{"id":697,"date":"2017-12-27T12:10:56","date_gmt":"2017-12-27T12:10:56","guid":{"rendered":"http:\/\/www.theparkdb.com\/blog\/?p=312"},"modified":"2026-01-28T17:27:52","modified_gmt":"2026-01-28T17:27:52","slug":"the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn","status":"publish","type":"post","link":"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/","title":{"rendered":"The Business of Theme Parks (Part II): How Much Do They Cost?  And Earn?"},"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-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/#The_Mega_Parks\" title=\"The Mega Parks\">The Mega Parks<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/#Expectations\" title=\"Expectations\">Expectations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/#Ticket_Prices\" title=\"Ticket Prices\">Ticket Prices<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/#Case_Studies\" title=\"Case Studies\">Case Studies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/#A_Caveat_Creative_Financing\" title=\"A Caveat: Creative Financing\">A Caveat: Creative Financing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/#Summary\" title=\"Summary\">Summary<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/#_The_Outperformers\" title=\"\u00a0The Outperformers\">\u00a0The Outperformers<\/a><\/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-ii-how-much-do-they-cost-and-earn\/#The_RegionalsSuperregionals\" title=\"The Regionals\/Superregionals\">The Regionals\/Superregionals<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/#Low_sf\" title=\"Low $\/sf\">Low $\/sf<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/#A_Time_and_Place_for_Everything\" title=\"A Time and Place for Everything\">A Time and Place for Everything<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/#Waterparks\" title=\"Waterparks\">Waterparks<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/#Summary-2\" title=\"Summary\">Summary<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-ii-how-much-do-they-cost-and-earn\/#Business_Planning\" title=\"Business Planning\">Business Planning<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n<p><span style=\"font-size: 15px; font-family: Geologica; line-height: 22px;\">In the <a href=\"http:\/\/www.theparkdb.com\/blog\/index.php\/2017\/03\/19\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/\">first part of this series<\/a>, we evaluated the revenue side of theme park business models.\u00a0 In this series, we&#8217;ll continue our exploration of the economics of theme parks by\u00a0reviewing the cost of building amusement and water parks.<\/span><\/p>\n<p><span style=\"text-decoration: underline; font-size: 15px; font-family: Geologica; line-height: 22px;\">More importantly, however, we will be looking at what theme park development costs mean for <em>profitability<\/em>.<\/span><\/p>\n<p><span style=\"font-size: 15px; font-family: Geologica; line-height: 22px;\">As with the first installment, we&#8217;re covering a lot of ground here because\u00a0we&#8217;d like to speak not only to industry insiders, but any other potential developers, investors, or those curious about theme park or amusement park business plans.<\/span><\/p>\n<blockquote><p><span style=\"font-size: 15px; font-family: Geologica; line-height: 22px;\"><strong>Generally, the larger the theme park budget, the lower the probability that the attraction will be project-level profitable.\u00a0 <\/strong><\/span><\/p><\/blockquote>\n<p><span style=\"font-size: 15px; font-family: Geologica; line-height: 22px;\">This means that indoor theme parks and waterparks have the probability for the highest returns, followed by regional and superregional parks.<\/span><\/p>\n<p><span style=\"font-size: 15px; font-family: Geologica; line-height: 22px;\">Lastly, mega parks built by Disney and Universal usually feature the lowest project-level returns.<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/overallsummaryf.png\"><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-421 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/overallsummaryf.png\" width=\"1360\" height=\"940\" \/><\/a><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><em>We define project-level returns as EBITDA profits\u00a0against total attraction development costs.\u00a0 Indeed, certain positions along the capital stack will see much higher returns based on leverage, the existence of pre-opening funding sources, etc.\u00a0\u00a0<strong><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/overallchart-1.png\"><br \/>\n<\/a><\/strong><\/em><\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Here&#8217;s the dataset we used.\u00a0 Click on any\/all pictures for larger versions.\u00a0 The datasets\u00a0in this and all blog posts use illustrative data from publicly available sources or are internal estimates.<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/summary.png\"><img decoding=\"async\" class=\"aligncenter wp-image-392 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/summary.png\" width=\"1454\" height=\"700\" \/><\/a><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Now, if you literally just clicked into this post to answer the question &#8220;how much does it cost to build a theme park or water park&#8221;, here you go:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Mega theme parks; i.e. Disney and Universal: $2b to $4b USD<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Regional and superregional theme parks: $200-$500m USD<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Waterparks: <a href=\"http:\/\/www.theparkdb.com\/blog\/index.php\/2017\/11\/01\/deconstructing-a-waterpark\/\">as mentioned in our previous post<\/a>, a water playground can be constructed for less than $1 million.