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Lego Looks to Sell, but Who's Buying?

Lego's created a great asset for the theme park industry. Now the industry's major players must find a way to keep that asset from slipping away.

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Published: October 27, 2004 at 10:16 PM

Parents who want to take their kids to a theme park ought to know that there is a better alternative to Disney -- Legoland.

The Danish toy company has built a collection of kid-friendly theme parks that surpass the Magic Kingdoms for wit, value and (literally) breath-taking fun. Lego's parks offer rides and play areas tailored to kids -- not to thrill-seeking teens or nostalgic adults. And they do so with sensible hours, affordable tickets and reasonable lines.

So please indulge this Lego-loving parent his panic attack after hearing last week that the company will put its theme parks up for sale.

Lego's been suffering for years, as price pressures in the industry, driven by Wal-Mart, have squeezed premium toymakers. A takeover by a larger conglomerate could have helped provide financial shelter, but to date the long-time family-run Lego has remained independent. Perhaps the company could have transitioned to a boutique toymaker, operating at a smaller size, with lower margins and expenses. But that switch appears impossible so long as the company remains in the capital-intensive theme park business.

Keeping parks running, and stocked with new attractions, requires hundreds of millions of dollars. Not the sort of thing boutique toymakers can get away with. No, to survive in the theme park business, Lego needs to be the Disney of toys, a major brand with billions of dollars in annual revenue.

Unfortunately, Lego's not chosen well with its choice of locations for its parks. While the original in Lego's hometown of Billund, Denmark, makes plenty of money for the company, the three other Legolands have not performed well. Neither of the two other parks in Europe, in Germany and England, lie in popular resort communities. And Legoland California stands in Carlsbad, a pleasant beach community between Los Angeles and San Diego that fails to draw the millions of tourists from those cities that a successful theme park needs. Imagine if Lego had chosen instead to build Legoland in Garden Grove, down the street from Disneyland, as part of that community's oft-delayed "International West" development? It would be easy to envision Legoland California drawing two to three times its current 1.3 million annual visitors in that location.

Selling the Legolands would provide the ailing company with a much-needed infusion of cash. But who would buy a chain of four theme parks so closely identified with another company's product? And what could Legoland become without... Legos?

Perhaps Lego will find a buyer allied with the company. Universal and Disney have successfully raised cash by selling all or part of some of their parks to outside companies which licensed their brands and attractions. If Lego could create a relationship with an experienced attraction operator the way Disney has in Japan with the Oriental Land Company, theme park fans could end up with even better managed parks and Lego could gain an even more lucrative vehicle for promoting its toys. After all, many fans consider the Oriental Land-owned Tokyo Disney Resort to offer the finest theme parks in the Disney chain.

Several existing players in the theme park industry would do well to take a closer look at Lego. Sure, many theme park fans dismiss Legoland as a kiddie park. But they overlook the sophistication and ingenuity with which Legoland has delivered for its target market.

Consider Legoland California's newest attraction, the Fun Town Fire Academy. Not really a ride, nor a show, this attraction is a competition between families to drive an oversize Lego fire truck down a track, pump a fire hose to soak a target and then return to the truck and drive it back to the starting line. As such, Fun Town Fire Academy is an ingenious extension of the theme park attraction into interactive experience -- the next step, conceptually, beyond video-game-inspired shoot-'em-ups like Disney's Buzz Lightyear and Universal's Men in Black.

Yes, Lego had failed with Fun Town Fire Academy to create an immersing themed environment like that which elevates Men in Black. But the core concept of the attraction is fresh. And Lego excels at creating attractions that demand activity, not just passive watching, from the pure physical fun of some of the best theme park playgrounds on the planet to instructional attractions like Lego's outstanding Driving School.

And Lego does all this while avoiding the syrupy earnestness that makes Disney's theme parks too much to bear for some adult visitors. Lego fills its theme parks with satirical touches, from cell-phone toting princes in its fairy tale ride to little Lego figures videotaping police arrests on the "streets" of Miniland.

