It may not be a retail model that Australians are familiar, with but family entertainment centres in the United States is a very lucrative business which is why Ardent Leisure Group (ASX: ALG) is expanding their US footprint with the acquisition of three locations in Colorado.
The acquisitions fall under Ardent’s Main Event Entertainment division which is operated independently to their Australian theme parks business. Offering gaming venues that are mixed with family-friendly food and drinks, the Main Event business has been on the radar of Private Equity for several years now, but stalled due to the pandemic which forced centre closures.
Since their staggered reopenings, Main Event has thrived to have reported USD $98.4 million revenue and USD $52.0 million EBITDA for the six months ended 31 December 2021.
Americans have clearly been itching for the entertainment experiences following lockdowns with total foot traffic across the 45 centres having increased by 20% on their pre-COVID levels.
For Australians that don’t have the pleasure of being able to visit these centres, they are ideal family outings where children can play games all day, dads can hang out at the bar and watch sports on giant screens and mum can sit back with a glass of wine watching from afar.
In many ways, the US business is keeping Ardent afloat with their Australian operation having continued to be affected by COVID due to the Omicron outbreak occurring right at the start of summer which reduced tourism to the Gold Coast and Ardent’s theme parks.
Across the Company, Ardent reported $275.5m in revenue which represented a 100% increase on the previous year and $43.6m in EBITDA which was a massive improvement on the prior year’s $4.9m loss. The majority of these earnings, though, came from the Main Event division.
The three newly acquired centres are located in Denver and Colorado Springs and are currently branded as ‘The Summit’ but integrations will take place over the coming months to re-brand them as Main Event Entertainment.
The centres are expected to generate annualised revenue of USD $24 million at roughly 25% EBITDA margins.
The total purchase price was USD $26 million which was funded from existing cash flow in the Main Event division.
Over the next three months, Ardent also has plans to open new Main Event centres in Huntsville in Alabama, and Waco and Tomball in Texas.
Although it was not captured in the half year reporting period, Ardent has confirmed ticket sales for Dreamworld picked up 75% in January and 111% February 2022 compared to their previous corresponding months.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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