\u00a0 But most common is between $10-$40m.\u00a0 Anything above\u00a0$40-$60m is truly aiming high.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Indoor theme parks: $10-$30m USD.\u00a0 <a href=\"https:\/\/www.theparkdb.com\/blog\/an-introduction-to-indoor-entertainment\/\">More details in this post<\/a>.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">But, we hope you&#8217;ll continue on.<\/span><\/p>\n<h1 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"The_Mega_Parks\"><\/span><strong>The Mega Parks<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Mega parks are the Disney and Universals, costing at least $2b-$3b in order to build, and with cash flow up to $300m in EBITDA.<\/span><\/p>\n<blockquote><p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>As we saw in the <a href=\"http:\/\/www.theparkdb.com\/blog\/index.php\/2017\/03\/19\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/\">previous installment<\/a>, Disney and Universal parks are the only theme parks in the world that are capable of achieving $1b+ in revenues.\u00a0 But in order to do so, they spend\u00a0accordingly.\u00a0<\/strong><\/span><\/p><\/blockquote>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">In the past decade, it was a rare Disney\/Universal theme park that cost <em>less<\/em> than $2b-$3b in order to build.\u00a0\u00a0If they did, it was because they\u00a0<span style=\"text-decoration: underline;\"><strong>saved on land costs<\/strong><\/span>:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Universal Studios Japan amortized its land costs in the form of a lease;<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Universal Studios Singapore is part of the larger Resorts World Singapore and did not break out segmented land costs;<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Tokyo DisneySea&#8217;s land basis was from the 1960s, when the Oriental Land Company (parent company) acquired land for the original Tokyo Disneyland.<\/span><\/li>\n<\/ul>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/chart23.png\"><br \/>\n<img decoding=\"async\" class=\"aligncenter wp-image-402 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/chart23.png\" width=\"1402\" height=\"343\" \/><\/a><br \/>\n<span style=\"font-size: 20px; font-family: 'EB Garamond';\">Evidence from publicly-available sources suggests that the profit levels for most recent Disney and Universal projects are in the mid-single digits in terms of rate of return.\u00a0\u00a0The reasons are manifold and detailed below.\u00a0 The most important reason is that these parks cost way too much relative to the $$&#8217;s they generate.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Why?<\/span><\/p>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Expectations\"><\/span><strong>Expectations<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong><em>First,\u00a0there&#8217;s been an inflation in theme park expectations over the past few decades.<\/em><\/strong><\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">The original Disneyland opened <a href=\"https:\/\/www.ocregister.com\/2015\/07\/16\/disneyland-opening-day-these-were-the-rides-and-exhibits-in-1955\/\">with\u00a0an attraction mix (~20)<\/a> that would be considered half-finished today, with a budget of less than $200 million in inflation-adjusted dollars.<\/span><\/p>\n<figure id=\"attachment_404\" aria-describedby=\"caption-attachment-404\" style=\"width: 711px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/thecavenderdiary.com\/tag\/disneyland-opening-day\/\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-404\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/map-of-disneyland-on-opening-day-1955.jpg\" width=\"711\" height=\"516\" \/><\/a><figcaption id=\"caption-attachment-404\" class=\"wp-caption-text\"><span style=\"font-size: 10px; font-family: Geologica;\">Not a coaster in sight.<\/span><\/figcaption><\/figure>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">These days, Disney and Universal can spend between $30 and $100 million<strong> <em>for a single attraction<\/em><\/strong> in a park full of $30 to $100 million attractions.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Partially, these theme parks are competing with&#8230;<em>themselves<\/em> in the form of the weight of decades-long accumulated guest\u00a0expectations about Disney and Universal parks.\u00a0 Partially, these theme parks also compete with the various forms of entertainment that didn&#8217;t exist when the first theme parks opened &#8211; videogames, internet, social media, cable tv.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">The net result is that the threshold for being considered a notable theme park has been raised to such an extent that not only is it impossible for any non-Disney or Universal theme park to compete with the former, but Disney and Universal find it\u00a0difficult to meet\u00a0the weight of their own expectations.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-403 aligncenter\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/tdr.png\" alt=\"\" width=\"784\" height=\"440\" \/><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Tokyo Disney Resort is famous for its meticulously, beautifully prepared data books and annual reports.\u00a0 In them, they lay out their future short- and medium-term plans; the above chart is one that was prepared in 2015.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">In it you can see that they planned to spend approximately 11 billion yen on each of its two parks over the next five years, <strong>which equates to $200 million total:\u00a0<\/strong>$200 million being, nearly the price tag for a regional ride park.