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Good morning to all. This is my first time here. Enjoy all the posts and wisdom in the forum. To start I have 12 years in operations of theatre exhibition, and relate to all the differnt nuiances you have in this great business. I agree that you have to have passion to stay with it. My situation has giving me a lot of stress. To begin with I have the oppurtunity to be an independent by leasing a four screen completely set up. The complex use to be a 1st run and the major went in to bankruptcy. The population of over 100,000 here and no 2nd run. This is a great location and the building and equiptment are in fantastic shape. I got them to even update equipt. The agent agrees with what I can do with it and has supported me to give a lease to. My problem is that the owner wants more liquidity on my side. The lease is setup for three years/option five. Rate is 4500.00 a month plus tripple net. I sent them a [email protected] projection. Now I have offered them 3 to 7 1/2 percent on gross net. Gross around 400,000. They think it should do more. What I responded with is that these are real numbers not pie in the sky and any thing above is great for all parties concerned. I have thought about a partnership, but as you all know this is not retail. Any support or comments would be great. Thank you and I hope I wasn't to long.

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I am a 5-plex in a town of 150,000.

We don't pay triple net, but our rent is higher.

We did $2 million on art films last year, or year number 3.

We pay 10% above the base rent after a certain amount of money. We payed percentage rent in 11 out of 12 months last year. Our landlord loves us.

Sounds like you have room to move.

I wouldn't pay the landlord a penny more. I use the "10% rule" as a gage for paying rent. You shouldn't be paying more rent then 10% (15% if you have to) of a theatres yearly film gross. What kind of leverage do you have? Is there someone in the wings who would operate the theatre if you walked or would it be a white elephant to the landlord?
You may need to play hardball. It is better to educate your landlord now about this "funny" business of ours.

Thank you for your replies. To follow up, the broker of the property will suggest to the owner that we meet. The owner has a friend who was with Cinemark and it seems he is confused about what this business can do. The numbers he is being told can not do that in this situation. A second run for a 1.50 admission with four screens at its max I feel could do over $800,000.00 gross. With a 10 plex first run as my only competion I feel this is the numbers it will do. I know the owner would like to see a corporate enity here but it will not happen. I am thinking of a one year lease with a four year option, include a 10 to 12 percent admission gross the first year. I have negoiated a two month no rent for equiptment upgrades that is needed. If I add a partner or investor this could be what may seal the deal too. This is a very good oppurtunity here and I would if need be do that. The competion here is so badly managed and the public complains constantly. Any suggestions to win this owner over?
I told the wife I feel I am in child birth trying to bring this deal into the world.

One other word of advice...
Do your homework. Always be conservative with your figures. If possible find out what the theatre was grossing prior to closing. Most important..THINK...Don't let your emotions make your decision. 10,000+ people a week to a four screen sub-run theatre seems rather high. Without knowing your area, I'd say $ 400,000 is more realistic but would even figure lower than that the first year. Good luck!