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TOPIC: Purchasing a theatre.... help....

Purchasing a theatre.... help.... 03 Feb 2003 14:31 #23757

  • Laura719
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We are considering purchasing a 3 screen theatre that has been totally remodeled and is completely ready to open. We live in a small (pop 5,000) town without any competition, the town is growing and adding great restaurants soon so we feel good about the fact that we will sell tickets... How many is the question?? We have NO clue what to expect. We have the capacity to hold up to 388 people and will play first run (if we are allowed) :eek!: Is it true that the distributor keeps 90% of the ticket sales? We want to sell tickets for $3-$4 and have reasonable concessions. Can anyone take an educated guess at what our expected gross could possibly be??? We are 20 miles from a large theatre and have a lot of small towns surrounding ours. I appreciate any input....
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Re: Purchasing a theatre.... help.... 03 Feb 2003 16:28 #23758

  • GREGBORR
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Laura719,
You have found the best refernce site on the internet for the information you seek. The best thing to do is to set the forums to "Show All Topics" And read, read, read. There have been many discussions on the site that will answer a lot of questions.

Average Film Rental throughout the year will be much less than 90%, 90% would be for the first weeks run of a Harry Potter.

Would you be purchasing or leasing the building?

The average ticket price in the U.S. is close to $6.00, and in the theatre business a majority of the profit is generated at the concessions stand.

If you are 20 miles from your nearest competitor you should be able to obtain 1st run films.

Why is the theatre being sold? Can you get financial data from the previous operator? Do some research, you should be able to obtain admissions information from when it was last operated.


Best of Luck!

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Re: Purchasing a theatre.... help.... 03 Feb 2003 22:40 #23759

  • Laura719
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Actually I received some financial info today...
June-Dec 1999 the total including concessions were $103,590.35 and Jan-Aug 2000 totals were $69,075.85. Their sales dropped dramaticly in 2000, it is my understanding the Owners really didn't have the management style to run it properly & they didn't advertise! yikes! After reading their #'s makes me feel great about what I can do. I would like to know from anyone that owns a small theatre (3 screen) in a small town, what percentage of the population will come to the movies??? Thanks!
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Re: Purchasing a theatre.... help.... 04 Feb 2003 11:22 #23760

  • LanceC
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Laura,
As Greg mentioned, this is a good place to start. I would also advise looking at this book....ISBN: 067175095X for some really good insight on trends. Perhaps they have an updated version as this was printed 11 years ago, but many of the statistics hold true. Read all you can here in the old posts. The "Impresario" has compiled a huge knowledge base here, and everyone is helpful. I remember the last thing our tech said as he walked out the door after finishing training...." I hope you don't think this is a part time job"
Most here would agree...it isn't a job, it is a love affair.
lance

[This message has been edited by LanceC (edited February 04, 2003).]
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Re: Purchasing a theatre.... help.... 04 Feb 2003 11:24 #23761

  • GREGBORR
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The average over the time is a little more than 11K per month in comparison to the below, not very good.

Example - 3 Screen Theatre, 1st Run, town with population of 5,500. The actual population of the town isn't the key, it's the population in the surrounding area that you feel you can draw customers from.

January through April of 2002.

26,008 Paid Admissions
57,303.63 Concession Sales

[This message has been edited by GREGBORR (edited February 04, 2003).]
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Re: Purchasing a theatre.... help.... 04 Feb 2003 11:30 #23762

  • BECKWITH1
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Something smells fishy about the drop in ticket sales in 2000. While 2000 was a bad year we dropped only 12%. I'm calculating a 50% drop in admissions using your numbers. Did another theater open up anywhere in the area between Fall of 1999 and summer of 2000. Was there a huge change in management or # of hours theater was open?

Also these numbers are not particularly high for a 3 plex. They sound a lot like my single screen. If you are planning on making a living here it will be tough going as you will probably only take home 9-12% of what you gross after expenses. (I am just imputing general expense numbers - only you know how much your actual real estate or lease expenses will be).

Advertising can be very expensive. If you are lucky to have a small town paper which doesn't cost too much and will cover the territory that you need to cover then you will probably be OK. But if you are trying to cover multiple towns with multiple newspapers it can get very expensive. Magnets with the theater telephone number cost only .19 each and are a good way to cover a broad area.
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Re: Purchasing a theatre.... help.... 04 Feb 2003 17:36 #23763

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It is my understanding the Owners had poor management and they got into a spat with the loca newspapers about advertising costs and stopped advertising. In asking around the town I've heard the same responses, nobody knew if/when the theatre would be open and what would be playing. According to the "demographic and income forecast" sheet I have the "downtown Primary Retail Trade Area" snapshot population is 60,589. Per the "downtown ER Retail Trade Area Computation of Demand by Retail Product" (definition is admissions to sporting events, movies, concerts, plays, and movie rentals) the total demand for product is $13,327,151. We have an old 2 screen theater with horrible seats 10 miles from us that is always packed and a big theatre 20 miles away with HIGH prices. My thought was if I have decent prices on concessions and ticket prices people will stay local... ??? The price asking price has been reduced from $475,000 to $250,000 and we are offering $200,000. The equipment values aer $302,400 (not sure who valued them). So, I feel like it's a decent deal... ONLY if I can SELL A LOT OF TICKETS!!! Give me honest input re: the life of a theatre owner... will we EVER make decent money? Thanks for taking the time!

