{"id":690,"date":"2017-03-19T02:17:43","date_gmt":"2017-03-19T02:17:43","guid":{"rendered":"http:\/\/www.theparkdb.com\/blog\/?p=166"},"modified":"2026-01-28T17:25:35","modified_gmt":"2026-01-28T17:25:35","slug":"the-business-of-theme-parks-part-i-how-much-money-do-they-make","status":"publish","type":"post","link":"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/","title":{"rendered":"The Business of Theme Parks (Part I): How Much Money Do They Make?"},"content":{"rendered":"<h1><span style=\"font-family: 'EB Garamond'; font-size: 20px;\"><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-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#Revenues_Not_Created_Equal\" title=\"Revenues: Not Created Equal\">Revenues: Not Created Equal<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#Revenue_Categories\" title=\"Revenue Categories\">Revenue Categories<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#DisneyUniversal\" title=\"Disney\/Universal\">Disney\/Universal<\/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\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#Super-Regional_Parks\" title=\"Super-Regional Parks\">Super-Regional Parks<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#Tier_1\" title=\"Tier 1\">Tier 1<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#Tier_2\" title=\"Tier 2\">Tier 2<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#The_Supermajority\" title=\"The Supermajority \">The Supermajority <\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#Revenue_Wrap-Up\" title=\"Revenue Wrap-Up\">Revenue Wrap-Up<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#Profitability\" title=\"Profitability\">Profitability<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#Summary_Framework\" title=\"Summary Framework\">Summary Framework<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#Im_DisneyUniversal\" title=\"I\u2019m Disney\/Universal:\">I\u2019m Disney\/Universal:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#I_will_be_a_super-regional_park\" title=\"I will be a super-regional park:\">I will be a super-regional park:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/#Im_an_indoor_attraction\" title=\"I\u2019m an indoor attraction:\">I\u2019m an indoor attraction:<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<\/span><\/h1>\n<h1 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Revenues_Not_Created_Equal\"><\/span><span style=\"font-size: 56px; font-family: 'EB Garamond';\"><strong>Revenues: Not Created Equal<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Revenues are the starting point for all cash flows. \u00a0While revenues can be disaggregated into its components, attendance and per person spending (subjects of a later post) \u2013 for our purposes, a high level view will suffice.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Using data from the Park Database, we\u2019ve plotted the distribution of theme park revenues for over 300 parks in the world.\u00a0 These are theme parks for which attendance numbers are readily available, and revenues can either be observed directly or estimated with a degree of confidence.<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-1.png\"><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-182 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-1.png\" width=\"886\" height=\"343\" \/><\/a><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Far from being a random distribution, it turns out that like many (most?) financial outcomes in the world, the amount of money theme parks make also conforms to a power law.\u00a0 Less than 5% of theme parks in the world make more than a $1 billion in revenues.\u00a0 In this chart, 20 theme parks are responsible for more than 90% of the revenues.<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-2.png\"><img decoding=\"async\" class=\"aligncenter wp-image-181 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-2.png\" alt=\"This chart was created to illustrate the point about the power law; certainly we could add a few thousand parks here, which would lengthen the rightmost tail, and change the % numbers listed here.\" width=\"886\" height=\"343\" \/><\/a><\/p>\n<blockquote><p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">This distribution rises from the fact that the components of attraction revenues are essentially: attendance x per capita guest spending, and attendance is also arranged in a power law distribution.\u00a0 <a href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-iv-how-do-they-make-money\/\">Read more about it here<\/a>. <a href=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture1.png\"><img decoding=\"async\" class=\"aligncenter size-large wp-image-7988\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture1-1024x618.png\" alt=\"\" width=\"800\" height=\"483\" srcset=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture1-1024x618.png 1024w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture1-300x181.png 300w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture1-768x464.png 768w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture1-1536x928.png 1536w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture1-2048x1237.png 2048w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/a><\/span><\/p><\/blockquote>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">There are several implications of this power law distribution, but for our purposes, you can understand that <span style=\"text-decoration: underline;\">the theme parks of the world can be classified into a handful of revenue segments<\/span>.<em>\u00a0<\/em><\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Let\u2019s get more concrete.\u00a0 Using publicly available data, we can list specific parks and their individual or average revenues.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">This small sample includes the highest attended and famous parks in the world.