Business for Sale: Midwest Amusement Park
THE BUSINESS Ready to jump off the corporate merry-go-round? Try running a roller coaster instead. This one's part of a 40-ride amusement park on an interstate outside a major midwestern city. The park, 37 years old, also contains a 10-acre water park and an ice-skating rink. The bulk of revenues comes from $13.95-per-person admission tickets. The sale includes $4.5 million worth of rides and maintenance equipment and $450,000 to $700,000 in gift-shop items, prizes, and ice-skating equipment. Four key managers are willing to stay on. The owners are ready to retire.
PRICE $5 million (real estate not included; the current lease runs until 2008)
OUTLOOK Fun city. Americans spend about $6 billion a year at amusement parks. This 55-acre park attracts 400,000 customers yearly. The buyers could boost revenues by raising ticket prices, charging for now-free parking, or investing in glitzy new equipment.
PRICE RATIONALE Two sticking points here: a land lease that dead-ends too soon and a cash-flow pattern that's positively hair-raising. Without a lease extension or an option to buy the land, you're left with a deal that has to pay for itself in less than 12 years. Meanwhile, with recast earnings bouncing around more than the customers do, one appraiser advises buyers to estimate cash flow at a conservative average, say about $290,000. (Three years of recast earnings add up to $1.375 million, which he reduces by a 10% "fudge factor" to $1.238 million; he then subtracts $125,000 a year for the managers' and owner's salaries. Divide that figure by three.) That could comfortably support a lower price of $2.5 million to $3 million, he says, but only with a lease extension.
PROS Who says work can't be fun and games?
CONS At this amusement park, the owner is on the scariest ride of all. -- Jill Andresky Fraser
Inc. has no stake in the sale of the business featured.
The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Bharat Shah, 630-241-0170.