[This message has been edited by Laura719 (edited February 13, 2003).]
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Re: Purchasing a theatre.... help.... 04 Feb 2003 23:06 #23764

  • RoxyVaudeville
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A 3 screen recently remodeled for $250,000 sounds like a really good deal to me. Is that the price for everything or just the equipment and you still have to lease the building? It would sound high for just the equipment unless it is all brand new. If that includes the real estate it sounds very good. Where was that again... I'll be right out with a check. Just kidding, but I would be wary of discussing actual locations on the internet as it could bring unwanted competition.
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Re: Purchasing a theatre.... help.... 05 Feb 2003 07:07 #23765

  • LanceC
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I would look at the opportunity as a chance to pack them in because of great presentation, safe and clean environment, not cheap concession prices and cheap movies. First run prices need to be in line with competition. Have you experience with projection equipment? What is the sound like in the auditoriums? You could have the greatest equipment in the world and the worst "Threaders" and it takes about two shows to turn people off. There has to be more to the closure than a few spats. With such limited competition what is missing? Those ticket and concession figures seem quite low. Have you talked to the previous booking agent and asked what the former operators did wrong? just a few thoughts....
oh, and if you do this...my advice is not to sell your concession to finance the project
lance
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Re: Purchasing a theatre.... help.... 05 Feb 2003 09:33 #23766

  • Ken Layton
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Another thing to look at are the theater's seats. Bad seats will drive away customers!
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Re: Purchasing a theatre.... help.... 05 Feb 2003 09:48 #23767

  • Mike
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We have a 3 screen, town of 6500..... 15 miles out 18,000 people and we do okay. we don't make more than a hs teacher though. But we can throw the kids out! 200k sounds good to me! Perhaps the guy was skimming it out hence the sales drop?

Michael Hurley
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Michael Hurley
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Re: Purchasing a theatre.... help.... 05 Feb 2003 18:05 #23768

  • Laura719
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Gregborr- Is it common to have your ticket sales less than your concessions?

Roxy- We feel the price is GREAT! The price includes building and everything including the pop machines etc. It's like they closed one day and never came back... The equipment is all new, it's a converted bowling alley.

Beckwith- Are you saying everyone only takes home 9-12%?!? Or is that for the #'s I presented? We have a single newspaper that covers several counties so that shouldn't be too bad. The magnets are an excellent idea!! I will hand them out at my grand opening!


Lance- I have no experience with projection equipment. What is a "threader"? Everyone I've talked to has said they didn't go because they didn't know what was playing or when. I did however receive a comment today that the sound didn't bother them (like it did me) but they could hear the projector running? What is up with that? I have a list of "equipment values", keep in mind this is a new "stuff" and the projectors (3 theatres)/screens inlcude splicing tables/film trays = $135,000. That # means nothing to me, are there certain brands like a car? Should I look to see if it's "good". As far as financing, are you saying if I put down 20%-30% and the bank finances the rest that's not too risky or what? I'm getting scared even though I think I'm SPECIAL and I CAN make it work. But, how am I supposed to know if it's a "crappy" theatre? I only attended 1 time and didn't like the fact that I could hear the movie next door.

Ken- I don't think the seats are too bad. They aren't the latest and greatest conform but they are decent and do the cup holders!


Mike- When you say "we" don't make more than a high school teacher does that mean you split the teachers wages with your partner? Or you each make that much? I obviously don't want to share $40K with someone... do you work in the theatre? I was thinking if I am in there all the time that will cut down on employees... am I being realistic?

I really appreciate everyone's input!!!
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Re: Purchasing a theatre.... help.... 05 Feb 2003 22:49 #23769

  • John Pytlak
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Knowing so little about the equipment, you may want to hire a theatre equipment engineer to come in and do an evaluation and appraise the equipment. Lots of hidden problems could be lurking (e.g., blown speakers, poorly maintained projectors, overaged xenon lamps, damaged reflectors or lenses) that could be an unpleasant surprise. Like buying a home, you should also get an independent appraisal of the property and engineering evaluation of the structure.

John P. Pytlak, Senior Technical Specialist
Worldwide Technical Services
Entertainment Imaging
Research Labs, Building 69, Room 7525A
Eastman Kodak Company
Rochester, NY 14650-1922
Telephone: 585-477-5325 Cell: 585-781-4036 Fax: 585-722-7243
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Website: http://www.kodak.com/go/motion
John P. Pytlak, Senior Technical Specialist
Customer Technical Services
Entertainment Imaging
Research Labs, Building 69, Room 7525A
Eastman Kodak Company
Rochester, NY 14650-1922
Telephone: +1 585-477-5325 Fax: +1 585-722-7243
E-Mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Website: http://www.kodak.com/go/motion
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Re: Purchasing a theatre.... help.... 06 Feb 2003 01:19 #23770

  • Adam Fraser
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For some more technical information go over to www.film-tech.com and look through the tips and manuals section. Running and maintaing projection equipment is a big job and will determine if people will keep coming to your theatre (i.e. if there are a lot of problems with the presentation, they will find another place to go). I agree with John, have a theatre technition come to the theatre and check everything out before you get into any deals, also get the HVAC system and roof checked for potential problems by contractors.
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Re: Purchasing a theatre.... help.... 06 Feb 2003 07:34 #23771

  • usfrench
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The theater itself, in the market described, should be happy with a 10-15% of the gross in profit total. Split it up however you like. You will NOT get rich in htis biz. Mike did a poll some time back and a good chunk of us little ol' theater owners have other income. Speaking for myself, there's no way my family could live on the theater income. We are a twin in an non-competitive market and gross $400,000 per year, profit about $40K. (I pay a little more in payroll because I have another life). Do not do this for the money, there are much easier ways to make the same amount. Do it because you want too.
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