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Hard Rock Park bankruptcy auction looms*

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Published: December 14, 2008 at 11:19 PM

[Update: We're having a contest to guess the bankruptcy sale price. Submit your guess in the comments!]

On Monday, Hard Rock Park will go on the block, as the bankrupt Myrtle Beach, South Carolina theme park is auctioned off. There's a great story on the Myrtle Beach newspaper's website detailing just how the park failed. Ultimately, it was not gas prices, and it certainly wasn't a bad in-park experience.

No, ultimately, arrogance did in the Hard Rock Park, long before the park even opened. Park managers' refusal to advertise, to work with local hotels on promotion, to package and price the park aggressively -- all these failures to work with others left the park empty and its balance sheet a mess.

This is not news to Theme Park Insider readers, who had insight into HRP's arrogance years ago. But it enlightening to see such thorough documentation of the many mistakes that Hard Rock Park made on its way to bankruptcy.

As usual, businesses enter bankruptcy most often not because of adverse market conditions, but because their managers did not anticipate and plan for those adverse conditions.

Readers' Opinions

From Anthony Murphy on December 15, 2008 at 9:51 AM
Its still too bad!

The park, from what I saw seemed like it was a pretty interesting park with some kind of new rides. I think the slumping economy did not help with this park taking off since 2008 seems to be a bad time to open up a brand new park. The investors and creators should have seen this, but they did not. It also seemed pretty well received on this site with people actually being more excited than bashing it. However, I will say that I have found one park's reviews a little misleading, in my opinion, and that was DCA post all the improvements. Maybe it doesn't take much to entertain me.

From Joshua Counsil on December 15, 2008 at 10:08 AM
Anthony -
You were the first one to post on the other "arrogance" thread. I think we've been here too long, or not nearly long enough. Maybe that should be the next vote, Robert - how long have you been with the site? 2008, 2007, 2006 ...

It's a guilty pleasure, but it sort of felt good reading that letter from the Hard Rock investor to Robert about the site members not knowing anything.

From Robert Niles on December 15, 2008 at 11:09 AM
Actually, there's a thread now on Laurie's site about that very topic.

If you click through on a member's name, you can see when they joined the site. (Site registration started in October 2000, even though the site was around before then.)

But that is a great vote topic, too. I'll keep it in mind.

As for Hard Rock, I thought that this park had a good chance to succeed, based solely on what was inside the gates. Make this the third gate at Universal Orlando, and I think we're talking hit.

But alone, in South Carolina, away from Interstate highways and major airports, and without massive promotion and a Web-savvy marketing team -- Hard Rock had no chance.

From Derek Potter on December 15, 2008 at 2:37 PM
Hard Rock has a chance alright...a golden one. Whoever wins this auction will get a brand new theme park for pennies on the dollar in one of the biggest tourist markets in the country. As for the highways Robert, Interstate 74 will be there soon enough.

A big question is this, if the winner keeps the park open, will it stay themed to Hard Rock? Although the theme is a good one and can be built upon, it's also not cheap. A few million bucks for the Hard Rock license, and merchandise deals with several bands and other music acts for rides and merchandise tend to lessen profit a little. Most companies would probably drop the Hard Rock brand in the face of an economic crunch, although they would pretty much have to do nothing to open next year if they keep it.

I don't care what the theme park experts and their feasibility studies say. Forget about the colossal failure of the previous management and think about the market they are in. With the right management and the right plan, Hard Rock can be a winner.

From Peter Stephens on December 15, 2008 at 4:26 PM
I posted a review after our visit to HRP this summer. Items of note:

HRP was a good experience but not anywhere near good enough to get me to travel back for a second visit unless many more attractions open. It's too far from where we normally vacation (NC Beaches, usually, HHI, occasionally)

The actual park location and surroundings are very poor. (A park at the beach should be AT THE BEACH!!!)

Beach vacationers have spent a lot on the hotel, food, etc. Several hundred for HRP isn't fitting into too many budgets.

Most MBSC "regulars" tend to be more interested in NASCAR than the British Invasion.

