Now, it's Universal Orlando in a credit mess
Published: April 7, 2009 at 11:43 PM
We've been following on this site for years Six Flags' credit mess. (Search the archives, I'm too tired to link all the relevant stories at this stage.) But now another theme park company is facing drastic consequences due to credit issues.
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.
Published: April 8, 2009 at 6:07 AM
Pretty much what I got from that is they just will not be making any new rides for awhile, but I wonder about Harry Potter and RRR which probably have both been greenlit. Other than that, not too much of a suprise. Disney seems to have the same thoughts, but stopped before falling over the credit ledge. It looks like nothing exciting in 2009 for Universal.
Published: April 8, 2009 at 6:13 AM
I am sure Universal will be OK. They just don’t have Parks like six flags; they also have other entertainment venues. The movie division must be generating some cash... Therefore financing will be much easier for Universal. Heck – we can pass the hat on this site and all send them a few bucks…
Published: April 8, 2009 at 7:01 AM
MR. MURPHY WRITES: It looks like nothing exciting in 2009 for Universal. NEW!
I RESPOND: According to its website, 'Hollywood Rip Ride and Rocket' is scheduled to open this spring.
Published: April 8, 2009 at 7:15 AM
MR MURPHY also wrote: Nothing going on EXCEPT RRR and Harry Potter, if already greenlit.
Its the same as people saying Disney isn't doing anything new this year except Hall of Presidents and American Idol.
Also, for Six Flags being in the mess they are, Great America is getting a huge new attraction called Buccaneer Battle. So it looks like business as usual at the parks!
Published: April 8, 2009 at 7:36 AM
RRR is opening in 2009 -- and frankly it looks pretty exciting.
Or did you mean to write nothing "else" in 2009.
If so, my bad ... sort of.
Published: April 8, 2009 at 8:06 AM
It sounds like a similar situation. Obviously though we are looking at two different animals. Six Flags is an amusement park company, Universal Orlando is only a small part of a conglomerate that has a lot of financial weight. Oh, and let's not forget that Universal Orlando brings in over 10 million guests per year and wasn't in the financial mess that Six Flags was in. With Universal, it's a case of bad timing. The new attractions, the Harry Potter facelift and all of it's costs are coming at a bad time, creating potential problems that many companies have. I'm thinking that they will be able to fix this one.
It's not all roses though. Universal will be vulnerable this year just as Disney and all the other Orlando parks are. They do have the new attractions to help draw visitors, but a lot of people simply are not taking the plane ride/long drive big dollar vacation this year. They are instead staying closer to home.
The salvation for Universal (and all the other Florida parks) from a rough 2009 season is the local market and passholders.
Published: April 8, 2009 at 9:34 AM
It might just be me thinking this, but I've been to Universal and Seaworld recently, and they seem much busier that usual at this time of year.
Mardi Gras is a phenominal success again, so much that the Kelly Clarkson concert was pushed back an hour and the park hours extended until 10pm. (Although MC Hammer was the WORST "Concert/Production" I have ever experienced anywhere ever!)
Ride queues during the day have been hitting 120 mins for some, Simpsons and Spiderman.
Even the Classics, like Twister, are holding around 40 minutes.
Seaworld has been throwing out two Shamu Rocks each evening, the night time show and another dance show each evening. They've also completed a lot of the landscaping for Manta and opened it up for visitors to navigate around. (I'll be there tomorrow to see first hand).
Talking to tourists in my evening social job (Pub 2 nights a week, lol) I can see that there are a lot of US residents visiting from within state and out of state, who would have previously travelled abroad but decided to stay.
And the Brits are still coming over despite the credit crunch in the UK.
It seems they are taking advantage of the deals to come here last minute.
This all shows me that despite the economy being a little battered, people are still coming to Orlando as they did before. Maybe with a little less money to spend around town and in the parks, but they are still coming!
