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TOPIC: Did you sell your theatre?

Re: Did you sell your theatre? 16 Dec 2007 00:07 #17004

  • jacker5
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There are many good points amde here from both sides! You have to admit though that theatres are on the market for a few years before there sold and usually are sold becasue of drastic reductions.
Now in my experience all the theatres that I have looked at are in the red. But if you really look at the books and see the deductions and the owners draw you will see a Gross of 30-50,000. You have to remember that small town theatres are owned and operated by the manager. And the biggest deduction is his paycheck. Who happens to be the owner.
Now it is different when you have a theatre being sold and the owner has no stake in it, he just owns but has others running it. All his profits go in there pockets, plus all they take over the top.
I found a theatre for dirt cheap but it needs so much work I may just have to level it and start over again.
You cant get a theatre that has been renovated for nothing and then again you cant get a run down theatre for nothing and expect to make a profit.
But you have to find a medium!
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Re: Did you sell your theatre? 16 Dec 2007 00:52 #17005

  • rufusjack
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Jacker,

Your last post has me confused. Are saying that the $30-50,000 that the owner/operator can be looked at as profit?

If so I drastically disagree. I bet each one of us could go out and get a job that pays decent without having to spend thousands of money to get that job, sign over our life and take on all of the risk.

When you eveluate the potentail finacials of any business, you have to look at what it would take to run that business including all employees.

Now if that onwer/operator was paying themselves $30-50,000 and not performing any needed duties at a business, then you could back that out as profit.

I see too many small business owners look at the salary that they pay themselves as profit when they are performing vital tasks for that business.
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Re: Did you sell your theatre? 16 Dec 2007 01:16 #17006

  • slapintheface
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Salery can be profit for a small operation. Thats how you justify doing what you love!~
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Re: Did you sell your theatre? 16 Dec 2007 01:29 #17007

  • Cinemateer
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The last theater I looked at buying was going to be purchased through a real estate loan, not a business loan. The purchase price was based on the building, land, and equipment appraisal only. The business was free. This is the only way the theater could be sold since it can't show a profit, unless the seller wanted to carry the note, which they understandably didn't.

Serious buyers will already have the financing in place. That's a given, and Mike has learned to get that question out of the way first. Good. That helps both the seller and buyer not waste any more time.
..."if they don't like the price they can make an offer. In writing. With a check as a deposit."


Ouch. This makes it VERY difficult on buyers. If I make a written offer and include a $1,000 check and THEN you open your books and I see it's faults and back out, I just lost $1,000. Sorry- I only put down a deposit AFTER seeing everything. I know it's hard to show your books to everyone inquiring, but you are trying to sell a business based on P&L statements, so we need to see them. In fact, I pay more attention to the last 3 years' P&L statements than I do the theater. You should be able to purchase a business based on P&L statements alone without ever seeing it.
...consider buying a diamond in the rough.


However, these "diamond in the rough" theaters that have been closed for decades are closed for a reason. Revitalizing that business will most likely be even harder with the multiplexes than it was back when it was the only theater in town. You can pay for it in cash and put $1M into restoring it, but you still need customers to keep it going.
...real estate has appreciate far faster than the profitability of the movie industry making these sales untenable.


Bravo! This is exactly my point. In other words, if you can't show a decent profit, your theater is worth as much as the land it sits on, making it uninteresting to those of us looking to buy a theater.
...there must be some other value that is obvious to the buyer, such as real estate value. That way the buyer knows they are getting something for their money even if the business tanks.


That SOUNDS good, but it doesn't work out that way. Theaters are unique and can't be sold for much of anything else other than a church. If a theater appraises for $500k, it won't sell for anything near that, and MANY theater owners base their selling price using realtors, which is unrealistic. So their theaters sit. And sit.

Sure, there may be a lot of theaters for sale. But to the educated buyers, we can see the duds a mile away after about an hour of research and without even contacting the seller. A good deal MUST be obvious, and they are rare.
finding that type of 'multi-faceted' buyer is proving near impossible.


Don't get too discouraged, rdetzler... we are out there!