\u00a0 Even so, their revenue figures are completely unevenly distributed.<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-3.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-180 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-3.png\" width=\"932\" height=\"488\" \/><\/a><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">To call out some points and pre-empt your objections:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">What do these charts tell us? That essentially, in the world of theme parks, there is the Disney\/Universal category, and then everyone else.\u00a0 Consider that Ocean Park (Hong Kong) is more highly attended than Hong Kong Disneyland, but has a revenue level that is 50% of the latter.\u00a0 Samsung Everland is among the highest attended theme parks in Asia, but is also squarely in the lower tiers in terms of revenues.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Average revenues for chains\/multi-park entities were calculated by dividing by the total number of parks, which included in many cases, seasonal or smaller operations such as waterparks or indoor attractions \u2013 Cedar Fair, Six Flags, Seaworld. What is important to note here are rough orders of magnitude, not the exact amounts.\u00a0 Even if these seasonal operations were excluded in the denominator, the average would not be much more than $100 million \u2013 in all three cases.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">We are entirely cognizant, and in fact believe there is a <em>strong probability<\/em>, that Cedar Fair, Six Flags, and Seaworld each have top performing parks that are in the $200-$400 million range. However, this also means that they have several parks that are much less than $100 million in revenues.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">As a corollary to the first point, while attendance is an important metric in terms of planning and sizing, there is a weak correlation between it and cash flows. <u>Revenues are the more important factor when considering the theme park as a business, rather than as a gift to the people, which some of these parks are.<\/u><\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">There are famous theme parks that are missing in this chart. \u00a0We&#8217;ve only focused on publicly available revenues.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">For more detail on the methodology, see below; for a complete methodology, please contact us.<\/span><\/p>\n<p><strong><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-6.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-183 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-6.png\" width=\"1343\" height=\"419\" \/><\/a><\/strong><\/p>\n<blockquote><p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">2024 update: while the above data are from the pre-COVID era, the underlying principles are essentially unchanged.\u00a0 Here&#8217;s a chart of values from 2022 across a range of types.\u00a0\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture2.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-7985\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture2-582x1024.png\" alt=\"\" width=\"582\" height=\"1024\" srcset=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture2-582x1024.png 582w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture2-171x300.png 171w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture2-768x1350.png 768w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture2-874x1536.png 874w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture2-1165x2048.png 1165w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture2.png 1752w\" sizes=\"(max-width: 582px) 100vw, 582px\" \/><\/a><\/p>\n<p>&nbsp;<\/p><\/blockquote>\n<h1 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Revenue_Categories\"><\/span><span style=\"font-size: 56px; font-family: 'EB Garamond';\"><strong>Revenue Categories<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">You might observe several distinct categories here.<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-5.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-186 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-5.png\" width=\"886\" height=\"343\" \/><\/a><\/p>\n<h3><span class=\"ez-toc-section\" id=\"DisneyUniversal\"><\/span><strong>Disney\/Universal<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Disney and Universal operate the only billion dollar parks in the world (<em>2024 edit: while this was true at the time of writing, <a href=\"https:\/\/www.theparkdb.com\/blog\/the-mega-chinese-theme-parks\/\">Chimelong Ocean Kingdom<\/a> has almost certainly passed the $1b mark)<\/em>. \u00a0<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">It&#8217;s<\/span><span style=\"font-size: 20px; font-family: 'EB Garamond';\"> unlikely that in the foreseeable future, there will be other parks that can match them in terms of revenues.\u00a0 Not impossible, just unlikely.\u00a0 This is as a result of several factors:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Both parks generate billions, but spend billions to get there. Consider the development cost of the last two Disneyland parks; Hong Kong at $4.5 billion, or Shanghai Disney at a reported $4 billion.\u00a0 Obtaining funding in this magnitude, for unproven concepts, is prohibitive; i.e., it\u2019s not 2007 anymore.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Moreover, spending the billions is no guarantee of success.\u00a0 The factors leading to success in the theme park business are ill-defined.\u00a0 As much as consultants will tell you they know what to do, each park\u2019s market dynamics are impossible to predict.\u00a0 The best thing you can do, as a park developer, is to approach this as a risk management exercise and limit your downside.\u00a0 Euro Disney is struggling to generate profits almost 30 years after opening, while Hong Kong Disneyland has been cash flow positive and net income negative.