Banner
Welcome, Guest
Username: Password: Remember me
  • Page:
  • 1

TOPIC: Theater Lease

Theater Lease 12 Jan 2001 15:23 #1130

  • sevstar
  • sevstar's Avatar
  • OFFLINE
  • Platinum Boarder
  • Posts: 520
  • Thank you received: 6
  • Karma: -1
Looking at a theater in a busy shopping plaza that closed last week. Has four screens roughly 100 - 125 seats per house. It was a discount house. It is only four years old. Most of the equipment comes with it, platters and such. With the exception of the sound equip., though speakers are in place. Landlord is asking $50,000 per year lease. I own a theater but never leased one. Can anyone tell me if that is an average lease rate? Or if it is above or below the average. Just looking for any info anyone with experience with leasing might have. $12.00 per sq foot seems to be the shopping center's average.

The administrator has disabled public write access.

Re: Theater Lease 12 Jan 2001 19:27 #1131

  • Large
  • Large's Avatar
  • OFFLINE
  • Platinum Boarder
  • Posts: 1074
  • Thank you received: 1
  • Karma: 0
You don't want your lease to exceed 10% of your monthly gross. Therefore can you gross $42,000 per month out of this location?

We have a lease that is significantly higher than what you were offered. But I live in the San Francisco Bay area. Our lease is $11,000 per month and we were able to grosse $84,000 each month during our first year. As you can see, we didn't quite live up to my rule of thumb. It would have been more comfortable if we had.
The administrator has disabled public write access.

Re: Theater Lease 13 Jan 2001 01:33 #1132

  • sevstar
  • sevstar's Avatar
  • OFFLINE
  • Platinum Boarder
  • Posts: 520
  • Thank you received: 6
  • Karma: -1
Thanks for that 10% figure, that helps a lot. I am trying to find out what this theater grossed when it was run as a discount house. That would give me an idea of what is possible. I have always run mine as first run or second run. And have no interest in a discount theater. Did your theater come with the booths equiped? Or did you have to equip them?


The administrator has disabled public write access.

Re: Theater Lease 13 Jan 2001 13:53 #1133

  • Large
  • Large's Avatar
  • OFFLINE
  • Platinum Boarder
  • Posts: 1074
  • Thank you received: 1
  • Karma: 0
Yes it did, but we had to purchase the equipment from the previous operator and I still had to spend $5,000 per screen to bring it up to proper, running condition.

[This message has been edited by Large (edited January 13, 2001).]
The administrator has disabled public write access.

Re: Theater Lease 13 Jan 2001 16:30 #1134

  • Bird
  • Bird's Avatar
  • OFFLINE
  • Senior Boarder
  • Posts: 62
  • Karma: 0
Large, is this 10% rule something that most theatres achieve, or just a goal to strive for? (that is rarley achieved)

Would a landlord consider this when negotiating a lease?
The administrator has disabled public write access.

Re: Theater Lease 13 Jan 2001 19:40 #1135

  • Large
  • Large's Avatar
  • OFFLINE
  • Platinum Boarder
  • Posts: 1074
  • Thank you received: 1
  • Karma: 0
The 10% rule is just a personal Rule of Thumb that I made up. But consider that you pay staff about 12% and you pay the Film Companies 40%-50%, Utilities could easily match your staff costs. If you pay the landlord more than 10% you won't have much left to play with.

I am just dealing in big fat round numbers here. But the lease is the first, big expense you get to control. If you mess up with the lease, you will never recover it elsewhere.

It is hard to control film rental unless you have a monopoly on the town. You can control the staff costs to a degree, but you still must service the customer. You need utilities to run the theatre and they are seldom negotiable.

The big boys are primarily declaring bankruptcy in order to renegotiate or get out of bad leases. I was working at a 12-plex that was 40% profitable for a couple of years. The lease was negotiated on that basis. Then there were 4 other theatres built in the vicinity and the theatre started to decline in revenue. Now the lease payments are too high.

Ps. make the landlord responsible for the shell of the building. That includes parking lot, roof, HVAC, property taxes, exterior painting, structural safety systems (fire and earthquake). Although most landlords make HVAC the responsibility of the tenant, make sure they are in good working order before accepting the building.
The administrator has disabled public write access.

Re: Theater Lease 17 Jan 2001 17:17 #1136

  • Mike
  • Mike's Avatar
  • OFFLINE
  • Administrator
  • Posts: 5001
  • Thank you received: 39
  • Karma: 16
We play about 13% of last year gross for our mortage. 10% would be nicer. But 15 would be okay and anything higher would start to get weird. What size town?
Michael Hurley
Impresario
The administrator has disabled public write access.

Re: Theater Lease 17 Jan 2001 17:52 #1137

  • sevstar
  • sevstar's Avatar
  • OFFLINE
  • Platinum Boarder
  • Posts: 520
  • Thank you received: 6
  • Karma: -1
10-15% was my original thought. I came in around 12% for the mortgage on the theater I have now. The town has a population of around 45,000. Competition is Regal 13 Stadium one year old, and a Regal 10 about 9-10 years old. Also a 25 year old ex-UA theatre that is a discount theater.

The administrator has disabled public write access.
  • Page:
  • 1
Time to create page: 0.212 seconds
attraction attraction
attraction
attraction
attraction
attraction