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Buyers Scarce For Busch Parks

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By JACOB SCHNEIDER

The Tampa Tribune

Published: July 8, 2008

TAMPA - State-of-the-art rides, good management and free beer samples helped Busch Gardens Tampa Bay build a strong reputation for family fun. But that could change if Busch Gardens comes under foreign ownership, a strong possibility if parent company Anheuser-Busch is acquired by Belgian brewer InBev.

If InBev's takeover bid succeeds, the company would likely try to shed Busch Entertainment Corp., a division that includes 10 amusement parks under the Busch Gardens, SeaWorld, Aquatica, Adventure Island, Water Country USA and Sesame Place brands.

But the domestic amusement park market has been pinched by the same credit crunch that has depressed the real estate market, making it unlikely that traditional operators such as Six Flags would be in a position to buy the Busch properties if they go up for sale. That means the most likely suitors for Busch Gardens would be located overseas.

Analysts say the impact of such a change in ownership could be minimal. But missteps by a new owner or the breakup of the well-regarded Busch brand could undermine the chain's decades-old reputation for high-quality amusement and dampen attendance and profit.

According to Lehman Bros., Busch Entertainment Corp. is worth $2.58 billion, or about 6 percent of Anheuser-Busch's total value. But because of the economy, domestic park operators might be hard pressed to raise that kind of capital.

"We're all in agreement that the typical buyers that over the last decade or so have been involved in most of the purchases of theme parks and chains - Six Flags and Cedar Fairs - are not in the market at this time," said industry consultant John Gerner of Leisure Business Advisors in Richmond, Va. Two other dominant park owners, Walt Disney Attractions and Universal Studios Recreation Group, have traditionally stuck to their own brands.

Gerner said that could mean that a foreign operator could acquire Busch Entertainment. England's Blackstone Group, which owns the Legoland parks and Merlin Entertainment, is the most high-profile foreign operator, but another possibility is a Middle Eastern theme park operator. This year, Busch launched a partnership with Dubai's Nakheel PJSC to open four amusement parks in the rich Middle Eastern tourism hub over the next decade.

Sale Would Be A Big Deal

The scale of the Busch theme park properties contributes to the uncertainty about future ownership prospects. A sale of the Busch chain would be the largest single movement in the theme park industry in recent memory, according to Curt Caffey, vice president of investments for CNL Lifestyle Co., a real estate investment trust that owns several theme parks.

"In recent history, it just hasn't happened," Caffey said. "Six Flags in the 1990s went through a change of hands, but it was a much smaller entity than it is today."

Last year, Busch Entertainment ranked as the world's fifth-largest theme park operator by attendance, according to the Themed Entertainment Association. That puts it behind Walt Disney Attractions, Merlin Entertainment, Universal Studios Recreation Group and Six Flags. SeaWorld Florida in Orlando and Busch Gardens Tampa Bay were the chain's largest draws, with 5.8 million and 4.4 million visitors respectively.

Gerner said the parks would not necessarily have to be sold together but that a buyer would likely want to keep each brand intact. The parks' strong reputation among theme park operators and visitors could be at risk if they lose the Busch name, he said.

"Without the Busch name, what is really the brand?" he said. "If it's not associated with that name, one has to wonder whether or not they still have that commitment to the parks."

InBev, which produces Beck's and Stella Artois beer, launched an unsolicited takeover bid of the St. Louis-based brewer of Budweiser and other beers in June in an attempt to create a global beer magnate. The founding Busch family has promised to fight the bid, but it is unclear whether its 4 percent stake in the company is sufficient to prevent the merger. InBev has offered $65 per share, slightly higher than the current market value.

Freebies Likely To Go

Visitors would likely see little impact if ownership changes, said Gerner, although he did note that InBev's reputation for cost-cutting would not serve them well in the theme park sector.

If new owners trim costs by cutting employees or deferring maintenance, attendance may drop, requiring even more cuts. Industry analysts call that scenario the "death cycle."

"We've seen it elsewhere, and it would be a tragedy to see that type of situation even begin at the Busch Gardens," Gerner said.

The best buyer for Busch, Gerner added, likely would be a company that could develop the same kind of synergy with its parks as Anheuser-Busch.

"Both sides have benefited from this symbiotic relationship," he said. "The parks have benefited from a longtime commitment from Anheuser-Busch. ...The company has benefited from an association with family fun."

However limited the changes at Busch Gardens, one popular amenity likely would not survive a split with the beer maker, said Paul Ruben, North American editor for Park World magazine.

"The adverse consequence of all of this for the average visitor is that there will be no more sample adult beverages," he said.

Reporter Jacob Schneider can be reached at jschneider@tampatrib.com or (813) 259-7850.

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