The Business A 40-lane bowling alley in a small-but-growing city in the Southwest. This relatively new (five years old) facility recently played host to the Ladies Pro Bowlers Tour, and uses state-of-the-art pinsetters and automatic scoring. The revenue breakdown is typical: bowling fees account for 58%; the cocktail lounge accounts for 17%; the snack bar accounts for 15%; and miscellaneous extras acount for the rest. About half the bowling revenues -- a lower-than-usual fraction -- come from weekly league play. Competition is minimal; there's only one other bowling alley nearby, and it's about 40 years old. The present owner is a real estate kingpin who has other fish to fry.

Financial Summary

(in thousands) 1990 1991 1992

Gross revenues $1,158 $1,169 $1,290

Recast earnings before $306 $381 $480interest, taxes, depreciation, and owner compensation

Price $3.6 million (No seller financing)

Outlook Though historically considered recession-resistant, bowling has recently taken a hit. Lineage (games played per lane per year) declined 11% from 1986 to 1990. Over the past 10 years league bowling, long the lifeblood of the industry, has declined by 21%. Even so, bowling remains the number one participation-game sport in the country.

Price rationale The price includes the business, equipment, and 4.5 acres of real estate. Experts say a fair earnings multiple in such deals is 5 to 7; here, it's 7.5, but such multiples are sometimes fetched by younger centers (which this is), with high volume (which this has), in attractive locations (well . . . maybe). The seller is also offering the business alone for $1.25 million, with a $15,000-a-month lease on the land. Subtracting $180,000 from earnings for rent yields a multiple of 4.2, which insiders deem fair.

Pros Decent revenues, which have increased every year since the place opened. The second deal with the leased land looks solid. And Arizona is a great place to retire.

Cons You wouldn't exactly be retiring here; bowling is a hands-on business. And does that astonishing 1992 pretax profit margin of 37% make the earnings multiple look better than it should? -- Christopher Caggiano

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 Sandy Hansell & Associates, Pueblo, Colo., 719-544-1824.