Legoland sale expected to close this summer

Posted Wednesday, April 13, 2005 10:17 AM | Contributed by Jeff

Lego, the Billund, Denmark-based toymaker that owns the Legoland California theme park, says it expects to sell the Carlsbad venue and its three sister parks in Europe soon. While the company is still entertaining offers for the parks, it announced plans to finalize a deal this summer.

Read more from The San Diego Business Journal.

Wednesday, April 13, 2005 10:20 AM
Jeff's avatar I absolutely don't get this. The California park at least has indicated profitability. Paramount Parks say they're in good shape. Universal says they're reaching new levels of revenue. So why is it then that no one wants to hold on to their theme park properties if they're doing well? Even if they aren't ridiculous growth businesses, they're a bright spot when the rest of your business isn't doing well (the media companies of all people should get that).

Yet another example of how investor influence and the emphasis on quarterly results shows complete disregard for the long haul.

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Wednesday, April 13, 2005 11:53 AM
janfrederick's avatar Sounds like they want some quick cash for an advertising blitz or something. I agree with Jeff though, seems pretty wierd. I actually think that the parks are a great way to market the toys.

As for the toys, I'd suggest getting back to more generic peices. A lot of the models these days seem to have unique parts that can't be used for anything else. Legos should be all about versatility. Then again, perhaps that wasn't selling so well.

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Wednesday, April 13, 2005 12:03 PM
That "gotta make the quarter's numbers" mentality is exactly the problem...

Too many managers (and investors--especially investors) are too focused on making that quarter's targets as opposed to the long-term health of the company. Not every company can (or even should) show 20%+ annual increases in revenue and stock price. There's something to be said for the good, old fashioned income stocks.

I guess I can see Lego's desire to get the parks off their balance sheet a little more than the others. They're a manufacturer, and while the parks are a good marketing engine for selling their hard-line products, they're first and foremost still an old fashioned manufacturer. But Paramount and NBC/Universal? Come on...entertainment IS their business. I don't see theme parks as really any different than cable, movies, video games, or the internet--they're simply another means of delivering their entertainment product to a paying audience.

I'm sure the cyclical nature of the theme parks has scared some of the newer operators, but still...

Joel*** This post was edited by JZarley 4/13/2005 1:42:45 PM ***

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Wednesday, April 13, 2005 12:22 PM
Jeff's avatar I read a story in one of the newer business magazines about Lego in the last year or two that explained that the company actually had some brilliant licensing agreements that helped boost sales. Star Wars has always been strong with them, and even the little NBA guys were kind of interesting.
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Wednesday, April 13, 2005 1:20 PM
rollergator's avatar The CA park was awesome fun...def. the surprise hit of the Solace trip. If only SFMM had employees like those at Legoland...:)
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Wednesday, April 13, 2005 2:32 PM
I think the question for Lego is how far a theme park is from their core business. I also suspect that, for Lego, the theme parks are not nearly as effective at moving toys as are the discovery center stores. I've seen these stores in urban shopping destinations (Chicago and Seattle downtown shopping centers), other theme parks (both domestic Disney parks have them) and a variety of other places. They are much less capital-intensive than a theme park, and while they probably generate a lower margin, they also are smaller properties, so you can have more of them. After all, who travels to carlsbad to see legoland? Certainly few people east of the Mississippi do, and locating discovery center stores closer to where all those people live seems like a better idea for moving toys.

I don't have an equivalent answer for universal and paramount.

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Wednesday, April 13, 2005 5:53 PM
janfrederick's avatar Yah, but any advertisements for the park=advertisement for the toys (even if the ads are limited to California, anyone seen them elsewhere?).

Then again, if they sell the parks, and the parks keep the lego branding, lego will be getting free advertising along with a fat wad of cash.

But still, that cash isn't making money for them anymore unless they manage to turn the toys around.

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Wednesday, April 13, 2005 7:03 PM
Any chance these parks are not making the profits they have reported? I do not this to be true. I just throw it out there for discussions sake. We know from Enron that it is not beyond some of these companies to exaggerate profits and hide losses to show profitability in the place of real losses. I know if I really wanted to sell something, I would do my best to paint it in the best light possible. Maybe these parks are not profitable at all. Maybe??
*** This post was edited by Jeffrey R Smith 4/13/2005 7:08:17 PM ***
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Wednesday, April 13, 2005 7:18 PM
My only question is, who would purchase the parks?
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Wednesday, April 13, 2005 8:29 PM
I hope all of you realize that Lego is a private company, no shareholders, it is one of the last global private companies along with Mars.

http://www.lego.com/info/pdf/annualreport2004UK.pdf

The toy sector has been hard hit lately I suggest you look at last years report which should shed some light on the situation.

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Thursday, April 14, 2005 11:17 AM
As a Dane, I'd like to clarify a bit. Lego has had enormous losses for the past couple of years. The only parts of the business making profit, are the themeparks. Previously it was discussed to get another company to take care of the themeparks only.

Also, currently the entire production takes place in Billund, Denmark but they're beginning to outsource to the Czech Republic and China. Lego is pretty much the only business in Billund, they rely on it. I expect if the parks get sold that they'll still run with the Lego theme, as I don't see how they're ever going to retheme all the rides. That would involve replacing most of them. The difference is that the other Lego parks opened in the 90's-00's, Billund has been around for nearly 40 years.

All the Danish parks are doing extremely well, Tivoli for example had 4.3 Million visitors last year. Compare that to the fact that the population of Denmark is 5.5 million and you get the picture.

Out of the ten most visited tourist attractions last year, 6 were themeparks. Historically they're part of our culture, Bakken is the oldest amusement park in the world and Tivoli is probably one of the first parks to use themeing. Walt Disney came to Denmark to get ideas for Disneyland.

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Thursday, April 14, 2005 12:06 PM
Jeff's avatar Wow, I didn't realize production was entirely in Denmark. Not that I like seeing manufacturing jobs go to other countries, but certainly there are less expensive places.
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Thursday, April 14, 2005 6:42 PM
There's some interesting info on Viacom's supposed sell of Paramount Parks (apparently that idea has been nixed) and what Disney's doing at this link:

http://www.fool.com/News/mft/2005/mft05041401.htm

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Sunday, April 17, 2005 1:55 PM
It's been confirmed that all the parks will keep the Lego theme. I don't see Tussauds making a bid, since they're getting sold as well. Especially when it's the entire theme park section of the company that's for sale.
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