There is probably not a strong level of sales of season passes (which is critical in this business) because the area is sparsely populated. Most residents of MBSC are kids working summer jobs or retirees that like to play a lot of golf.

I am not confident the park will re-open. I do not think sucess will come easily. There is no market for HRP and THAT is what we saw this year.

I am, however, very happy to have had the opportunity to go and take my teenage kids. I hope my prognosis is wrong!!!

From Robert Niles on December 15, 2008 at 4:42 PM
The auction winner will be announced on Thursday. The opening bid was $35 million, so I suspect that someone would bid if only to get the rides and move them, at that price.
From Anthony Murphy on December 15, 2008 at 5:23 PM
I say pack up and move to Universal Orlando. Yeah, I know there is no area to build, but I think it would fare better in FL or CA
From Robert Niles on December 15, 2008 at 7:29 PM
Heck, if I were one of those hotel owners on 192 watching my investment rot, I might try to pool some cash to buy it and rebuild it down there.
From Joshua Counsil on December 16, 2008 at 7:32 AM
$35 million opening bid? Damn, that's cheap.

Also - Robert, I'm interested in that vote because I want to see statistics. I know you can see people's durations on their profiles, but it would be cool to see how much the site has taken off.

From M. Ryan Traylor on December 16, 2008 at 6:56 PM
Let's start a collection here and place our own bid? Rename it Theme Park Insider Park?
From Joshua Counsil on December 16, 2008 at 8:23 PM
Ha - I got $200.
From James Rao on December 16, 2008 at 10:15 PM
I'm in...got some Series EE Bonds that are nearing maturity. Been saving them for the kids...but you only get one chance in your life to own part of history. I'm good for 1k.
From M. Ryan Traylor on December 17, 2008 at 12:09 AM
So I've just been clicking around at the Hard Rock Park site and notice that they still plan to re-open for the 2009 season. Also, "Our Job section is unavailable at this time".

But the map still works.

From James Rao on December 17, 2008 at 8:30 AM
Any updates on what the bidding has risen to, if it has risen at all?
From Derek Potter on December 17, 2008 at 11:37 AM
Winner expected to be announced Thursday.

Seriously folks, 35 million is chicken feed for that park. It's brand spanking new I would like to think that it didn't sell for that. 35 million is probably about what they paid for the 3 coasters, let alone build the whole park. I read somewhere that PARC was inquiring about managing for whoever the winner was, but then it seems that PARC denied that story. I would think that they could have been one of the bidders, given that they just bought the NASCAR fun center and Myrtle Waves water park..both about 5 miles down the road from Hard Rock.

If it did in fact sell for 35 mil, the buyer is a fool if they don't reopen it.

From Robert Niles on December 17, 2008 at 12:18 PM
Let's see, what would a new owner need to make to recoup a $35 million purchase price?

Assuming a 150-day operating season (April-August), you'd need to net $233,333 a day to make that money back in the first season. Assume $40 per guest in revenue, and you'd need to average 5,833 paying guests a day to cover the purchase price, not counting park operating cost.

Now, these numbers are absurdly low. Even assuming that many folks will be entering the park on annual passes and multi-day tickets, you should gross more than $40 a head when you factor in parking, food, photos and merchandise. And a Halloween event would extend the season another couple months. The park should be able to open in March for Spring Breakers, too.

Of course, I suspect that the park will go for more than $35M, too.

Throw all the numbers into the mix, and it seems to me that an average daily attendance of 10,000 is what you'd need to begin to make this park financially viable. If a buyer thinks that it can hit that number, it stays open. Otherwise, we're just selling off rides here.

Personally, to hit that number in Myrtle Beach, I think the park's going to need a substantial marketing campaign, including TV, radio and online advertising and marketing. Plus cooperation with the local tourism board and area hotels. That's an additional expense, which would require an owner willing to operate at a loss for the first year to pay for it.

