{"id":1242,"date":"2018-09-19T22:26:15","date_gmt":"2018-09-19T22:26:15","guid":{"rendered":"http:\/\/www.theparkdb.com\/blog\/?p=598"},"modified":"2025-05-02T01:46:28","modified_gmt":"2025-05-02T01:46:28","slug":"fundingandfinancing","status":"publish","type":"post","link":"https:\/\/www.theparkdb.com\/blog\/fundingandfinancing\/","title":{"rendered":"Attraction &#038; Theme Park Funding and Financing &#8211; A Primer"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 ez-toc-wrap-left counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.theparkdb.com\/blog\/fundingandfinancing\/#Due_to_their_size_theme_parks_and_attractions_are_typically_financed_through_creative_and_diversified_sources\" title=\"Due to their size, theme parks and attractions are typically financed through creative and diversified sources.\">Due to their size, theme parks and attractions are typically financed through creative and diversified sources.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.theparkdb.com\/blog\/fundingandfinancing\/#Government_Contributions\" title=\"Government Contributions\">Government Contributions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.theparkdb.com\/blog\/fundingandfinancing\/#Other_Sources_of_Funding\" title=\"Other Sources of Funding\">Other Sources of Funding<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.theparkdb.com\/blog\/fundingandfinancing\/#Illustrative_Example\" title=\"Illustrative Example\">Illustrative Example<\/a><\/li><\/ul><\/nav><\/div>\n\n<h3 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Due_to_their_size_theme_parks_and_attractions_are_typically_financed_through_creative_and_diversified_sources\"><\/span><strong>Due to their size, theme parks and attractions are typically financed through creative and diversified sources.<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>When done right,\u00a0attractions generate enormous economic impacts.\u00a0 Daily, they can become engines driving a population of people the size of a city within their gates.<\/p>\n<p>This results in trickle down impacts\u00a0to neighboring businesses, like restaurants, parking lots, hotels, and other merchants.\u00a0 Job growth is created during both the construction of the park,\u00a0and also on a sustained basis.\u00a0 Tax receipts in the form of property taxes and sales\/VAT are also grown and sustained.\u00a0 And for some areas,\u00a0attractions become a valuable source of foreign exchange or dollars.<\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\" wp-image-610 aligncenter\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2018\/09\/econim.jpg\" alt=\"\" width=\"653\" height=\"490\" \/><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">All this is to say that for most attractions of a certain size, the local or regional government <span style=\"text-decoration: underline;\">is an invaluable partner<\/span>.\u00a0 With manifold economics benefits to the areas surrounding them, theme parks and waterparks are a prime candidate for the <strong>public-private partnership<\/strong> model of financing, and any developer or planner must keep this in mind.<\/span><\/p>\n<blockquote><p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><em><strong>Indeed, many of the largest parks in the world have been sponsored either directly or indirectly by the governments surrounding them.\u00a0<\/strong> <\/em><\/span><\/p><\/blockquote>\n<p><img decoding=\"async\" class=\" wp-image-602 aligncenter\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2018\/09\/usj-1914942_1280.jpg\" alt=\"\" width=\"833\" height=\"555\" \/><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Disney in Paris, Hong Kong, and Shanghai feature heavy government involvement.\u00a0 The Osaka Government was an investor in Universal Studios Japan.\u00a0 Tivoli Gardens was established in\u00a01842 by royal charter, on the grounds that it would distract the populace from mounting social and economic problems.\u00a0 Yas Island&#8217;s attractions, including\u00a0Ferrari World Abu Dhabi, were developed by government-owned Miral.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Indeed, most of the mega-projects in the UAE have been\u00a0developed under the guidance of government-owned and sovereign entities.\u00a0 Even in the United States, a large proportion of waterparks are municipal-owned and\/or operated.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Government_Contributions\"><\/span><strong>Government Contributions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">A summary of the subsidies and contributions that governments typically provide, or can provide:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Outright cash grants or equity (cash) contributions.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Land acquisition, appropriation through eminent domain, relocation of residents, or even reclamation.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Infrastructure construction in the form of metro lines, roads, and utilities.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Tax subsidies on VAT or accelerated depreciation.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Lifting of restrictions on zoning or other ordinances.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Government loans at favorable rates.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Granting of licensing for residential construction, or other uses like casino gambling.<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Other_Sources_of_Funding\"><\/span><strong>Other Sources of Funding<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Nor is attraction financing limited to government funds or subsidies.<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Initial public offerings (IPOs)<\/strong> are a not uncommon source of permanent capital.\u00a0 As two of the most prominent examples, Euro Disney and Dubai Parks\u00a0&amp;\u00a0Resorts were both funded in this manner.\u00a0 Of course, this involves giving up equity and control in return for diversifying the funding sources.\u00a0 But of course, there are sources of funding that do not dilute ownership.