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">This is a major\u00a0reason each subsequent park is getting more expensive to build, because the attraction mix that you need to open with in order to compete with each existing park is stupendous.\u00a0 Universal Studios Japan is going one further\u00a0<strong><a href=\"https:\/\/www.usj.co.jp\/company\/company_e\/2017\/0608.html\">and adding a Nintendo World area at a cost of $500 million<\/a><\/strong>, following the successful Wizarding World of Harry Potter, whose price tag was also reported as in the range of $300 million.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">$500 million is how much <a href=\"http:\/\/money.cnn.com\/2017\/10\/25\/technology\/legoland-new-york\/index.html\">Legoland New York is supposed to cost<\/a>, in total.<\/span><\/p>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Ticket_Prices\"><\/span><strong>Ticket Prices<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Next<\/strong>, <em>while development costs can range greatly, especially on the high-end, ticket prices are much more constrained.<\/em>\u00a0 The ticket price\u00a0that guests are willing to pay for a location-based attraction; i.e., theme parks or waterparks, is relatively constrained within a range of $10 to $70.\u00a0 <strong>There is a strict price ceiling; i.e., no park other than Disney or Universal, with a few minor exceptions, can charge more than $90 in current terms.<\/strong><\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Indeed, 95% of the theme park tickets in the world cost less than $60.<\/strong><\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/tkt-1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-406\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/tkt-1.png\" width=\"859\" height=\"777\" \/><\/a><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Now, while the maximum that even mega theme parks can charge\u00a0one visitor is in the ~$100 range, the development cost per visitor\u00a0has a much wider range.\u00a0 The development costs for a Disney or Universal park, per visitor, are relatively un-constrained, especially on the high end &#8211; with outliers like Hong Kong Disneyland effectively having costed almost $900 per annual visitor!<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-407 aligncenter\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/tkt2.png\" alt=\"\" width=\"1281\" height=\"456\" \/><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">This relationship <span style=\"text-decoration: underline;\">matters<\/span> <strong>because total revenues per visitor are pegged to ticket prices<\/strong>.\u00a0 Ticket prices comprise the single largest category of\u00a0spending for guests at theme parks and anchor guest perceptions of experiential value.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">So when parks like Hong Kong Disney cost more than 12x\u00a0revenues, that indicates&#8230;a very long payback period.<\/span><\/p>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Case_Studies\"><\/span><strong>Case Studies<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Indeed, the theme park business is a hard one, and it is not uncommon to have a barely break-even operation years after opening.\u00a0 Here are snapshots of three of the mega parks above.<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">You&#8217;ll notice that Euro Disney, in the third year after opening, was generating barely $50m USD in operating cash flow for the <em>entire resort<\/em>, compared to a nearly $4b development cost.\u00a0 But at least cash flow was positive back then; the resort has struggled to even break-even during the last few years because of a massive debt load.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">It was a similar situation for Hong Kong Disney, built at a development cost of over $4b and not operationally profitable until 2010, five years after opening.\u00a0 Compare total resort EBITDA of ~$30m against the development cost.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">While Universal Studios Japan generated positive EBITDA in the first years after opening, cash flows plummeted along with attendance in the second year, and did not return to its first year levels for many years.\u00a0 This effectively resulted in ROI in the low to mid-single digits.<\/span><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-424 aligncenter\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/financials.png\" alt=\"\" width=\"778\" height=\"847\" \/><\/p>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"A_Caveat_Creative_Financing\"><\/span><strong>A Caveat: Creative Financing<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Although, to the last point, we offer a counterpoint.\u00a0 All this is not to say that Disney and Universal earn no money on their investments.\u00a0 Quite the opposite.\u00a0 In fact, Disney and Universal&#8217;s varied and major sources of financing likely enhance their returns\u00a0greatly.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>ALL recent Disney and Universal parks have featured highly varied sources of financing other than just equity<\/strong>:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Disney invested less than 10% of Hong Kong Disneyland&#8217;s $4b+ budget.\u00a0 The rest was 90% financed, directly or indirectly, by the government in the form of equity, loans, infrastructure, land reclamation, etc.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Similarly, Shanghai Disney was helped by the government&#8217;s investment in a dedicated metro line, preferential loans, government equity, land relocation.