by Mark Hengel
Posted 3/10/2008 12:00 am
Updated 1 year ago
(To veiw as graph depicting Magic Springs' attendance over the last several years, click here.)
Carpenters were putting the finishing touches on a new deck at Magic Springs & Crystal Falls as February drew to a close.
Visitors at the Hot Spring theme park will be able to set up deck chairs on the spot and watch family members taking a dip in the Crystal Falls wave pool. It's a small touch but more comfortable than the rocky surface it now covers, said Dan Aylward, the park's president and general manager.
"We are the close-to-home, family destination," Aylward said.
The more than 200-acre property sat lifeless on U.S. Highway 70 from 1995 until it was purchased in 1999 by Themeparks LLC of Louisville, Ky. Themeparks has developed the park into a regional attraction through relentless emphasis on families.
In the past five years, attendance has doubled from 254,000 in 2002 to 518,000 last year. With each of those visitors spending an average of $23 - Aylward's estimate, - the park's revenue last year was bumping up toward $12 million.
Investment in the park has totaled about $50 million. Industrial development revenue bonds have provided about $14 million, and Themeparks LLC provided the remaining $35 million, which includes the $1.5 million purchase price and about $14 million in initial investment by Themeparks.
Additions have included many rides, but the management team has also built two other draws: the Crystal Falls water park and a concert venue called Timberwood Amphitheater.
The investments came at a time when many other amusement park companies "were pulling in and hunkering down," Aylward said.
"It's a good business when you run it right," he said.
The park has experienced growth in revenue and attendance and is now turning an operating profit, Aylward said, although he would not disclose the margin. Themeparks also secured outside investment last year when a real estate investment trust bought the property for about $20 million and pledged to invest $10 million. Themeparks LLC affiliate Magic Springs Development Co. LLC remains in charge of the lease and the park's development.
The Amusement of Others
Aylward comes across as a banker on first meeting, and fun is not a word to describe him. The fun of others has been his business for almost 40 years, though, and he has a record of running sucessful parks, as does Themeparks.
Aylward was lured to Magic Springs after overseeing Six Flags Inc.'s eight theme parks in Europe. Attracting new patrons and retaining the old is the key to managing a theme park, he said.
"Every year you have to be fresh and new," Aylward said. "You don't have to spend $5 [million] to $10 million, but we do spend on rides."
The park has invested in new attractions at the rate of about one per year. Crystal Falls was added when the park reopened in 2000 and Timberwood Amphitheater opened in 2003. Other new attractions include roller coasters in 2004, 2005 and 2006, and an expansion of Crystal Falls in 2007. Workers are erecting a six-lane water slide for the 2008 season.
"You can race the family: mother, father or grandma," Aylward said with rare flare. "It follows in line with the general theme of [being] family-oriented."
He is upping Crystal Falls' deck chair total by 20 percent for the coming season.
Aylward said he does not expect attendance to continue increasing at the clip it has experienced since 2002.
"You don't expect to double attendnce every five years. That's a little aggressive," he said.
Instead, he expects modest gains during the coming season, with numbers similar to 2007's record year. The marketing strategy will remain the same, though, he said.
"We know families are the core of our business, and we try not to forget that," he said.
The park focuses its marketing efforts on mothers aged 18-34, he said. Magic Springs advertises from Memphis to Tulsa and from Shreveport to Tyler, Texas. Anything north of Branson, Mo., is not part of Magic Springs' plan, he said, because Silver Dollar City dominates that territory.
Silver Dollar City attracted more than 2 million visitors last year, and Aylward names it and Six Flags Over Texas in Arlington as Magic Springs' main competitors.
Pete Herschend, owner of Silver Dollar City, said Magic Springs' growth under Aylward has been impressive. The two have known each other professionally about 20 years.
"Any property that doubles in attendance in five years is doing something right," Herschend said, adding that Aylward's feat was even more impressive because he achieved it after Sept. 11, 2001.
"If you have a good product and pay attention to the customers - as Dan does - and cause repeat business, then you'll do fine. If you don't generate repeat business, you'll lose your job."
Aylward said Timberwood Amphi-theater generates repeat businss.
Local residents attend the summer-long concert series and church youth groups from the region attend Christian-themed weekend events. Hot Springs Village residents, mainly retirees, have become fixtures at the concerts thanks to the blanket admission included in season park passes, Aylward said.
"We're incredibly affordable. It costs $49.99 for a season pass. That's the price of one concert ticket," he said.
A Christian youth group event brought 18,000 visitors on one day, the park's attendance record. This season's calendar includes two similar weekends.
Flip This Park
When Themeparks LLC, owned by Ed Hart and four passive investors, bought Magic Springs in 1999, Hart said he wanted to duplicate his success at turning around Kentucky Kingdom in Louisville. Hart purchased that park in 1988, and the park attracted only 137,000 visitors in its first year under his ownership. His company sold it in 1997, when attendance reached 1.3 million. Premier Parks Inc. paid $64 million, according to SEC records.
Hart said he and the other investors saw the same growth opportunity in Magic Springs.
"Kentucky Kingdom, like Magic Springs, had run on hard times," he said in an interview. "We didn't create the previous problems; we just alleviated the previous owners of [the parks]."
Themeparks sold the Magic Springs property last year to a real estate investment company in Florida for $20 million, according to SEC records. The deal is a sale-leaseback, with Magic Springs Development Co. still operating the park. The lease is for 20 years, with options allowing Magic Springs to extend the lease for another 20. The sale price roughly equals the original purchase price, Hart said, but would not give specifics. Hart said the sale was done to increase capital investment and separate himself and the other investors from the park's day-to-day management.
"After the rent, you are still in the game and you have the operating profit," he said, but would not disclose revenues or profits. "Obviously if we are still operating and still adding rides, we have a reason...you wouldn't put more money in if you are not earning money."Hart said the obvious differences between Louisville and Hot Springs did not deter the investors. Louisville has more than 4 million residents within 100 miles, and Kentucky Kingdom competes with several theme parks within a day's drive. Hart focused on thrill rides to draw a crowd.
Hot Springs presents a different scenario.
"Hot Springs does like 700,000 in [annual visitors]," Hart said. "That's a wonderful base to work off."He also said the work of Hot Springs officials to reopen the dormant park made the decision easier.
David Byerly is president and CEO of the Greater Hot Springs Chamber of Commerce. Tourism accounts for about 7,000 jobs in the Hot Springs Metropolitan Statistical Area, he said; Garland County has about 40,000 jobs total. The theme park is a boon to the small city, he said.
"Does the state have another one?" Byerly asked rhetorically. While there are some water parks scattered around Arkansas, the state hasn't had another true theme park since Dogpatch USA near Jasper closed in 1993.
Chamber members experience the park's impact when hotel rooms fill and restaurant receipts return, he said.
"I think this community enjoys a very large tourism [industry], and I think that owes greatly to having two of the largest tourism draws in the state," Byerly said, referring to Oaklawn Park and Magic Springs.
Jay Chesshir, president of the Little Rock Regional Chamber of Commerce, formerly sat in Byerly's chair and helped recruit Themeparks LLC.
"Even when things weren't going well for the previous owners, it still had a major economic impact on Garland County and Hot Springs," he said.
"We saw the positive impact on the community and knew it could have an impact on Hot Springs and the state as a whole if it reached regional status."
The problem was enticing an investor to take over.
"We knew it would take a public-private partnership in order to create the total financing package required to produce an attraction that would be regional in scope," he said.
Garland County voters have passed three industrial development revenue bond issues in order to help the park continue investing. Magic Springs also receives a sales tax credit of about 25 percent.