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Sponsorships<\/strong> are probably the best known and frequently used among this category.\u00a0 The original Disneyland was financed in large part by the television studio ABC-Paramount.\u00a0 Afterwards, 33 &#8220;lessees&#8221; provided ongoing sponsorship to different pavilions and areas of the park.\u00a0 But sponsorships are not limited to parks of this scale.\u00a0 Kidzania, a chain of indoor experiential centers, famously pre-funds its construction through sponsor deposits, and also receives sponsorship funds to the tune of 15-30% of total revenues\u00a0in this manner.<\/span><\/li>\n<\/ul>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.disneylandclub33.com\/Club%2033%20Name%20&amp;%20History.htm\"><img decoding=\"async\" class=\"aligncenter wp-image-1231\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2018\/09\/Screen-Shot-2022-03-30-at-11.29.57-AM.png\" alt=\"\" width=\"800\" height=\"554\" \/><span style=\"font-size: 10px; font-family: Geologica;\">Source<\/span><\/a><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Peripheral land uses<\/strong> can also be a source of diversified funding.\u00a0 Theme parks in China regularly sell off strata-title retail shops within the grounds of their attraction.\u00a0 And master planned attractions and resorts have the option to sell development rights for hotels, retail, parking, or other land uses in the areas adjacent to the main gate.<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Illustrative_Example\"><\/span><strong>Illustrative Example<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Here&#8217;s an example of theme park funding, using Euro Disney S.C.A., commonly known as Disneyland Paris.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-625 aligncenter\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2018\/09\/Presentation2-e1537395918402.png\" alt=\"\" width=\"738\" height=\"306\" \/><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Disney contributed $100 million, which went towards a 49% ownership of the project.\u00a0 The remaining 51% of\u00a0the project was offered to the public via an initial public offering that raised $1 billion.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">The first loan was a staggering $1.7 billion.\u00a0 The French Government lent $770 million of this amount, the remainder was covered by a consortium of seven banks.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">The government further granted a cash gift of $30 million and contributed over $400 million worth of infrastructure, including an extension of the RER rail and TGV line, utilities, and a subsidy for the land.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Other incentives granted to Disney included a drop in the tax rate on ticket sales, and an accelerated depreciation schedule (10 years, instead of the standard 20).<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Midway through construction, cost overruns forced a second loan &#8211; this time with a consortium with over 60 banks &#8211; of over $500 million, and an add-on equity offering, which raised over $100 million.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">The economic fortunes were supposed to be further boosted by residential real estate sales in the neighboring area, and the eventual opening of a second gate.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Since\u00a0opening, the park has gone through\u00a0multiple rounds of restructuring due to financial problems and unforeseen woes, but the initial financing remains a representative example of the types of funding sources available in the public-private partnership model.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Building on the case of Euro Disney, subsequent government partners to Disney have required higher equity contributions from Disney itself, and have taken actual equity stakes.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 20px; font-family: 'EB Garamond';\">****************************<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">We cover these cases, and others, <a href=\"https:\/\/www.theparkdb.com\/store\/product\/devfinancing\/\">in our dossier on the financing of major theme parks<\/a>, now available in <a href=\"http:\/\/theparkdb.com\/store\">our store<\/a>.\u00a0 For pro users and researchers, may we recommend checking it out.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Due to their size, theme parks and attractions are typically financed through creative and diversified sources. When done right,\u00a0attractions generate enormous economic impacts.\u00a0 Daily, they can become engines driving a population of people the size of a city within their gates. This results in trickle down impacts\u00a0to neighboring businesses, like restaurants, parking lots, hotels, and [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3799,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7,9,44],"tags":[],"class_list":["post-1242","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-guides-and-references","category-theme-parks","category-waterparks"],"acf":{"":"","bfi_title":"","bfi_title_2":"","bfi_description":"","chart_image":"","chart_title":"","chart_description":"","bc_title":"","bc_sub_title":"","bc_content":"","bc_right_side_content":"","highlighted_image":"","highlighted_sub_title":"","highlighted_title":"","highlighted_bottom_text":"","highlighted_button_text":"","highlighted_button_link":"","below_highlighted_title":"","below_highlighted_sub_title":"","below_highlighted_content":"","below_highlighted_right_side_title":"","below_highlighted_list":""},"_links":{"self":[{"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/posts\/1242","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/comments?post=1242"}],"version-history":[{"count":0,"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/posts\/1242\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/media\/3799"}],"wp:attachment":[{"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/media?parent=1242"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/categories?post=1242"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/tags?post=1242"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}