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Euro Disney was financed through an IPO and add-on equity raise, government loans, low tax rates, infrastructure subsidies, accelerated depreciation, and real estate sales.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Universal Studios Japan was subsidized with infrastructure spending, loans, and equity by the Osaka Municipal Government.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Universal Studios Singapore was financed, essentially, through Resorts World Sentosa&#8217;s casino license (1 of 2 in Singapore).\u00a0 Casino revenues comprise more than 70% of the total resort&#8217;s revenues, while Universal Studios is an estimated 15-20%.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Further, this does not even mention the pre-opening sources of cash flow that Disney and Universal cleverly insert into their partnership contracts, including design fees, management and operational fees, licensing payouts and royalties beginning at contract signing, etc. etc.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Thus while mega theme parks, at the <em>project level<\/em>, are among the least profitable, let&#8217;s not worry too much\u00a0on behalf of Disney or Universal who <em>begin earning fees before the parks are even designed<\/em> :).<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Many would-be developers and governments miss this point.<\/span><\/p>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Summary\"><\/span><strong>Summary<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Disney and Universal build so large not only because they have to, but because they <em>can<\/em>.\u00a0 The strengths of their brands allow them to negotiate with governments and banks to an extent that theme parks in lesser tiers would find it impossible to do.\u00a0 And for this reason, the spending is so massive that project-level returns appear to be quite paltry.\u00a0\u00a0<\/strong><\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">These operators are able to spend so much because the primary metric by which their government partners are judging success is <em>not<\/em> financial, but measured in economic impacts; tax revenues, foreign exchange earnings, employment creation, tourism growth, and output multipliers.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Walt Disney, both the man and the company, was and is a creative financing genius, which shall be the subject of a later post.<\/span><\/p>\n<h1 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"_The_Outperformers\"><\/span><strong>\u00a0The Outperformers<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Now let&#8217;s examine indoor theme parks and waterparks.\u00a0 At the project level, they have the highest probability of being profitable, with investment returns in the mid-teens to 20%+ range.<\/span><\/p>\n<blockquote><p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">These are indoor parks that cost between $10-$30m to build, and generate cash flow (EBITDA) of between $3m to $10m.\u00a0\u00a0<strong>This class of smaller parks are both more efficient users of capital <em>and<\/em> space.\u00a0<\/strong><\/span><\/p><\/blockquote>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">What we&#8217;re talking about when we talk about indoor theme parks are projects usually between 2,000 and 9,000 square meters in size, which act as anchors or inline tenants within urban retail environments.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">This class does <em>not<\/em> include indoor playrooms or kids cafes that are usually generic and less than 1,000 sqm, or indoor ride parks of more than 30,000+ sqm that happen to have a shell above them, such as Nickelodeon Universe, Lotte World, or Trans Studio.\u00a0 Some of the major brands in this category include Kidzania, Merlin Midway, and Joypolis.\u00a0 Some scenes are below.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-425 aligncenter\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/indoors.png\" alt=\"\" width=\"635\" height=\"473\" \/><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Because of their smaller size, their sales productivity (per unit of area) is highest among all theme park categories.\u00a0 Their development cost per unit of area is also lower\u00a0than that of mega parks.<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/bubble.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-413 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/bubble.png\" width=\"1454\" height=\"800\" \/><\/a><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">You can see this relationship even more clearly when we look at revenues and costs <em>per visitor, <\/em>as below.\u00a0 We return to the point about ticket prices again.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">In the case of indoor parks, they benefit perhaps from the fact that there <strong>is a <em>price floor<\/em>\/threshold; i.e., a minimum amount that people are willing to pay for a location-based attraction &#8211; in the range of $15-$20 for adult visitor<\/strong>.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">When we compare revenues per visitor (which reflect this ticket price threshold) against development costs per visitor, it is apparent that, all else equal, this class of parks looks attractive from an investment standpoint.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">For more on this specific type, refer to <a href=\"https:\/\/www.globalrealestateexperts.com\/2017\/12\/family-entertainment-centres\/\">our guest post on the Global Real Estate Experts blog<\/a>.<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/indoorchart.