Wheee, Legos

Brooks Barnes has an article in The New York Times about the latest British invasion:

The Merlin Entertainments Group is one of the world’s largest operators of amusement parks and tourist attractions, entertaining more than forty million visitors annually. But the company operates almost entirely overseas, and it has no presence in central Florida, the sweaty epicenter of the theme park universe. With the opening of a new Lego-themed park in Winter Haven, Florida— built on the roller-coaster-strewn carcass of the late and not-so-great Cypress Gardens— Merlin has a message for North America: We are coming after you. “Our ambitions for this marketplace are tremendous,” said Nick Varney, Merlin’s chief.
Legoland Florida, which hopes to attract about a million and a half visitors annually, is one of six new or coming United States attractions from Merlin, which is based in Poole, England. A $15 million Sea Life aquarium at the Mall of America in Minnesota opened in March. Legoland Discovery Centers— indoor “fun zones” built at about $12 million apiece— are coming to Atlanta and Kansas City; one opened in Dallas earlier this year.
Merlin— which also owns the Madame Tussauds chain of wax museums, including a location in Manhattan— is a major part of a $100 million tourist complex planned for Orlando in 2013. Merlin’s contributions will include a Madame Tussauds, an aquarium, and a 425-foot-high Ferris wheel similar to the popular London Eye, which the company also owns.
Merlin’s push comes amid increased jockeying by the media giants that dominate this corner of the entertainment industry. NBCUniversal, owned by Comcast, spent a billion dollars in June to buy full control of Universal Orlando. Disney has been pouring money into its parks, recently announcing an Avatar-themed area at Walt Disney World that will cost an estimated four hundred million.
Theme parks require steep, continual investments in new rides and upgrades, and their exposure to outside factors like weather and the economy makes investors nervous. But most parks are also reliably profitable and have continued to grow even during the recession, as people seek escape.
“We would much rather see increased investment in parks than in other media areas, like film— the returns are simply better,” said Michael Nathanson, a media analyst for Nomura.
Indeed, other entertainment businesses like movies and television, always high-risk endeavors, look even more so than usual at the moment. The internet is starting to make good on its promise of changing how people watch television, and movie studios are coping with the collapse of DVD sales and declining attendance in theaters.
For the year, attendance in North America is down by about five percent compared with the same period last year, which ended about six percent down from the year before.
Varney says he is not trying to compete with Disney World, which, by some estimates, attracts thirty million visitors a year, as much as shave off some of its overflow and expand into cities where families face a shortage of entertainment options. His company’s sudden addition of new parks was meant to lead up to an initial public offering. Citing the sputtering economy, however, Merlin abandoned that plan last year.
Merlin reported a pretax profit of $40.4 million last year, compared with a loss of about $21 million a year earlier. Revenue was $1.3 billion in 2010. Merlin employs about 17,000 people globally; major holdings include Alton Towers in Britain and a fast-growing Legoland park in California.
The company is 36 percent owned by Kirkbi, the Danish investment company that is itself owned by the family behind the Lego brand; the private equity firms CVC Capital Partners and the Blackstone Group essentially split most of the rest.
In Florida, Merlin spent about $25 million to acquire Cypress Gardens, a historic 150-acre property that was a symbol of the carefree, water-skiing Sunshine State of the 1950s. The park closed in 2009 after a series of owners failed to compete with Disney and Universal, and for good reason: getting to Winter Haven from Orlando requires a fifty-minute trek on more roads than your average corn maze. “Oh, dear, I’ve got a problem here,” Adrian Jones, Legoland Florida’s general manager, recalled thinking after getting lost on his inaugural visit to the property. He added: “It’s true, the biggest challenge is to cement in people’s minds that this isn’t the other side of the world.”
Merlin is largely counting on the strength of the Lego brand and the refurbishment of the park itself. Although the company refuses to say what it has spent on new rides, restaurants, and landscaping, the cost appears to be considerable. An estimated fifty million Lego bricks now adorn the park, where “pink-knuckle” roller coasters (in keeping with the focus on young children) have been re-themed to fit Lego toy lines like castles and jungle adventuring. “The condition of the park was worse than we thought— mold, dry rot, termites— but we completely Lego-ized it,” said Bill Vollbrecht, the park’s creative director.
Merlin is also working with local government officials to improve the roads and add better signage along the route. Jones takes comfort in internal research that shows eighty percent of theme park visitors in Orlando rent cars, but Legoland Florida will also offer five-dollar roundtrip shuttle service from the city.
And Merlin executives note that they have overcome the hurdle of location at their Lego park in California, which is about forty minutes north of San Diego. That park has become a success by cultivating a reputation among parents for extreme cleanliness and its intense focus on younger children. “Let’s put it this way,” said Duncan Dickson, a professor of theme park management at the University of Central Florida. “If anybody has a chance of making it in Winter Haven, they do.”

Rico can't help wondering how long it'll be before Legos goes to Lagos. (Never, probably.) But, while parks may be a better investment than film, his little video will only cost the rounding error on these places...