Yesterday, Zachary reported on a recent survey soliciting feedback on a new, proposed SEAS theme park in Virginia, which we are calling “Sesame Place Williamsburg.” While his extensive analysis of the included site plan and concept art focused on the How, When, Where, and What in depth, we decided to address the Why separately, because it is such a complex discussion.
There are many arguments in favor of building Sesame Place Williamsburg. But first, the question of “Why” needs to broken into three subcategories:
- Why would SEAS do this?
- Why would it be good for BGW?
- Why do we like the idea?
Probably the most important question is whether it makes sense for SEAS to build Sesame Place Williamsburg at all.
The 2017 Agreement
The most critical reason is that SEAS has an agreement with Sesame Workshop, which includes the building of a second Sesame Place park by 2021. Taken in this light the survey becomes much less hypothetical.
SeaWorld Entertainment, Inc., a leading theme park and entertainment company, and Sesame Workshop, the nonprofit organization behind Sesame Street®, today announced the extension of their 37-year partnership to include the development of an additional Sesame Place® theme park in the United States…
The new license agreement between Sesame Workshop and SeaWorld Parks & Entertainment extends SeaWorld’s status as Sesame Workshop’s exclusive theme park partner in the United States, with the second Sesame Place theme park scheduled to open no later than mid 2021 in a U.S. location to be determined…
This press release contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections… Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements.
Source (May 18, 2017)
Additionally, it could beneficial for SEAS to attempt to focus and expand on the elements of their company that are not associated with Blackfish and marine mammals (sorry, Shamu). Closer ties to Sesame Workshop, a well-known and beloved children’s educational organization, could help SEAS resuscitate their brand image. The press release, itself, emphasizes the charitable aspects of a Sesame Place:
Sesame Place also extends Sesame Workshop’s commitment to social impact work with its Sesame Place Cares annual series of events both in and outside the park, including a 30-year partnership with Variety—The Children’s Charity, focused on providing events with a safe and fun atmosphere specifically for children with disabilities and their families.
Growth of Children’s Parks
More generally, we have seen a recent increase across the industry in both the number and importance of children’s parks. LEGOLAND is the perfect example. It is an incredibly popular family destination, which has continued to evolve to include integrated resorts and water parks.
It makes sense for SEAS to want to cash in on this expanding sector of the amusement industry. The (possibly) most obvious theme, however, has turned toxic. Attempting to focus new children’s parks on animals would probably only exacerbate their Blackfish problem. Sesame Street characters, however, provide them a popular IP, free of baggage.
One obvious question is whether a Sesame Place park would even be successful in Williamsburg. While we don’t have the data to predict its likely popularity, we believe the risks associated with failure would be by the proposed proximity to Busch Gardens Williamsburg.
Assuming the absolute worst case scenario, the addition could flop completely, and SEAS would be forced to close its third gate. In that case, Forest of Fun, and probably the rest of the new park, could be reintegrated into BGW relatively cheaply.
So, the end result of the project would be either a new children’s park in Williamsburg or an expanded children’s area at BGW. Neither is a bad result for SEAS, and both have the potential to bring in guests.
Based on this calculation, it seems that building Sesame Place adjacent to BGW would mitigate the risk associated with a new park. New attractions and infrastructure could be used, regardless of whether it proved successful.
Thus, a case could be made that using Williamsburg as a test bed for adding Sesame Place parks is a relatively “safe” venture with the potential for long term gains for SEAS.
Finally, based on several reports and investors calls over recent years it is clear that SEAS sees value in having dedicated resorts and creating multi-day destinations. The Disney/Universal model is clearly the benchmark for any large theme park chain; the question is where to build it.
Obviously, Orlando already has a three-gate complex, and adding a fourth park and a resort there might make a lot of sense. Williamsburg, however, is already a vacation destination as well, and has both a major dry and a massive water park. Further, there is still room for expansion, and possibly more critically, significantly less local direct competition. In fact, the case could be made that the other area attractions are not likely to detract from a BGW-centered three-gate theme park destination resort.
But is a hotel feasible, in addition to a new Sesame Place?
There is some precedent already: In 2016 BGW partnered with Colonial Williamsburg to create joint vacation packages, which importantly focused on linking stays at CW hotels with discounted tickets for BGW. So, clearly, SEAS (or at least BGW) has previously looked into some sort of hotel/resort for the Williamsburg parks.
On the Other Hand…
Perhaps more important than the question of “why” is the counter of “why not.” As highlighted in the survey, itself, there is significant competition in the northeast.
The original Sesame Place is only five hours away in Pennsylvania. That state also boasts several other popular children’s parks like Dutch Wonderland and Idlewild. Perhaps more importantly, there are plans for a new LEGOLAND resort in New York.
A second Sesame Place park, even as part of a larger resort area, might have difficulty drawing families from New England and the Mid-Atlantic (excluding Virginia), with all of those options closer to home. SEAS would need confidence that a children’s park in Williamsburg would add to their bottom line, before they made such a huge investment, especially given their current financial difficulties.
Busch Gardens Williamsburg
Why would a park built to help market a brewery be the logical place to build a children’s park, themed to Big Bird and Oscar the Grouch? On the surface, it is a fairly reasonable question. As local park enthusiasts can tell you, however, there has been an ever-increasing focus on family-friendly attractions at Budweiser’s old Virginia park.