[This message has been edited by Cinemateer (edited December 16, 2007).]
"In a place like this, the magic is all around you. The trick is to see it." -Martin Landau
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Re: Did you sell your theatre? 16 Dec 2007 12:13 #17008

  • Mike
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<BLOCKQUOTE><font size="1" face="Verdana, Arial, helvetica">quote:</font><HR>Originally posted by slapintheface:
Salery can be profit for a small operation. Thats how you justify doing what you love!~<HR></BLOCKQUOTE>

Of course you would not give a check without a financial viewing. But being able to prove you can write that check is what I am talking about. Someone with no money in the bank and bad credit should not be asking people to show them the books. In real estate: QUALIFYING the buyer is a FIRST STEP before you take them around.

IE I just had a guy who identified himself as "Bob" ask for my financials. I wrote back in a very nicer fashion approximating "in your dreams....Bob" and never heard back.

If you want into a real business where real people spends hundreds of thousands of dollars you had better expect to be expected to be real.



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Re: Did you sell your theatre? 16 Dec 2007 18:31 #17009

  • lionheart
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Sure, finding a real diamond in the rough is difficult. But, I did not say you had to buy something closed for decades. A diamond in the rough is something that is priced low with real potential. It will be priced low for various reasons. It may need lots of work, but the potential is there if the work is accomplished. If you are looking at a theater closed for decades in a city that has multiplexes or megaplexes around the corner, then it is no diamond in the rough to me. It may be cheap. It may have been a beauty queen in its day. But, it has no real potential to my way of thinking. I also wouldn't consider something a diamond in the rough if the cost to get it back up and running profitably would be quite large. It would be hard to find something with potential that you could get up and running profitably on the cheap, but it needn't cost a million bucks either. Mike gave two specific examples of what it cost to get his theaters going. That's nowhere near a million dollars and within the reach of many who read these forums, I'm guessing. At lease with financing. And that was my original point, that others could do what Mike had done.

If you are buying a theater with a back-up plan based on obvioius value, such as real estate value, I hope you are NOT valuing it as a theater for that purpose. You would have to think of it as land, or a warehouse, or a church, or even an antique mall or some such thing. Calculate what the property would cost to convert to some of these new purposes. If you could make a convincing sales pitch to convert it to one of these things, then maybe you have a back-up plan. I don't think a good plan would be to say, "I'm going to sell this place for a profit, even if the business fails, because the real estate alone is worth big bucks." Also, the back-up plan may not save you from any financial harm, but it might make it manageable.
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Re: Did you sell your theatre? 16 Dec 2007 19:18 #17010

  • Mike
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Many smaller independent theatres do require the owners to run the place to make a better income. While it's true that salary does not equal profit you halso have to factor in the real estate appreciation that is occuring while you work which might not happen if you did not do the time. For those of accustomed to a regular paycheck (from someone other than yourself) you'll have to tell me how that feels as I've been self employed since 1977. I've always doubled down and invested in myself through property from income made from one business or another that has subsidized another. Bigscreen.com would be a great example of a profitless endeavor that feeds from other sources to pay the bills. In the corporate world there are always performers that are losers and winners and often the winners pay for the losers: as long as the total bottom line works out. There are very successful theatres available for sale. All you need is a pile of cash and extremely good credit. But as the old blues song goes: "everyone want to go first class but nobody wants to pay." When I bought my first theatre it took us 1.5 days to decide to go for it, make an offer and put up the cash, and I have never regretted it.

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Re: Did you sell your theatre? 17 Dec 2007 11:13 #17011

  • Cinemateer
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Mike, you truly have some unique business philosophies. Better or worse, I don't know, but they are certainly unique!


<BLOCKQUOTE><font size="1" face="Verdana, Arial, helvetica">quote:</font><HR>Originally posted by Mike:
I've always doubled down and invested in myself through property from income made from one business or another that has subsidized another.<HR></BLOCKQUOTE>

Using one business to finance another is a great way to diversify and expand, however, there are many of us who have no desire to get "big" and just want to run one successful theater and keep the stress to a minimum.
There are very successful theatres available for sale. All you need is a pile of cash and extremely good credit.