I know nothing (well, at least according to the Hard Rock brass), but I will guess that the park sells for $52 million. Anyone else want to take a guess? We'll make this a contest for official TPI bragging rights. ;-)

From M. Ryan Traylor on December 17, 2008 at 1:55 PM
$48 million
From Derek Potter on December 17, 2008 at 2:37 PM
According to what I've read, it was 10 percent to get in. That means that if the price is 52 mil, the buyer fronts 5.2 million. 5.2 million to reopen Hard Rock park. That could easily be covered, given a halfway decent payment structure is reached. The figures you have are based on paying back the whole cost of buying in one year. If the money is spread out over 5 to 10 years, than covering the cost of purchase won't be a problem. There won't be any improvement costs, unless the Hard Rock name is dropped. That would basically force ownership to change quite a bit.

The Hard Rock theme does cost some money, but still can be a winner with creative minds, and remember that the new owners would have a lot less debt to manage (hence more money to play with for special events, concerts, halloween...etc, which drew big numbers when they did happen at Hard Rock). Plug 2-3 million guests into the equation at $40-$50 bucks a head, and all of the sudden it doesn't look so daunting.

A low "mortgage" payment, combined with management that knows where and how to market, how to set prices, how to manage payroll, and how to entertain people...makes for success.

I'll go a little higher Robert..62 mil.

From James Rao on December 17, 2008 at 4:23 PM
At a $400 million startup cost, I would be shocked to see the park go for less than $100 mil. However, if the intention is to purchase the park and move the rides elsewhere, then the initial monetary outlay is only part of the expense. Moving the rides and setting them up in another park can't be cheap. Not to mention the cost of doing something with the wasted land you now own in SC once you move all the rides somewhere else.

I really regret not making it to Hard Rock over the summer. It looked like it had the beginnings of a real nice park. Whether the mgmt team was too cocky, or foolish, or naive, or whatever, I think they were on the way to creating another great theme park vacation destination. It is truly a shame to see things end this way, with shrewd buyers just picking over the carcass of a once very promising theme park.

Now, why doesn't someone give me $400 mil to start a park? I wouldn't do much worse than Hard Rock, and with most of my mgmt and creative team assembled from regulars on this very website, I speculate the park we built would be absolutely amazing.

Robert, I've said it before, and I'll say it again: TPI regulars need to band together and build our own park. It will be a perfect amalgamation of theme and thrills...a marriage of the best of Disney and Cedar Point. People would immigrate to be near our park, guaranteed! Lead the charge, Mr. Niles. Make it happen!

From Tim W on December 17, 2008 at 4:26 PM
2 cents. no actually im gonna go with 60 million. thats actually really low considering the amount it took to build....
From Derek Potter on December 17, 2008 at 6:32 PM
Normally I would say 100 million, but given the state of the economy and the fact that banks are frozen solid right now, I think that many who would have bid 2 years ago won't bid now. Six Flags won't bid, Busch won't bid, Disney or Universal won't bid, Cedar Fair may bid small to get the rides, but still unlikely to go past minimum bid in that respect.

The parcel of land was dilapidated before Hard Rock moved in, and still isn't what I would consider prime real estate in MB, so an investor buying the park for the land is probably out of the question. There aren't a whole lot of companies that are prepared to expand or even buy a cache of rides that would end up costing more money to move anyway. 100 million bucks isn't worth moving rides or the land the park sits on, so if the bids do go that high, there's a good chance that the park will open.

It will really be a shame if it doesn't open. If I had the money, it would be mine.

Blackstone...Herschend...who's the winner? They did say that there was one national and one international company interested in reopening the park.

From Don Neal on December 18, 2008 at 7:35 AM
Would be interesting to see Blackstone do it. They have the money that would have been invtestetd in the Lego Land that was supposed to go in around Kansas City. Lego would be a strong family brand for Myrtle Beach and they could probably adapt the current rides to fit something Lego like. I know Lego would definitely make me consider another trip to Myrtle Beach sooner than I would have with a Hard Rock park.
From Joshua Counsil on December 18, 2008 at 8:39 AM
Today's the big day. I'm gonna say $65 M.

We could build one sweet park. I'd be in the design division due to my mechanical engineering background. Hey, that sounds like a good topic - where would you be in the theme park layout?

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