><li>Contractually restrict the amount of control landlord has over operating issues </li></ul></ul>
  20. IAAPA <ul><li>Outright Sale </li></ul><ul><ul><li>Find buyer </li></ul></ul><ul><ul><ul><li>Broker or other source </li></ul></ul></ul><ul><ul><li>Negotiate your price </li></ul></ul><ul><ul><ul><li>Asking 8 to 10 times cash flow </li></ul></ul></ul><ul><ul><ul><li>Offering 5 to 7 times cash flow </li></ul></ul></ul><ul><ul><li>Sign on the bottom line and walk away </li></ul></ul>
  21. IAAPA <ul><li>Benefits of Sale </li></ul><ul><ul><li>Frees cash from operation </li></ul></ul><ul><ul><li>Eliminates existing debt obligations </li></ul></ul><ul><ul><li>Frees any contingent liabilities </li></ul></ul><ul><ul><ul><li>Personal Guarantees </li></ul></ul></ul><ul><ul><li>Owners walk away from operation </li></ul></ul><ul><ul><ul><li>Management contract </li></ul></ul></ul><ul><ul><ul><li>Transition of ownership </li></ul></ul></ul>
  22. IAAPA <ul><li>Drawbacks of Sale </li></ul><ul><ul><li>Often the park has been in family for generations </li></ul></ul><ul><ul><li>Lose control of operations of facility </li></ul></ul><ul><ul><li>Community still looks to previous owners if there is a problem </li></ul></ul><ul><ul><li>Safeguards for previous owners reputation are a matter of concern </li></ul></ul>
  23. IAAPA <ul><li>Challenges of Sale </li></ul><ul><ul><li>Many buyers want an earn out clause </li></ul></ul><ul><ul><ul><li>Should be treated like a loan to the buyer </li></ul></ul></ul><ul><ul><li>Some buyers want to give a lower price with upside bonus </li></ul></ul><ul><ul><ul><li>Difficult to manage </li></ul></ul></ul><ul><ul><li>Some buyers are not adequately funded to support the acquisition </li></ul></ul>
  24. IAAPA <ul><li>Protections for Seller </li></ul><ul><ul><li>Look at the financial strength of the buyer </li></ul></ul><ul><ul><ul><li>Do they pay their bills? </li></ul></ul></ul><ul><ul><ul><li>Are they current with their ride suppliers? </li></ul></ul></ul><ul><ul><ul><li>Will they be able to get parts? </li></ul></ul></ul><ul><ul><ul><li>What is the likelihood they can operate effectively in the future? </li></ul></ul></ul>
  25. IAAPA <ul><li>Protections for Seller </li></ul><ul><ul><li>What is history of buyer? </li></ul></ul><ul><ul><ul><li>Have they operated parks before? </li></ul></ul></ul><ul><ul><ul><li>Were they successful? </li></ul></ul></ul><ul><ul><ul><li>What references can they give you? </li></ul></ul></ul>
  26. IAAPA <ul><li>Protections for Seller </li></ul><ul><ul><li>Get complete financial package from buyer </li></ul></ul><ul><ul><ul><li>Why do they want to pay over time? </li></ul></ul></ul><ul><ul><ul><li>Are they current with all their suppliers? </li></ul></ul></ul><ul><ul><ul><li>Do they have a reputation of treating their local suppliers fairly? </li></ul></ul></ul><ul><ul><ul><li>Three years of financial statements </li></ul></ul></ul>
  27. IAAPA <ul><li>Protections for Sellers </li></ul><ul><ul><li>Know the buyer </li></ul></ul><ul><ul><ul><li>Who is the key management person? </li></ul></ul></ul><ul><ul><ul><li>What personal references can be given? </li></ul></ul></ul><ul><ul><ul><li>Talk to past sellers </li></ul></ul></ul>
  28. IAAPA <ul><li>Protections for Seller </li></ul><ul><ul><li>Non-disclosure Agreement </li></ul></ul><ul><ul><ul><li>Monitor media </li></ul></ul></ul><ul><ul><ul><li>Challenge erroneous statements </li></ul></ul></ul><ul><ul><ul><li>Protect your image from the buyer’s comments </li></ul></ul></ul><ul><ul><ul><li>Remain responsive to your past suppliers and clients </li></ul></ul></ul>
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