{ Growing A Family Amusment Business}

Little by Little
Mark started out with just the miniature golf course in 1988 and had no intention of making it into what it is today, a Family Entertainment Center (FEC). Then, he added batting cages in 1993, go karts in 1994, a game arcade in 1995, and a snack bar area in 1996.

There Is a Difference!
Typically an amusement park is a place where the rides are passive (someone else controls the ride). In a family entertainment center, the facilities are active (you drive the bumper boats and go karts). Cost is another difference. In a major park, a single roller coaster can cost a million and up. In the FEC, Mark built everything, including the miniature golf course. A third difference involves time. Major amusement parks are destination places where you are going to go and spend the day, whereas a FEC is a place where you are going to spend an hour to maybe three hours.

Starting from Scratch
A typical FEC contains miniature golfing, bumper boats, batting cages, and an indoor game arcade. If you are going to start from scratch where you buy the property and build the whole thing, it will cost you 3 to 4 million dollars. Mark pointed out that you don't have to have all of that at once. You can borrow some of it from other places.

A Business Background
Mark graduated with a degree in business from Central Washington University in 1974, became a CPA in 1975, and was the general manager of a truck dealership for 14 years. What exactly does that have to do with running a FEC? The experience helps you understand finances. You know how to hire and manage employees from your past experiences--things that you just wouldn't know if you were 24 years old and trying to run a business. Mark emphasized that you learn a lot the hard way, through experience. Mark explained that getting involved in a business of this sort of magnitude would be a huge gamble and, of course, he doesn't know anyone that would finance a person with little business background.

Management--A Full-time Job
"We actually have 2 full-time managers because when you are running a business 7 days a week and get there at 9 o'clock in the morning and don't leave until 11 at night and midnight on Friday and Saturday nights, it is really difficult," Mark said. "If a manager works 30 to 40 hours a week, it requires almost 3 full-time managers." Besides the 2 managers, Mark takes some of the work shifts and his wife takes some as well. One person couldn't possibly do all the work!

Hiring Help
The majority of the employees, with the exception of their 2 managers and maintenance person, are high school students. Mark likes the fact that the kids are there for a just a period of time. They move on and don't expect larger incomes. "During the summertime we have about 26 full-time equivalents, though realistically we have closer to 40 people because we have a lot of part-time people," he said.

Training
One of the most frustrating factors in running a FEC or business is having to gear up to train year after year on a seasonal basis. Some people don't know how to count back change, which would seem real basic to him. Even when his employees are 17 and 18, this is their first job because he tends to hire the kids who want to be really active in school.

Location--It's Important
A facility like this relies on the population from at least a 30 or 40 mile radius, but if Mark had to rely on just the people 3 or 4 miles from here, he would be broke next month. He relies on people coming the surrounding cities and towns. Basically, it wouldn't be his first choice to be in such an out-of-reach location. On the other hand, if you were in a really centralized location, you would be near the freeway, which presents two problems. First, the cost of property would be really high, and secondly, you could have more problems with the kind of people that you don't want hanging around.

Seeing a Profit
How do you really calculate the profit? Is it based on financial statements, which are all based on depreciation, amortization or the writing off of the amount of equipment you buy from a bookkeeping standpoint. It doesn't usually look like you are making a lot of money, but it depends on whether you stay in business for 6, 8 or 10 years and whether or not your equipment will last long enough to be able to amortize all of it. Mark gets notices from parks that are for sale around the country. Obviously, these parks are not doing well, but there are other parks that are doing fabulous, and then there is everything in between. Mark considers himself part of everything that is in between.

Fads Flame Out
One of the biggest problems about the amusement park industry is that it attracts a lot of people who want try ideas that tend to flame out quickly. Lazertag has been the hottest thing in the last three years, and Yakima had a lazertag arena for a short period of time. Mark explained that the arena was at least a $125,000 to $150,000 investment, and they probably lost their equipment and most of their money. Something similar to this is what had happened to all the Discovery Zones. Mark received a notice last summer where auctioneers brought a bunch of the Discovery Zone equipment all together and had one huge auction because those types of things don't have much staying power. The amusement park industry itself has a tendency to attract all the newest and latest crazy ideas, and there are usually people willing to throw their whole life savings at it.

Risky Business?
Every business has its risks. Those people who don't do a good job studying the industry have been confronted with the most problems. They do what Mark calls a cursory study. In other words, they go to a Discovery Zone or they go to a lazertag arena with their little calculator and try to make generalizations about how profitable it would be.