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-412 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/indoorchart.png\" width=\"1267\" height=\"940\" \/><\/a><\/p>\n<h1 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"The_RegionalsSuperregionals\"><\/span><strong>The Regionals\/Superregionals<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Finally, right in the middle of the pack are regional and super-regional parks.<\/span><\/p>\n<blockquote><p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">In this tier, we have a lineup of very famous brands that are not Disney or Universal, such as Legoland, Cedar Fair, Seaworld, and Six Flags.\u00a0 These parks cost between $200m to $500m to construct, and earn (EBITDA) between $30m to $100m.<\/span><\/p><\/blockquote>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">There is no clear definition about what parks are in this category.\u00a0 In most cities where there is no Universal or Disney park, these regional \/ super-regional parks are <em>the<\/em> major theme park of the market, even if it doesn&#8217;t have a world-renowned brand.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Operations such as Tivoli Gardens in Denmark, Everland in Korea, Parc Asterix in France, Alton Towers in the UK, etc., come to mind.\u00a0 Most have been around for decades (centuries in the case of Tivoli).\u00a0 Once again, the parks we review below are ones that have revealed their data publicly.\u00a0 And no, we didn&#8217;t include Tivoli, whose development cost is from the 19th century and was too hard to calculate \ud83d\ude42<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">This category is interesting for several reasons.<\/span><\/p>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Low_sf\"><\/span><strong>Low $\/sf<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">First, notice that this category of parks is <strong>usually the same size as parks in the Disney\/Universal category, in the 200,000 to 400,000 square meter range<\/strong>.\u00a0 Yet, their revenues are a fraction of Disney\/Universal&#8217;s.\u00a0 This sets us up for some interesting implications.<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/regionals-1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-417 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/regionals-1.png\" width=\"1454\" height=\"642\" \/><\/a><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Now,\u00a0even if this category of parks earns $100m to $300m in revenues, the latter of which is on the high-end, this is still a fraction of what a similarly-sized Disney or Universal would generate.\u00a0 This means that sales productivity (in terms of sales per unit of area) is low.\u00a0 A $200m revenue park spread over an average-sized\u00a0area of\u00a030 hectares (300,000 sqm) translates into sales of ~$670\/sqm, or ~$60\/sf.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>As a piece of yield-producing real estate, this is quite low.\u00a0<\/strong><\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Returning to this chart, we can see that regionals are indeed\u00a0the lowest-performing (lower left) in terms of revenue efficiency per unit of space.<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/bubble.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-413 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/bubble.png\" width=\"1454\" height=\"800\" \/><\/a><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">On the other hand, they also <strong>cost<\/strong> the least in terms of unit of space.<\/span><\/p>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"A_Time_and_Place_for_Everything\"><\/span><strong>A Time and Place for Everything<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>This brings us to one of our theses, which is that regional and superregional theme park development may be a relic of certain macroeconomic and socioeconomic conditions.\u00a0\u00a0<\/strong>In the developed world, this convergence of conditions has largely passed.\u00a0 In certain other geographies, however (China + Middle East, to name names), this is still ongoing.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">In\u00a0the developed countries and cities of the world, purely private theme park development <em>was often a relic of low land prices and lower expectations<\/em>, to name some of the more important ones.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">With growing and rapid urbanization in most countries, as well as central bank policies, land prices have appreciated &#8211; and continue to appreciate &#8211; at a rapid pace, crowding out the potential for large amusement or recreation parks.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">If we simply consider the development history of theme parks in the United States, we can see that most of the major parks were built in the 1960s to early 1980s.\u00a0 Ask yourself, looking at the list below, if there&#8217;s been another major park in the vicinity of the metropolises below, in the last 20-30 years.\u00a0 Not counting second gates and Orlando.\u00a0 Is there\u00a0one?<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/usparks.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-418 \" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/usparks.png\" width=\"905\" height=\"686\" \/><\/a><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Now, let&#8217;s see what&#8217;s been happening in China.\u00a0 It&#8217;s no secret among industry insiders that China has dominated theme park development in the last decade, accounting for nearly a quarter to a third of all theme park openings since the year 2000, as below.<\/span><\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/china2.