Now, it's Universal Orlando in a credit mess
Published: April 7, 2009 at 11:43 PM
That's the word from an Orlando Sentinel report this morning.
Unlike Six Flags, which took on excessive debt due to a long-ago leveraged buy-out and overly aggressive expansion plan, Universal Orlando's credit problem is more simply like a game of musical chairs. They might be caught standing when the music stops.
The music, this time, is widespread credit availability, which Universal Orlando, like many businesses, have been using to finance ongoing obligations, including park construction and payments on previous debt. Universal's making money and has several major new attractions coming up this year that will drive traffic to the resort. (Harry Potter, *cough*) But if Universal can't get existing creditors to deal, it's gonna have to come up with a load of cash, fast.
And that means no money for new rides, new shows or for much maintenance around the park.
Complicating this is Steven Spielberg's consulting deal with Universal, which soon gives him the opportunity to ask for a massive buy-out in lieu or continuing to cash his multi-million dollar annual royalty checks. Frankly, I don't envision that one being much of an issue. Spielberg's not going to do anything greedy and stupid that would endanger future paydays.
Could Universal end up in the same boat as Six Flags? Personally, I doubt it. Universal's got more resources, and a better market outlook, than Six Flags brings to the table.
But this isn't the type of stomach-churning thrill ride that fans want to be getting from their parks anymore. Let's leave that for the roller coasters, not the 10-K reports.