Kid-siderate Attraction Boom
Not only has BGW added things like kids concerts and shows, and free Preschool Passes; but also starting last year, there was a dramatic increase in Sesame Street events. As of March 2018, the park has already announced Sesame Street® Kids’ Weekends, Let’s Play Together, and The Count’s Spooktacular. From this trend it is evident that BGW is expanding and increasing its focus on families with young children. Creating a third park targeting that demographic would fit that pattern, and may be the next logical step, especially if it increases sales.
And the Cons…
The obvious drawback from BGW’s perspective, that it loses a popular children’s area to a nominally separate park. Since it would still have kids rides in all of the other hamlets, it would still have attractions for its youngest guests, however. In fact, the removal of Forest of Fun from BGW proper could possibly lead to a future refurbishment of the beloved Land of the Dragons.
Regardless of how good or bad this addition would be for SEAS, the questions remain about the value to BGW’s guests. The bottom line is that we think this addition would be a net improvement for most people.
We see a lot of upsides to the addition of a third gate and even a resort. We have selected a few reasons that jump out as us; this is in no way a comprehensive list, and we certainly don’t have any real hard data from which to draw conclusions.
The addition of a children’s park would solve one of BGW’s perennial problems. Unlike many regional parks, it needs to cater to a very wide range of ages, tastes, and priorities. The park draws everyone from 3 to 60, and must provide attractions appropriate to all of them.
Sesame Place Williamsburg would allow SEAS to focus children’s programming in one park, and emphasize adult rides and entertainment at the other two. While this would not solve the problem entirely, it would mitigate it.
We see a related, but separate benefit during the Fall. There has long been a debate about how best to balance having an adult haunt in the evenings, while still providing programming for children. BGW introduced The Count’s Spooktacular in 2017, which provided something for kids to do, during the day. It did not, however, address the problem of having scared youngsters on the paths and even in the houses, during Howl-O-Scream.
Having a completely separate gate for children could greatly alleviate this perennial tension. Sesame Place would provide a place for “spooky” fun, where kids would not be in danger of being terrified by scare actors or gruesome decorations. Similarly, BGW would have the freedom to turn HOS back into the intense haunt that it was in its heyday.
Another annual issue for BGW are the overwhelming crowd levels at Christmas Town. In recent years the park has experimented with a variety of innovative solutions to try to manage their capacity problem. No matter how much they play with ticket prices and add attractions, there are still nights when the paths are simply unnavigable.
Unlike other special events, CT specifically targets families. Having a whole park aimed exclusively at kids would allow SEAS to increase capacity during the holidays. Targeted children’s activities at Sesame Place could be a huge draw, and relieve some of the pressure at Christmas Town, improving the experience for everyone.
Finally, one complaint from long-term park guests is the slow erosion of the “Old Country” theming, and the continuous encroachment of unrelated IP into all of the hamlets. Because Forest of Fun would become a section of the proposed Sesame Place park, guests would no longer run into Elmo in Killarney; the streets of Banbury would be safe from Cookie Monster; and no one would hear Abby Cadabby on the Busch Gardens Railroad.
But There are Drawbacks…
There are a few cons. While I’m sure we have missed something, here are the most obvious potential problems.
Some families, especially those with children at a wide variety of ages, but also those just with very young kids, could find themselves forced to purchase passes to both (or all three) parks.
The inclusion of two children’s areas at BGW has always been a benefit to families who want access to both adult and kids attractions. Without knowing the pass structure, however, it is impossible to predict the real impact of this potential addition.
It is worth noting that this is not out of the norm in the industry, although admittedly, Kings Dominion would likely still have an integrated Peanuts area. More importantly, there would still be children’s rides throughout BGW, and a charming play area would remain in Land of the Dragons.
The loss of the France lot would affect everyone, especially Premier Members. While presumably the park could still allow its highest tier pass holders to use the employee entrance and simply direct them to the England lot, Preferred Parking capacity would essentially be halved. Additionally, the loss of the parking spaces would have a cascading effect on all park guests, especially on high-capacity days. One possible mitigation could be the addition of a parking garage. This solution would be especially useful, if SEAS did include a resort in the proposed expansion.
Short term investment in Sesame Place Williamsburg could affect planned or potential projects in the existing two Virginia parks. Obviously, budgets are a zero-sum game, and while the addition could potentially bring in significant revenue, in the short term BGW and WCUSA might not have the resources for any new major attractions. Lacking insight into the park’s books and timelines, there is no way to assess the impact the proposal could have, especially on Project Madrid.
Despite some of the potential drawbacks, by creating a third gate, the addition of Sesame Place could turn Williamsburg into a real theme park destination. Of course, one could argue that attempts have been made for years to market the Historic Triangle with BGW and WCUSA as a multi-day family vacation destination. Those efforts, however, do not seem to be as fruitful as hoped, and perhaps a different approach would be more successful.
Especially, if SEAS included a themed resort, similar to LEGOLAND, the proposed expansion could breathe new life into the entire area, potentially improving tourism around the region. In an era of layoffs at CW and Blackfish-induced budget crises, such revenue growth could be invaluable to everyone.