Got both. Now where are they??? To me, it's not that simple. I have to take into account the area, weather, recreation, schools, future development plans, and places my wife can work. Just having good credit and being prequalified with a great down payment are actually the smallest parts to me.
When I bought my first theatre it took us 1.5 days to decide to go for it, make an offer and put up the cash, and I have never regretted it.


Wow. I could never do that. I have to take my time to research everything before making such a big commitment. After only 1.5 days, there was a good chance (50/50) that it could have been a disaster.

However, if I didn't have young children, I would be much more inclined to make quicker decisions because I don't have anyone that is counting on my ability to make the right decision. That brings up a good point. Hmmm. I'll start another subject on this. Interesting.
"In a place like this, the magic is all around you. The trick is to see it." -Martin Landau
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Re: Did you sell your theatre? 17 Dec 2007 11:17 #17012

  • slapintheface
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' My biggest problem is getting potential buyers to see like beyond movies. '

Most people (LIKE ME) want a movie theater not have to look beyond movies.
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Re: Did you sell your theatre? 17 Dec 2007 11:31 #17013

  • Mike
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"The theatre was sold to a chain. Rather than have the place bring the owners down, it wound up making them (and the landlord) a lot of money, and being part of a much larger group, the theatre's ups and downs doesn't have such a dramatic effect on the whole. It remains open." This is a quote from the add screens? post. It further makes the point about diversity of your economic base and all things do not have to be equally profitable for the big or the small. I.E. I know a guy who owns a theatre and his wife is a very successful surgeon. My point: it is not all black and white.



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Re: Did you sell your theatre? 17 Dec 2007 11:38 #17014

  • Mike
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If you want to buy a theatre in your area: it simply may not be available. There are lots of territories where no one wants to sell. If you live in one of those and you want to be in the movie biz you can either seek a niche or a corner they seem to be missing and build new or you can move or you can forget about it for a while.

And why are they unavailable? Because it's such a terrible business.


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Re: Did you sell your theatre? 17 Dec 2007 13:07 #17015

  • slapintheface
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its SUCH ABAD BSNS HE MADE A WEB SITE ABOUT IT>>>>>>HAHAHAHA
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Re: Did you sell your theatre? 17 Dec 2007 21:04 #17016

  • lionheart
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Mike is speaking my language now. My philosophy was to seek an area where the competition was far away. Yes, I had to move.

If your idea of having the competition far away is that there are no theaters for 3, 5, or 10 miles, then we don't think alike. I wouldn't know how to estimate my market share in a highly competitive area. I think I would guess it at near zero. I'm actually a little closer to competition than I wanted, but 22 miles isn't bad with the price of gas rising all the time-- especially with all the excitement I'm hearing from the locals. They all say they can't wait for us to open. I just hope there's more to this than a nice honeymoon period. All my demographic research says things will be fine.

The theater was open for over 50 years, and then a fairly new owner decided he would relocate to the outskirts of a nearby town (probably to avoid the expense of updating the old building). The relocated theater closed in about a year. I guess a metal building "in the middle of nowhere" didn't quite cut it. That newer location is now an auto dealership, I think. One corner of the old location has been partly used as a tailor shop and an antiques, crafts, collectibles store. Most of the building was untouched. I'm still having to go through significant remodeling and updating because I am converting it from a single screen to a 2-screen.

My market area? About 20,000 people in the county.

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Re: Did you sell your theatre? 17 Dec 2007 21:20 #17017

  • slapintheface
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The theater i bought has lots of competition.
CARMIKE8
REGAL18
REGAL12
CONSOLIDATED16
AMC
ALL WITHIN 2 MILES TO 20 TO 25 MILES
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Re: Did you sell your theatre? 17 Dec 2007 21:23 #17018

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this sounds a lot like my area. My closest "competitor" is a 5 screen about 25 miles away. I wish I had 20,000 people in my county. More like half of that for me. My building was a theater that was basically run into the ground and closed in 1996. We bought it and remodeled and reopened in 2003. I would think with 20,000 people a two screen sounds about right.
"What a crazy business"
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