Now, it's Universal Orlando in a credit mess
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.
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.
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…
MR. MURPHY WRITES: It looks like nothing exciting in 2009 for Universal. NEW!
MR MURPHY also wrote: Nothing going on EXCEPT RRR and Harry Potter, if already greenlit.
RRR is opening in 2009 -- and frankly it looks pretty exciting.
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 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.
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!
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.
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 said talking, not yelling. ;-)
speak for yourself on the whole CGI thing....
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.
Meanwhile, down the road ...
From Forbes.com - Today
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