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Disney and Universal have first mover advantages. Big moats.\u00a0 This comes in two forms.\u00a0 First, compared to when many of these theme parks were built, the world has urbanized to an extent \u2013 and central banks have so pushed up asset prices (i.e. land) \u2013 that being able to marshal the resources to purchase the minimum of 15-30 hectares of prime land next to a large metropolis, is an unbreachable goal, for most.\u00a0 The first parks for both Disney and Universal were built in 1955 and 1964, respectively.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Also, to compete head to head with either Disney or Universal will require you to outspend them.\u00a0 In their competitive response, however, they merely have to add a new ride or attraction. \u00a0When Disneyland was built in the 1955 for $17 million, which adjusted for inflation would still be under $200 million dollars, its cost was way under the threshold you would need to spend in 2017 to just be on par with peoples\u2019 expectations.\u00a0 By being first it had the advantage of not needing to completely fill the park with content, just to catch up to the existing level of peoples\u2019 expectations.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">For both Disney and Universal, their theme parks are a location-based delivery system for the rest of their media business. Not entirely coincidental to their theme parks\u2019 success is the fact that both brands of parks are owned by media &amp; entertainment conglomerates with television, movie, and other media properties that allow cross-pollinating (let\u2019s use this word instead of synergy) business models between their theme parks and the rest of their assets. \u00a0This cannot be underemphasized.\u00a0 Walt Disney recognized this in 1957.<\/span><br \/>\n<a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/b9988175702b3219c41021bd71aa5def.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-192 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/b9988175702b3219c41021bd71aa5def.jpg\" width=\"736\" height=\"642\" \/><\/a><\/li>\n<\/ul>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">The key takeaway here: Don\u2019t hope for getting Disney or Universal attendance, or revenues, if you\u2019re not prepared to spend as much as them, and if you don\u2019t have the media reach \/ mindshare as they do. \u00a0This is a key point we have to repeat while working in places like, say, China.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Super-Regional_Parks\"><\/span><span style=\"font-size: 40px; font-family: 'EB Garamond';\"><strong>Super-Regional Parks<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">You can divide this category of parks into two tiers.\u00a0 This category is an almost absurdly wide range of revenues, but the fact is that this category doesn\u2019t actually have that many parks in it!<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Tier_1\"><\/span><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><em>Tier 1<\/em><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">The first tier generates between $350 million to $1 billion in revenues.\u00a0 We could also refer to this category as Disney\/Universal-lite, because guess whose parks we also see here?<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">This is the category for the smaller Disney and Universal parks &#8211; Hong Kong Disneyland, Euro Disney. \u00a0<em>Maybe <\/em>Universal Studios Singapore.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Through publicly available information we cannot know for sure, but given the dispersion of their attendance, it is probable that the one or two largest Cedar Fair, Six Flags, and Seaworld operations are in this range.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">The characteristics of these theme parks are also similar to the first Disney\/Universal category: high development spend, and\/or first-mover advantage when land costs were low. Hong Kong Disneyland famously spent more than $4 billion to open by 2005, and Euro Disney spent almost as much in the early 1990s.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">And once again, first mover advantage is inherent: the first Seaworld and Six Flags attractions were built in the 1960s and 1970s, before land prices in most North American markets showed hockey stick trajectories. \u00a0Cedar Point (Cedar Fair) has been sitting on the same land <u>since 1870<\/u>.<\/span><\/li>\n<\/ul>\n<h4><span class=\"ez-toc-section\" id=\"Tier_2\"><\/span><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><em>Tier 2<\/em><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Between $100 million and $350 million, this tier includes most of the parks belonging to the regional operators &#8211; Cedar Fair, Six Flags, and Seaworld, and includes the largest parks in developed countries outside of the United States.<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Samsung Everland is the largest theme park in Korea in size and attendance. \u00a0Tivoli Gardens in Denmark, Ferrari World in Abu Dhabi, Futuroscope in France, and according to our estimates, Europa Park in Germany as well as Blackpool in England are likely at the upper edge of this tier, flirting with the lower edge of the Star Performer category.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">The higher performing Legoland park(s) are also in this category.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">One difference from the previous Tier 1, is that the largest waterparks are likely in this category; i.e., those getting over 1 to 1.5 million in attendance. This is only a handful of names.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">The key takeaway here is a simple probabilistic one.\u00a0 It is much more likely that any new large park development falls into this category, between $100 million to $350 million range.