The months-long coronavirus closures of theme parks around the world have had a devastating financial impact on Disney, Universal, SeaWorld, Six Flags and Cedar Fair.
The major theme park companies had all gotten off to strong starts in 2020 when the COVID-19 pandemic hit and sent profits spiralling downward. Promising attendance and revenue increases quickly turned to big losses as the coronavirus outbreak forced theme parks around the world to close indefinitely.
“Prior to the closure of our parks, we had a strong start to 2020, with record-setting results through February,” SeaWorld Entertainment interim CEO Marc Swanson said in a statement. “This performance was a continuation of the strong financial results we have delivered over the last two years.”
Recent quarterly reports from the major theme park companies offer a glimpse at the financial pain the pandemic has inflicted. But more economic troubles are expected as the theme park giants begin missing out on attendance and revenue from the busy summer season.
All of the big industry players have slashed cash expenditures. They’ve cut labour costs, reduced operating expenses and chopped capital expenditures on new attractions. And most of them have headed to Wall Street in search of new capital to weather the storm.
Let’s take a closer look at the financial impact of coronavirus on the big theme park companies.
The financial impact of COVID-19 on theme parks
Disney’s theme park division suffered a $1 billion loss in operating income in the second quarter due to the coronavirus outbreak. Revenue dropped $628 million for the quarter for Disney’s Parks, Experiences and Consumer Products division. Disney has halted $900 million in theme park refurbishment and construction projects as a result of the COVID-19 pandemic.
About half of the $1 billion loss occurred during the last two weeks of March at Disney’s U.S. theme parks in California and Florida. The other half of the loss was the result of the closure of Disney’s international theme parks and the shuttering of its cruise line.
The $250 million loss per week at Disney’s six U.S. theme parks is staggering. That works out to a $36.6 million loss per day for Disney’s U.S. parks. On average, that’s a $6.1 million loss per park per day.
The Walt Disney World resort in Florida lost nearly $25 million per day, based on 2018 attendance data from the Themed Entertainment Association. This is the breakdown by theme park of the financial impact of the COVID-19 closures:
Magic Kingdom ($8.8 million per day), Disney’s Animal Kingdom ($5.8 million), Epcot ($5.2 million) and Disney’s Hollywood Studios ($4.8 million).
The Disneyland resort in California lost $12 million per day, based on the 2018 TEA attendance data. The coronavirus closures cost Disneyland $7.9 million per day and Disney California Adventure $4.1 million per day.
Those numbers have almost certainly dropped significantly since mid-March when Disney’s U.S. parks first closed. Since then, Disney has furloughed 120,000 employees and slashed spending on new attractions. The belt-tightening has continued as the theme park closures extended from weeks to months.
Shanghai Disneyland recently reopened after a three month-plus coronavirus closure. Disney’s other 11 theme parks around the world remain closed amid the COVID-19 pandemic.
The financial impact of COVID-19 on Universal Studios is also sizable – it stands to lose $500 million if its theme parks remain closed through the end of June.
The coronavirus outbreak has forced Universal to halt work on its Epic Universe theme park planned for 2023. Work still continues on more than $300 million in theme park construction projects already underway.
Universal’s $500 million loss in three months looks small compared to Disney’s $500 million loss in two weeks. But Universal’s financial hit is a projection going forward. Universal’s economic hardship was likely worse just after the coronavirus closures of its parks. The company has had time to tighten its belt since then.
Nonetheless, the numbers are still eye-popping. Universal stands to lose $167 million per month in April, May and June if its theme parks remain shuttered. That works out to $5.5 million per day.
The Universal Studios theme parks in Florida, California, Japan and Singapore remain closed through at least May 31 amid the COVID-19 pandemic.
Six Flags attendance had been up 19% and spending had increased 17% in the first quarter before the coronavirus closures of the company’s amusement parks. However, the last two weeks of the quarter hint at the scale of the financial impact on the theme park operator. Attendance dropped 27% and revenue was down 20% for the quarter.
Six Flags anticipates a net cash outflow of $30 million to $35 million per month while its parks are closed. That works out to about $1 million per day companywide.
That means each of the 15 Six Flags parks is losing an average of $67,000 to $80,000 per day. That daily loss is likely larger at Six Flags’ three biggest parks. These are Six Flags Magic Mountain (California), Six Flags Great Adventure (New Jersey) and Six Flags Great America (Illinois). Those three parks make up a third of Six Flags’ annual attendance.
Attendance and revenues were heading upward in the first quarter when Cedar Fair was forced to indefinitely close its parks or delay openings due to the COVID-19 pandemic. Instead, Cedar Fair lost more than $20 million in revenues. It saw a steep decline in attendance for the quarter with its parks closed.
“Although the COVID-19 pandemic created conditions which led to the closure of our operations in mid-March, we are nevertheless pleased that the record pace we established in 2019 carried well into the first quarter of 2020,” Cedar Fair CEO Richard Zimmerman said in a statement.
Cedar Fair’s first-quarter results reflected only two weeks of park closures. Historically, Cedar Fair’s first-quarter results typically represent less than 5% of the company’s net revenues for the year.
Cedar Fair suspended $75 million to $100 million in new projects planned for 2020 and 2021. The company still anticipates spending $85 million to $100 million on capital improvements in 2020.
The financial impact of COVID-19 on Cedar Fair theme parks
The operator estimates its average cash burn rate will be approximately $30 million to 40 million per month. This is with all of its parks closed.
“Once given the green lights to reopen our parks, startup costs to do so would push this monthly burn rate up,” Cedar Fair CFO Brian Witherow said on a conference call with analysts.
Cedar Fair’s monthly burn rate works out to $1 million to $1.3 million per day.
That means each of the 11 Cedar Fair parks is losing an average of $91,000 to $118,000 per day. That daily loss is likely larger at Cedar Fair’s four biggest parks. These are Knott’s Berry Farm in California, Canada’s Wonderland near Toronto and Ohio’s Cedar Point and Kings Island. Those four parks make up more than half of Cedar Fair’s annual attendance.
Cedar Fair is prepared to take additional cost-cutting measures. This will further reduce its cash burn rate if its parks remain closed for an extended period of time.
SeaWorld and Busch Gardens got off to strong starts in 2020 with record attendance and revenues. But this was before COVID-19 forced the closure of the theme parks and began to have a financial impact.
The SeaWorld Entertainment company saw a 30% decline in total attendance and total revenue for the first quarter as the company shuttered all of its theme parks due to the COVID-19 pandemic.
The company closed its Busch Gardens parks in Florida and Virginia on 16 March. It also closed SeaWorld parks in San Diego, Florida and Texas on the same date. SeaWorld Entertainment’s quarterly results only reflect two weeks of park closures.
SeaWorld Entertainment temporarily furloughed more than 90% of its theme park employees in response to the COVID-19 pandemic. Some staff remain on duty to care for the 67,000 animals at SeaWorld parks.
SeaWorld Entertainment estimates its average cash outflow will be approximately $20 million to $25 million per month with all of its parks closed.
The company’s daily cash outflow is $667,000 to $833,000 per day.
That means each of the SeaWorld and Busch Gardens parks is losing an average of $133,000 to $166,000 per day. That daily loss is likely larger at the company’s three biggest parks. These are SeaWorld Orlando and Busch Gardens Tampa in Florida and SeaWorld San Diego in California. Those three parks make up more than half of SeaWorld Entertainment’s annual attendance.
None of the calculations in this article factor in water park attendance at each of the companies.
Background image, Steel Vengeance, kind courtesy of Cedar Point