So to all the parks in the Orlando are, I say this
"If you build it, they will come"............
And one more thing - MUMMY RULES!!!!!
Published: April 8, 2009 at 10:25 AM
Weird to hear about a giant such as Universal being on the edge of financial trouble - but I'm sure they'll be fine. People are staying in more, buying DVD's instead of heading out for the night so Universal should just transfer the profit from that to their troubled Parks division..ha!
T'is true though - The Brits are still heading overdespite the recession. Right now we can get ridiculously cheap flights to Orlando and Tampa, a half decent hotel and Disney/Orlando Flexi-ticket passes for pretty much half price when booked altogether. In some cases going over to Florida for a week or two is cheaper than two weeks of summer sun in southern Europe! Obviously you've still got expenses when you're there though..
Published: April 8, 2009 at 12:39 PM
FWIW, Universal has long - I'm talking since the MCA days here - had a reputation, like other movie companies, for "seat of your pants" accounting.
Universal ran its tour in Hollywood since the 1960s, but only got into the theme park business in a major way with the opening of UO and the expansion of USH in the 1990s. By that time, Disney had established its theme parks as a cash cow that funded other parts of the company in lean times. Universal never developed that culture, and its theme park projects didn't leave money on the table for the rest of the company the way such projects did at Disney. (This is what I've heard from various Universal insiders.) Instead, UO leveraged what it had to build up UO. But the Universal suits too often see red ink and have in the past treated the parks like just another financially wayward movie production. Or, at least, threatened to do so.
It ain't just theme parks that are going to stall if this credit carousel stops spinning. If Hollywood can't get credit, look for a lot of low-budget movies featuring a small group of people sitting around talking in a room for 2010 and beyond.
Published: April 8, 2009 at 12:48 PM
Mr. Niles Writes:If Hollywood can't get credit, look for a lot of low-budget movies featuring a small group of people sitting around talking in a room for 2010 and beyond.
I Respond: So your saying that the big screen will FINALLY welcome 'Theme Park Insider: The Movie.'
I'm gonna go practice my acceptance speech for the Oscars.
Published: April 8, 2009 at 2:04 PM
I said talking, not yelling. ;-)
And I am quite sure that many of us would require substantial, expensive CGI work to appear acceptable on screen.
Published: April 8, 2009 at 3:10 PM
speak for yourself on the whole CGI thing....
I still think that Theme Park Insider the movie would be better suited to an ongoing Saturday Night Live sketch.
Published: April 9, 2009 at 6:36 AM
I think what Universal and Disney needs to do in the future is reach out with more deals for the locals. I think they are starting to do that, but since people are cutting vacations left and right, they need to get people closer.
Published: April 9, 2009 at 8:31 AM
Meanwhile, down the road ...
Orlando Sentinel - 04-09-09
No recession to see here: Walt Disney World’s flagship park, the Magic Kingdom, has apparently hit maxiumum capacity several times this week.
On Tuesday, for instance, the park at one point had to stop letting any guests in at all because it was so full. Disney’s other three theme parks remained open, though the parking lot at Disney’s Hollywood Studios also filled up that day, forcing visitors there to park in the Epcot lot and ride a bus over to the Studios.
There have been several reports from parkgoers that the Magic Kingdom hit capacity again yesterday.
Expect them to continue the rest of this week. The week of Easter is historically one of the busiest single weeks of the year for the parks.
Published: April 9, 2009 at 9:55 AM
From Forbes.com - Today
'The Mouse Is No Louse - Buy Disney'
The Disney name is one of the world's most recognized brands across all of its major business segments," says George Putnam, editor of the Turnaround Letter. "While the company's financial results have been hurt temporarily by the global economic weakness, we believe it is well positioned to prosper again when economic conditions improve."
As of this writing Disney shares are at $19.36 (up .56 cents). The 52-week high is $35.02 -- meaning even a moderate gain would be indicative of a healthy company with good prospects for the future.
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