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-419 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/china2.png\" width=\"1447\" height=\"940\" \/><\/a><\/p>\n<p style=\"text-align: left;\"><span style=\"font-size: 20px; font-family: 'EB Garamond';\">And the theme parks that are being built in China <span style=\"text-decoration: underline;\"><strong>are regional parks<\/strong><\/span>, notwithstanding the blustering of certain property moguls.<\/span><\/p>\n<p style=\"text-align: left;\"><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Their attraction mix (hard ride-based) more closely resembles that of Six Flags and Cedar Fair than it does Disney or Universal, and their development costs, in USD, are also in the range of $100-$500m.\u00a0 Does it not resemble the US during the 1960s and 1970s?<\/span><\/p>\n<p style=\"text-align: left;\"><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/china1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-420 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/china1.png\" width=\"1454\" height=\"557\" \/><\/a><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Once a regional park is built, it is very difficult to build another in the same market.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>As land prices and urbanization increase, the opportunity cost\u00a0of setting aside\u00a0300,000+ square meters in order to generate less than $100\/sf in revenues is simply prohibitive.\u00a0<\/strong> Moreover, selling the positioning and differentiation angle to the consumer is almost impossible when there&#8217;s already another regional park in the market.\u00a0 <em>This means that existing regional theme parks are usually minor monopolies in their regions.\u00a0\u00a0<\/em><\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">As an ending note we need to mention that in both China and the Middle East, governments and other sovereign-related entities are sponsoring theme park development.\u00a0 And theme park &#8216;returns&#8217; in these geographies are measured mostly not in financial terms, but employment, prestige, branding, tourism impacts, and GDP multipliers.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">For this reason it&#8217;s not always wise to include China into a discussion with\u00a0Legoland, Cedar Fair, and Six Flags, but this is an interesting point nonetheless.<\/span><\/p>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Waterparks\"><\/span><strong>Waterparks<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Waterparks deserve their own post, as they are category unto themselves, but it&#8217;s interesting to measure them side-by-side with other types of theme parks.\u00a0 The major points we want to make here\u00a0are that:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Waterparks are smaller than theme parks, at 10,000 to 60,000 square meters, on average;<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">They likewise cost a fraction of their outdoor theme park equivalents, with the largest waterparks costing anywhere from $60-$100 million, maximum;<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>But in many markets outside of the United States, the price\u00a0to enter a waterpark is nearly the same &#8211; if not <em>higher<\/em> &#8211; than a theme park in the same market.\u00a0<\/strong>\u00a0<strong>\u00a0<\/strong>All this makes\u00a0waterparks attractive from an investment standpoint as well.<\/span><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-430 aligncenter\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/ticketprices2.png\" alt=\"\" width=\"702\" height=\"186\" \/><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">For this reason, waterpark development\u00a0has been torrid (torrential?) in China, Southeast Asia, and the Middle East (hospitable climates for waterparks, to be sure).\u00a0 Let&#8217;s take another look at the chart below.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Given that the cost\/sf and revenue\/sf between waterparks and the regional parks are similar, what kind of\u00a0project would a risk-minimizing developer choose, when the investment level for a waterpark is in the range of $30 million, compared to a regional park that costs 10 times that amount?<\/span><\/p>\n<p><a href=\"http:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/wpjust.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-422 size-full\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/wpjust.png\" width=\"1360\" height=\"940\" \/><\/a><\/p>\n<h1><span class=\"ez-toc-section\" id=\"Summary-2\"><\/span><strong>Summary<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Despite\u00a0our extended rambling, we&#8217;d like to think that you can leave with some concrete implications.\u00a0 In summary, here are some of the major ones.<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Mega theme parks such as Disney and Universal find it difficult to be profitable in the first few years after opening, and have a very low project ROI.\u00a0 But it doesn&#8217;t matter.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Don&#8217;t seek to compete with Disney or Universal, unless you are them, or you can line up tremendous sources of financing.\u00a0 Look for creative sources of financing.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">For investors, indoor parks are promising because they generate enough in sales productivity to be appropriate for urban retail environments.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Regional and superregional parks are appropriate when land prices are extremely low, and the market\u00a0does not have\u00a0similar types of developments.\u00a0 They can be built relatively cheaply.