Financing a New Family Fun Center; What
feasibility study is the first step in starting a new family fun
center. Leisure Business Advisors (LBA) specializes in conducting
this study, which is typically required by financing institutions
and investors. The study provides market and financial analysis
and projections that will be used in the developer's business
The study also provides critical physical planning recommendations
for the business plan. It is critical that design plans are in
line with market needs and expected cash flow. These planning
guidelines need to be established before financing is in place.
Designers and managers can also benefit from the guidance provided
in the study, in addition to the project's investors.
The following paragraphs outline the major tasks typically
involved in conducting feasibility studies.
1: Orientation Meeting
initial meeting would be held to discuss the project in more
detail and to see the prospective site if one has been chosen.
2: Site and Area Evaluation
site and local area would be evaluated to determine its effect on
potential usage. Factors include:
limitations or constraints
complementary and competitive facilities
3: Concept Description and Industry Trends
family fun center concept would be described and industry trends
discussed. Readers of the feasibility study may be unfamiliar with
the concept and this section of the report provides an
introduction before specific project-related issues are examined.
4: Market Analysis
market areas would be defined based on distance from the site.
Demographic characteristics for the resident market would be
analyzed to provide an indication of support. This would typically
tourist market would be defined and analyzed. Based on available
information, this analysis would likely examine:
5: Evaluation of Comparable Facilities
comparable family fun centers would be examined. Available
reported information would be provided on individual
6: Annual Usage
annual usage for the proposed family fun center would be
estimated for the first five years of operation based on a number
of factors, including:
of the available markets
performance achieved by comparable facilities
and potential competition
7: Physical Planning and Concept Development
would make physical planning recommendations needed to service
expected market demand. The specific parameters vary from one
leisure attraction to another. For larger projects, LBA can also
provide master planning and schematic design services. Physical
planning parameters may include:
types of activities
mix and sizing
visitor service space
land area or building space needed
8: Financial Analysis
financial analysis for the proposed family fun center would
be based on the selected concept and potential usage. Financial
estimates for the first five years of operations would include:
profit or surplus
for equity investors, if applicable
9: Warranted and Typical Development Cost
would determine the warranted development cost or investment based
on potential profitability. This is the recommended maximum amount
that should be spent to effectively develop the project and return
a reasonable return-on-investment to equity investors. This
warranted amount would be compared to the actual development costs
for other comparable facilities. Relative size would be taken into
consideration. This comparison would provide guidance as to
whether the proposed family fun center could be developed
for its warranted investment. If it can be, the project is
considered financially feasible.
Family Fun Center Projects
Selected past consulting projects are described below. All
involved John Gerner, LBA's managing director.
Andy Alligator's Fun Park (Norman,
Andy Alligator's Fun Park is an eight-acre family
entertainment center (FEC) with a variety of activities.
These include miniature golf, go-karts, batting cages, and
bumper boats. An 11,000 square-foot building provides space
for games, food service, and parties. LBA conducted the
feasibility study for this FEC in 2006. The client was
Allison's Fun Incorporated.
Foxfire Mountain (Sevierville,
Foxfire Mountain is a popular adventure park in the Smoky
Mountains tourist destination area. It offers a zip line
tour, an all-terrain vehicle (ATV) tour, and a swinging
bridge. It is considering future expansion, and LBA was
retained in 2012 to help define the direction of this future
NASCAR SpeedPark Chain (USA and
NASCAR SpeedPark is a branded outdoor family entertainment
center offering a variety of go-kart tracks and other
participatory activities. In 2005, LBA evaluated the
operation of the entire NASCAR Speedpark chain of centers as
a subcontractor to Economics Research Associates. The
client was Burroughs & Chapin Co, Inc. That company
later sold its leisure attractions to PARC Management LLC.
Andretti Thrill Park (Melbourne,
Andretti Thrill Park is a six-acre family entertainment
center that features multiple go-kart tracks, miniature golf
course, batting cages, paddle boats, train ride, kiddie
rides, and a playground. Inside its 17,000 square-foot main
building, it provides games, food service and party rooms.
LBA conducted a business valuation of this FEC in 2006. The
client was MTP of Brevard County, Ltd.
Valuation of Former Fun Park
(Florence, South Carolina USA)
Mister Mark's Fun Park was a family entertainment center
that was built in 2003 and closed in 2008. LBA was retained
by States Resources Corporation in 2009 to conduct a
business valuation of the former center in anticipation of a
foreclosure on the client's loan to the original owner.