\u00a0 Unless you are Disney or Universal.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"The_Supermajority\"><\/span><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong><span style=\"font-size: 40px; font-family: 'EB Garamond';\">The Supermajority<\/span> <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Most theme parks in the world generate less than $100 million in revenues. \u00a0This is the largest category and includes most of the waterparks in the world, most (all?) indoor theme parks, and regional ride parks.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Clients sometimes have an adverse reaction against being placed in this category, without considering that what actually <em>matters<\/em> in a real estate development is whether you see a return on your investment.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">I.e, would you rather run a $10 million park that returns 30% every year, or have a four billion dollar park that has not made money for decades?<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Merlin Entertainments famously operates dozens of midway attractions fitting into this category, with a high double-digit IRR. Indoor parks such as Kidzania can be very profitable, seeing immediate or even <em>pre-opening<\/em> returns on their investment from multiple revenue streams, such as sponsorship.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Overall, the profitability of smaller parks is probably higher. In certain regions, such as Asia\/Southeast Asia, the ticket price to get into a waterpark is on par with, if not higher than, the ticket price for a theme park.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Exhibits A &amp; B: Consider that in 2016, Samsung Everland had a headline adult price of 58,000 KRW against a 74,000 KRW peak price for Caribbean Bay, its associated waterpark.\u00a0 At Chimelong Paradise, the comparison was 250 RMB and 300 RMB, respectively.\u00a0 These two are the highest attended waterparks in Asia.This, while waterparks generally have capex requirements that are a fraction of that of a theme park.<\/span><\/li>\n<\/ul>\n<h1 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Revenue_Wrap-Up\"><\/span><span style=\"font-size: 56px; font-family: 'EB Garamond';\"><strong>Revenue Wrap-Up<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">The actionable response to this analysis of revenues can be distilled into a few questions, as below:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">What revenue segment can you feasibly target?<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">What makes you think that you will be in any category aside from the Supermajority, where 90%+ of the parks of the world are? By spending more?\u00a0 This is <em>not<\/em> to say that it is impossible.\u00a0 Just that it is necessary to really construct your case carefully.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">If you are aiming high, then first, contact us. \u00a0Second, do you have the resources to build a billion dollar park? \u00a0Or, can you get the local government to subsidize you?<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Profitability\"><\/span><span style=\"font-size: 40px; font-family: 'EB Garamond';\"><strong>Profitability<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Once you target your revenue figure, whether through a calculated or dart-throwing approach, now it\u2019s time for profits.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">This part is relatively easier, because empirically, it seems that EBITDA margins at successful parks, regardless of their size, seem to be constrained in a tighter range of between 20-40%.<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-4.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-184 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-4.png\" width=\"445\" height=\"287\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<blockquote><p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">2024 update: here&#8217;s an updated chart of 2022 values and across a wider array of park types (including smaller operations).\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><a href=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture3.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-7986\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture3-1024x560.png\" alt=\"\" width=\"800\" height=\"438\" srcset=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture3-1024x560.png 1024w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture3-300x164.png 300w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture3-768x420.png 768w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture3-1536x840.png 1536w, https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Picture3-2048x1121.png 2048w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/a>\u00a0<\/span><\/p>\n<p>&nbsp;<\/p><\/blockquote>\n<h1 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Summary_Framework\"><\/span><span style=\"font-size: 56px; font-family: 'EB Garamond';\"><strong>Summary Framework<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">To do a simple analysis, the three metrics that are important in evaluating theme park economics are:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Topline Revenues<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Profit Margin<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Development Cost<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">If that seems laughably simple that\u2019s because it is.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">The planning process should then be approached by trying to find the right range of these measures in themselves, and then calibrating these three measures with each other. \u00a0I.e., how feasible is it to achieve those revenues in the first place, what do you need to spend to target those revenues, how feasible is it to achieve a given profit margin, etc.