\u00a0 And once built, these parks can become the landmark attraction of a market for decades.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">Waterparks are often a more efficient alternative to regional parks, in that they occupy less space but have a similar return profile.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\">It&#8217;s important to define the return <em>measure\u00a0<\/em>for attractions.\u00a0 Very often, the partner\/developer\/government cares less about financial returns and more about employment, tourism, and GDP impacts.\u00a0 Governments can be a good partner.\u00a0 On the other hand, don&#8217;t benchmark these kinds of developments if you&#8217;re a purely private operation.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Business_Planning\"><\/span><strong>Business Planning<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">From our decades in the business, we\u2019ve encountered hundreds of would-be theme park developers who immediately will point to the first tier and insist that their parks will generate Disney or Universal-like performance, without spending nearly enough.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">While there are plenty of advisors out there who will happily take huge consulting fees to prepare self-justifying financials on pro forma, we\u2019d like to urge anyone in the business to stop and think about the real issues here, and offer these pieces of free advice to serve your theme park or amusement park business plan or feasibility study.\u00a0 Don&#8217;t read it if you like to waste\u00a0hundreds of thousands of dollars in &#8216;consulting&#8217; fees.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">As Charlie Munger says, sometimes the best thing to do is invert.\u00a0 And in inverting the problem of attraction performance, we find that the 3 <strong>real<\/strong> questions, in order, are:<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">1. What <em>type<\/em> of park are you attempting to develop or acquire?<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">2. Given the type of park, what is the worldwide range of performance for that tier; i.e., what is the range of outcomes you can expect?\u00a0 Generate a scenario analysis for your development around this range.<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">3. Finally, <em>most importantly<\/em>, what will it take to outperform within that range?\u00a0 In terms of design, content, positioning, market availability, and competitive dynamics?\u00a0 Does the local market support a ticket price tier of $30+?\u00a0 $40+?\u00a0 $50+?\u00a0 $60-80+?<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-451 aligncenter\" src=\"https:\/\/www.theparkdb.com\/blog\/wp-content\/uploads\/2017\/12\/finalone.png\" alt=\"\" width=\"1044\" height=\"623\" \/><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">We can easily see that in each\u00a0category, there is a performance range.\u00a0 The question any motivated developer, investor, or government should be asking <em><strong>is what it would take to outperform and\/or be more efficient within each range<\/strong><\/em>.\u00a0 Viz.,<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Indoor park<\/strong>: is it possible to spend $10m on a park and generate cash flow of more than $3m?\u00a0 What would it take, in terms of an experience, for people to spend up to $40-$50 USD per person.\u00a0 If you have to spend at least $30m for your vision, how do you increase throughput (attendance) or spending to above $50 USD per person?\u00a0 <a href=\"https:\/\/www.theparkdb.com\/blog\/an-introduction-to-indoor-entertainment\/\">Find more details for indoor parks in this post<\/a>.<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Waterpark<\/strong>: is it possible to spend $30m on a park and generate more than $8-$10m in cash flow?\u00a0 What would it take, in terms of the experience, for that to happen?\u00a0 How do you get people to stay as long as possible and spend more by disguising ancillaries as necessities?<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Regional\/superregional<\/strong> park: is it possible to build smaller, say, 100,000 to 150,000 sqm and deliver the same experience?\u00a0 I.e., is it possible to achieve a throughput of 4-8m people within that space?\u00a0 It is possible to build a regional park for less than $300 million?\u00a0 Conversely, how do we achieve a cash flow of more than $50-$100m?\u00a0 How do we get people to stay longer, and spend more?<\/span><\/li>\n<li><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Mega<\/strong>: what is the next government and market we can partner with?\u00a0 Is it possible to spend less than $3b for the park and achieve DisneySea-like return numbers?\u00a0 How do we increase spending in <em>all of our\u00a0parks<\/em> to the $80-$100 USD range?<\/span><\/li>\n<\/ul>\n<hr \/>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\">This article is part of our series on attraction economics.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-size: 20px; font-family: 'EB Garamond';\"><strong>Part I, relating to revenues, is <a href=\"https:\/\/www.theparkdb.com\/blog\/the-business-of-theme-parks-part-i-how-much-money-do-they-make\/\">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<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>In the first part of this series, we evaluated the revenue side of theme park business models.\u00a0 In this series, we&#8217;ll continue our exploration of the economics of theme parks by\u00a0reviewing the cost of building amusement and water parks. More importantly, however, we will be looking at what theme park development costs mean for profitability. 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