From the Bowlero SEC filing:
“Last week, we closed an acquisition in the water park space by acquiring Raging Waves, the largest outdoor water park in Illinois. We bought thepark at an attractive price with the opportunity to partner with a strong operator in the space,” followed Thomas Shannon. “We will continue touse internal and external investments to support increasing wallet share from customers in the out-of-home entertainment space, helping growour industry-leading free cash flow generation.”
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001840572/3c66c299-a04c-40a8-800d-538c78fe015a.pdf
From the earnings call:
Thomas Shannon (Founder, Chairman & Chief Executive Officer of Bowlero)
"We have a partner who has a number of these assets and manages them, some of them for the owners, some of whom are very prominent, well-known businessmen. These guys are the best in the waterpark business, certainly on the regional level. So, if you think about the market, right, it's everything below Six Flags, Cedar Fair, and SeaWorld, and there are a lot of them out there. And some of them are quite large and have a very wide moat, because as you can imagine, it's very hard to build these assets now, costs are very high, zoning prohibitive, et cetera. So, these businesses we view as being very, very attractive businesses.
This particular deal was brought to us by this company who would have financed it themselves and bought it themselves, but they found that the cap rates they were being offered in the sale leaseback market were higher than they wanted to pay. And so, we made a great deal for both sides where they run it with an incentive structure and we own it. I think that the EBITDA can double from where we purchased it in the next couple of years.
The park is beautiful. The infrastructure is first class. It's well located. But there were a lot of things they weren't doing that are sort of fundamental basics in the waterpark and amusement park business. I'll give you one example. They didn't sell alcohol. So, it can be a 95-degree day, and the park is packed with 8,000 people, which is about its capacity, and you can't get a beer. So, simply adding that not only enhances the experience for the adults but gives you meaningful revenue and EBITDA upside. One of many examples.
So, like the bowling business, largely mom-and-pop operated, older proprietors who are natural sellers at this point. And so, the deal was brought to us. We jumped on it. We've already effectuated a lot of changes. For example, applying for a liquor license months in advance of closing the transaction, which occurred one week ago today. That location will open around Memorial Day, and we'll have basically the entire season to evaluate how we like that business before any other potential transactions would come down the pike. So that's a very long-winded way of saying, yes, we're going to know exactly how this thing is performing and really know how well we like this business in very short order."
"Well, I'm not new to the waterpark space. I am as an owner, but I look to acquire a location in Florida that was very similar to the one that we acquired, similar dynamic, elderly seller had been around for a long time. And I wasn't able to buy that center because I didn't understand the concept of a sale leaseback, and I could never get to the seller's price. Our partner, the management partner on this asset, Raging Waves that we bought, was actually the guy who bought it. He had previously been the CEO of Six Flags, left Six Flags, and then started buying these regional assets. He took that location from $11 million in revenue to $25 million, and EBITDA exploded. So, unfortunately, I sat on the sidelines. I tried to buy that asset for 11 years and couldn't quite get there. And I got intellectually arbitrage because this other guy understood the sale leaseback market and I didn't. Well, now I understand the sale leaseback market.
And so, if you think about what the potential is or the likely outcome of this asset, once we optimize EBITDA, it would be a perfect asset to flip to the sale leaseback market. And even at these current cap rates, which are not attractive, we would probably end up with proceeds in excess of the purchase price, and we'd still own on order of 50% of the cash flow. So, the return would be infinite. So, I think from a return profile, the returns of doing an acquisition like this are far better actually than doing a bowling alley new build."
https://seekingalpha.com/article/4689872-bowlero-corp-bowl-q3-2024-earnings-call-transcript
“Last week, we closed an acquisition in the water park space by acquiring Raging Waves, the largest outdoor water park in Illinois. We bought thepark at an attractive price with the opportunity to partner with a strong operator in the space,” followed Thomas Shannon. “We will continue touse internal and external investments to support increasing wallet share from customers in the out-of-home entertainment space, helping growour industry-leading free cash flow generation.”
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001840572/3c66c299-a04c-40a8-800d-538c78fe015a.pdf
From the earnings call:
Thomas Shannon (Founder, Chairman & Chief Executive Officer of Bowlero)
"We have a partner who has a number of these assets and manages them, some of them for the owners, some of whom are very prominent, well-known businessmen. These guys are the best in the waterpark business, certainly on the regional level. So, if you think about the market, right, it's everything below Six Flags, Cedar Fair, and SeaWorld, and there are a lot of them out there. And some of them are quite large and have a very wide moat, because as you can imagine, it's very hard to build these assets now, costs are very high, zoning prohibitive, et cetera. So, these businesses we view as being very, very attractive businesses.
This particular deal was brought to us by this company who would have financed it themselves and bought it themselves, but they found that the cap rates they were being offered in the sale leaseback market were higher than they wanted to pay. And so, we made a great deal for both sides where they run it with an incentive structure and we own it. I think that the EBITDA can double from where we purchased it in the next couple of years.
The park is beautiful. The infrastructure is first class. It's well located. But there were a lot of things they weren't doing that are sort of fundamental basics in the waterpark and amusement park business. I'll give you one example. They didn't sell alcohol. So, it can be a 95-degree day, and the park is packed with 8,000 people, which is about its capacity, and you can't get a beer. So, simply adding that not only enhances the experience for the adults but gives you meaningful revenue and EBITDA upside. One of many examples.
So, like the bowling business, largely mom-and-pop operated, older proprietors who are natural sellers at this point. And so, the deal was brought to us. We jumped on it. We've already effectuated a lot of changes. For example, applying for a liquor license months in advance of closing the transaction, which occurred one week ago today. That location will open around Memorial Day, and we'll have basically the entire season to evaluate how we like that business before any other potential transactions would come down the pike. So that's a very long-winded way of saying, yes, we're going to know exactly how this thing is performing and really know how well we like this business in very short order."
"Well, I'm not new to the waterpark space. I am as an owner, but I look to acquire a location in Florida that was very similar to the one that we acquired, similar dynamic, elderly seller had been around for a long time. And I wasn't able to buy that center because I didn't understand the concept of a sale leaseback, and I could never get to the seller's price. Our partner, the management partner on this asset, Raging Waves that we bought, was actually the guy who bought it. He had previously been the CEO of Six Flags, left Six Flags, and then started buying these regional assets. He took that location from $11 million in revenue to $25 million, and EBITDA exploded. So, unfortunately, I sat on the sidelines. I tried to buy that asset for 11 years and couldn't quite get there. And I got intellectually arbitrage because this other guy understood the sale leaseback market and I didn't. Well, now I understand the sale leaseback market.
And so, if you think about what the potential is or the likely outcome of this asset, once we optimize EBITDA, it would be a perfect asset to flip to the sale leaseback market. And even at these current cap rates, which are not attractive, we would probably end up with proceeds in excess of the purchase price, and we'd still own on order of 50% of the cash flow. So, the return would be infinite. So, I think from a return profile, the returns of doing an acquisition like this are far better actually than doing a bowling alley new build."
https://seekingalpha.com/article/4689872-bowlero-corp-bowl-q3-2024-earnings-call-transcript
