one of its top parks closed indefinitely and its other parks looking at sharply reduced capacities, SeaWorld needs a backstop of cash to ensure that the company can pay its bills while making much-lower-than-usual revenue.The owner of the SeaWorld and Busch Gardens theme parks has been lining up credit as it tries to get through a pandemic for which there's still no end in sight. With
That's not exactly news, of course. All the theme park chains — including Six Flags and Cedar Fair — have been securing credit in response to the pandemic. What is news, however, is what else SeaWorld's interim CEO said that his company might do with the cash it's been borrowing.
Marc Swanson said that SeaWorld might be in the market to buy additional properties, in addition to paying bills with the money it's raising.
"There might be situations where there's market dislocation or competitors in industry who aren't able to weather the storm. So whether it's a water park, a hotel, or something like a park that we could look at and convert to a Sesame Place, for example, those are the type of things we're talking about," he said during SeaWorld's most recent conference call with investors.
As they say... very interesting.
Now, it's possible that SEI doesn't have its eyes on any properties at this time. By talking about acquisitions, Swanson could have just been trying to boost investors' confidence in the company. Higher confidence usually leads to higher stock prices, which, in turn, would protect SEI from becoming more of a takeover target itself.
But what if SeaWorld really is looking to buy? What could it afford? The company just closed the a private offering of $500 million of secured notes. That's a lot of cash, but how much does that really get you in the theme park business these days?
Remember that SeaWorld still needs a cash cushion in case its San Diego parks remain closed in 2021 and attendance continues to lag normal levels elsewhere around the country. And it's going to need to be sure that it can start repaying the money it borrows, even with shaky prospects for an economic recovery in the tourism industry. So it had better set aside a good chuck on this money for the very rainy days ahead.
But let's assume that the company could pull together something in the low nine figures to blow on a spending spree. Given that Disney and Universal can spend that much on a single attraction, fans ought to keep their expectations in check here when thinking about SeaWorld buying entire parks for that kind of money. SeaWorld's not going to buy anything among the Top 20 most-attended parks in the country. Heck, Swanson tried to set expectations lower than that, saying that the company was looking at water parks, hotels or Sesame Place-level parks.
So what's available there? Could SeaWorld buy one of the hotels around its property in Orlando in an effort to make that more of a true resort destination? Or should the company look to expand its footprint and buy into a new market? SeaWorld has water parks connected to all of its SeaWorld and Busch Gardens parks at this point. So any water or theme park acquisition likely would be in a new market for the company.
I'm sure that Theme Park Insider readers could nominate some candidates in or near their hometowns, so let's hear those in the comments. But in thinking about this, let's channel Buzz Price and think about feasibility.
I think the biggest "tell" in Swason's comments was his use of the Sesame Place brand. The company is converting its Aquatica water park in the San Diego area to the Sesame Place brand, which suggests how the company sees the current value of those two brands. Swanson's not talking about buying a new SeaWorld or Busch Gardens. But he is talking about acquiring a new Sesame Place. So let's think about markets where that brand best could work.
Personally, I would have loved to see Denver's Elitch Gardens become a SeaWorld-owned and operated Sesame Place, but the timing for that deal appears to have passed. Maybe Lakeside? Staying in the Rocky Mountain region, Salt Lake City's Lagoon offers great demographic potential for a family theme park, but perhaps too many thrill rides for the Sesame brand. Maybe SeaWorld could cut a deal with Cedar Fair for Kansas City's Worlds of Fun and Oceans of Fun? Or maybe Lake Compounce needs a savior?
Or, as I suggested earlier, perhaps this is all bluster and SeaWorld ain't about to buy anything. But Swanson has started the conversation. And with theme park owners across the country (and around the world) struggling during this pandemic, that conversation is only going to heat up until an industry recovery happens.Tweet
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