Calculations Don't Always Add Up Correctly
For example, some people have done this sort of evaluation with Mark's go karts. He said it doesn't take a rocket scientist to see what the prices are and then figure out that the rides are 5 minutes and there are 10 go karts that go for an hour and its $4 a ride, so its $40 every 5 minutes. That is how most people make their computations. Mark said that if they were to come when the go karts aren't going so steadily that would end up skewing their overall results. However, when they do their research, they would usually come on a Friday night for an hour and a half and then assume that that is the way it goes every day. They multiple that Friday night observation by 10 or 12 hours for their answer. That is just the way people have tended to do research.

Maintenance
Maintenance is an extremely important ongoing expense in any amusement park. Maintenance can mean maintaining the park as well as equipment, and everyone has a different idea on how much they are willing to spend. Walt Disney has set the standard in the whole industry. At Disneyland when they were closing the gate, you would see that the place was just beginning to look just a little bit dirty. You would be able to find a stain where somebody sat the pop, but you wouldn't find any cigarette butts, wrappers or cups because those would be picked up. If you were the first person to walk in the next morning, the street and sidewalk would be all wet because they just washed them all during the night. That is just how important cleanliness is to Disney. Mark tries to keep his business spotless. In fact, cleanliness is his number two most important job that he and his staff does, but the most important thing he says is safety--that is always first and foremost in everything that they do.

The Suburban Test
The toughest part of the whole business is to be able to maintain a level, which he calls the suburban test." When a 35-year-old mother drives up in a suburban to their facility with her 13-ear-old daughter and two friends, if anything in that entire facility makes her feel uncomfortable, hen it doesn't pass the suburban test. If she looks at the facility and there are two 14-year-old boys outside the door smoking, there is a car in the parking lot with a bunch of guys standing around with their music blaring, or there are people in the back of their pickup truck sitting in home lawn chairs drinking beer, then it doesn't pass the test because the mother is going to say, "Girls, get back in the car. Maybe we can do it another time when your dad can go with you." Cleanliness is a large part of the test because that is a big deal to the majority of people. Mark doesn't allow teens to smoke. Those are just some of the challenges that he faces.

Renovation and Replacement
Mark had to replace the bumper boats this year, which cost him $35,000. Did we need to do it? He thinks so, but did he have to? Absolutely not. The ones that he had would have run for a couple of years more, but it's just a matter of whether you want to have rides that are going to continually attract people better. There are new boats out there that are attractive to customers because they have some new features that the old ones didn't have. One of the easiest things to do in this business to become complacent. Mark could have been $30,000 or $40,000 ahead right now if he hadn't spent that money, but would he be in business 5 or 10 years from now if he continued to take that kind of an attitude? The arcade is the same way. If you were going to total up the price on all the machines, there is about half million dollars worth of games, but he rotates some every year in order to keep it interesting.

The Actual Cost of a Ride
The cost to get into an amusement park business is phenomenally more money than a FEC. Amusement park rides are typically a half million dollars. So if you had 8 or 10 rides in your amusement park, you can just multiply that out to see how much it is just for the rides. This does not include the whole facility nor a roller coaster and every amusement park needs some kind of an anchor ride. A main attraction can run one to two million. A lot of smaller amusement parks will buy used roller coasters. Typically, a bigger amusement park has to update its rides every year because that is how you are going to attract a million or a half million people every year. If you are going to be a true destination place where people are going to travel 100 or more miles, you have to offer something new. In order for major parks to make room for their new roller coaster, they sell rides to smaller amusement parks.

Advertising
Typically, Mark spends a different amount each year, which ranges anywhere from about $12,000 to about $40,000 total in a year. He says that it is difficult to judge whether the advertising dollars are doing a lot for you. He has done particular events or particular types of attractions, but has not seen huge numbers of people coming in from the advertising. For example, Mark had karoke as an attraction. He says that he spent a couple thousand of dollars on the first two weeks advertising it. The first weekend four people showed up. The second weekend 6 or 8 people showed up, so he had more people spreading it by word of mouth than by advertising. Overall, he does see the value in advertising, because again you can't just be complacent.

A Seasonal Business?
In Mark's case, they have 80 days in the summer to make almost three quarters of their income for the year. During those 80 days in Yakima, only a portion of them fall on the weekends, only 2 out of 7 or 3 out of 7 if you count Fridays. If those weekends or days happen to be really hot, rainy or the wind blows on just a third of those weekends or days, this causes major problems. Sometimes, weather can even force the business to close. "You could virtually shoot a shot gun through the parking lot and not worry about hitting anyone if it's 95 degrees out because no one is there," Mark said. "It just a general rule of thumb that people don't go out when it's hot, even though the arcade is air conditioned."

Partnership, Sole Proprietorship, or Corporation?
It is a sole proprietorship. Mark could be incorporated if he wanted to be, but there was no particular advantage for him to be incorporated.

Citation:
Needham, Mark. Personal interview. Permission granted to use on the site by letter. July 2000