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Here are some back of envelope examples.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Im_DisneyUniversal\"><\/span><span style=\"font-size: 20px; font-family: 'EB Garamond';\">I\u2019m Disney\/Universal:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">How feasible is it to suck $1 billion in revenues out of the market?<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Can I hit about $300 million in EBITDA?<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Given $300 million in EBITDA, what can I afford to spend? Who can I hit up for money?\u00a0 How much in government incentives can I get?<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Given how much I can afford to spend, what is the sensitivity of returns to a 25% swing in revenues, either way?<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"I_will_be_a_super-regional_park\"><\/span><span style=\"font-size: 20px; font-family: 'EB Garamond';\">I will be a super-regional park:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">How feasible is it to coax $350 million in revenues out of the market? This is at the upper range of revenues for any theme park, so how will I hit this?<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">How will I differentiate the park from what\u2019s in the market now?<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Given the cost structure, how feasible is $100 million in EBITDA?<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">With $100 million in EBITDA, what can I afford to spend?<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Given what I can spend, can I build a park that is on par with the best theme parks in the world?<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Given how much I can afford to spend, what is the sensitivity of returns to a 25% swing in revenues, either way?<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Im_an_indoor_attraction\"><\/span><span style=\"font-size: 20px; font-family: 'EB Garamond';\">I\u2019m an indoor attraction:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">How feasible is it to generate $15 million in revenues in this market? How do I position myself in an area of maximum traffic?<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Given the cost structure, how feasible is $5 million in EBITDA?<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Given this, what can I afford to spend? Is there a mall developer I can partner with?<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Lastly, we want to leave you with the following chart.\u00a0 One of the corollaries to the power-law revenue distribution is that seemingly, the higher the attendance at a theme park, the higher the ticket price!\u00a0 Of course, this may not actually be the case because we are not comparing like-for-like items.\u00a0 A stay at a Disney or Universal park is not the same as spending two hours in an FEC.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Rather, what this chart <em>reinforces<\/em> is that the theme park industry is a cumulative advantage industry: scale and first-mover advantage matters.<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-7.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-185 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/03\/Revenue-Chart-7.png\" width=\"810\" height=\"417\" \/><\/a><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">This is a brief introduction to lay the foundation of later posts, but it is our hope that you\u2019ve found it useful.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Part II, relating to costs and investment returns, is <a href=\"http:\/\/www.theparkdb.com\/blog\/index.php\/2017\/12\/27\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/\">here<\/a>.<\/strong><\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Part III, relating to funding sources, is <a href=\"https:\/\/www.theparkdb.com\/blog\/fundingandfinancing\/\">here<\/a>.\u00a0\u00a0<\/strong><\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Part IV, relating to the composition of revenues (attendance and per capita expenditures), is <a href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-iv-how-do-they-make-money\/\">here<\/a>.\u00a0 \u00a0<\/strong><\/span><\/p>\n<hr \/>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">If you&#8217;re ready, <a href=\"https:\/\/www.theparkdb.com\/store\/product\/development-and-business-model-suite\/\">develop your own models<\/a> using the same template we use.\u00a0\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Revenues: Not Created Equal Revenues are the starting point for all cash flows. \u00a0While revenues can be disaggregated into its components, attendance and per person spending (subjects of a later post) \u2013 for our purposes, a high level view will suffice. Using data from the Park Database, we\u2019ve plotted the distribution of theme park revenues [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3746,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[15,7,9],"tags":[14,16,17,18,19],"class_list":["post-690","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics","category-guides-and-references","category-theme-parks","tag-disney","tag-revenues","tag-theme-park-business-model","tag-theme-parks","tag-universal"],"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\/690","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=690"}],"version-history":[{"count":0,"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/posts\/690\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/media\/3746"}],"wp:attachment":[{"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/media?parent=690"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/categories?post=690"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.theparkdb.com\/blog\/wp-json\/wp\/v2\/tags?post=690"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}