Lego's intelligent appeal to smart youngsters could help elevate Paramount Parks' attempt to leverage its Nickelodeon characters to theme park fans. And it would give Paramount a badly needed presence in the important Southern California theme park market.

Or, Legoland's irreverence would fit perfectly with Universal's culture, and an acquisition would help Universal better appeal to the young family market it has long sought.

Busch could use Legoland California to cement San Diego County as a leading theme park destination, creating ticket packages with its SeaWorld in San Diego. And Lego provides a perfect demographic fit with the Sesame Workshop characters that Busch owns limited theme park rights to.

Even Disney could benefit from a relationship with Legoland, as Lego would inject the struggling Mouse House with some creative life and give Disney the chance to lock up the kid market for theme parks in the United States and Europe. After all, wouldn't a Legoland make the *perfect* fifth gate at Walt Disney World?

Lego's done too much for the theme park industry to be forced to dispose of its parks to some corporate vulture, looking to turn a fast buck by cutting costs and shortchanging customers. Especially in Southern California, where theme park fans have already had to endure the Pressler regime at Disneyland and the Premier Parks bungling of Magic Mountain over the past decade. Lego's created a great asset for the industry. Now the industry's major players must find a way to keep that asset from slipping away.

Readers' Opinions

From Arthur Cashin on October 28, 2004 at 8:45 AM
I totally agree. Having recently visited the Legoland in Denmark, I like the extra touches that Lego has added. Driving School and Power Builder are two very unique rides that the parents enjoy watching as much as the kids enjoy riding them.

The only issue is that the majority of their parks are in Europe, so no US firm is going to want to touch this. Maybe a Busch/Tivoli combination is the right answer.

Universal missed their chance when they had all that extra land in Orlando. A Legoland would have been the perfect addition to the International Drive area.

I could see CF or SF wanting to license a mini Legoland for their other parks. Either one of these operators would ruin the charm that the current Legoland parks have. It is outside there frame of reference (screaming teenagers).

Don't you just wish that the good guys could win some of the time?

From Kenny Hitt on October 28, 2004 at 9:17 AM
LegoLand as gate 5...now that's an intirguing proposition. Lego already has a promotion relationship with Diney through the Lego store at Disney Village Marketplace. Perhaps expend the horizons a little with some more mature-targeted attractions in addition to the kiddie rides that have already been developed...a TECHNIC-themed coaster perhaps?
From Robert Niles on October 28, 2004 at 10:15 AM
They've already got that in Carlsbad.

Unfortunately, it is a Mack Wild Mouse (known as the Jungle Coaster at Legoland Windsor) and somewhat similar to DCA's Mulholland Madness.

From J. Dana on October 28, 2004 at 11:42 AM
Disney already has large corporate agreements with both Mattel and Hasbro--both toy companies have large presences in Downtown Disney and both toy companies market lots of Disney stuff. Lego is right there with them, though. If an expense-sharing venture could be arranged, I see an easy alliance between Disney and Lego. But I don't really see Disney wanting to take on the challenge of those poorly-placed parks abroad. If Disney bought the parks, I think they'd close/sell most of them. So, perhaps hope for a better suitor. Busch? Don't know if the public would want Legoland being owned by a beer company. It's okay for SeaWorld and Busch Gardens since they're not primarily kid-centric, but I'm not sure LegoLand would be the best fit. Universal? Fat chance of GE getting into that fray--I just hope they don't dump the theme parks they've got. Paramount? Six Flags? Cedar Enterprises? Running theme parks ain't easy, and ain't always a big money maker....I wonder where those deep pockets will come from.
From Kenny Hitt on October 28, 2004 at 11:57 AM
Nah, see I'm talking a full-on Vekoma MindBender-type coaster, themed around the Technics line. None o that wild mouse stuff.
From Robert Niles on October 28, 2004 at 12:42 PM
J., don't forget that Busch owns Sesame Place, the Sesame Street-themed park outside Philadelphia. So the brewer has a track record with kid-oriented parks (though there's not a Busch logo anywhere on that park's website, unlike the other "Busch Adventure Parks.")
From J. Dana on October 28, 2004 at 1:33 PM
Hmmmm, that's a good point, Robert...

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