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Topic: "Value" of a Theatre Location (Question for Owners)
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Adam Fraser
Master Film Handler
Posts: 499
From: Houghton Lake, MI, USA
Registered: Dec 2001
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posted 05-09-2005 02:19 PM
Around here the only theatres I know of are owned completely, real estate and all. A single screen currently operating may start as low as $150,000 and go up higher. But for that little money you would get a theatre that is probably in need of some major repairs or upgrades. A nicer single to five screen in my area, including land, would be in the $300,000-900,000 range including real estate, most include additional income property with the theatre.
Sorry, dont know much about leasing because it isnt common for theatres in this rural area, as property isnt nearly as expensive as in metro areas.
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Mitchell Dvoskin
Phenomenal Film Handler
Posts: 1869
From: West Milford, NJ, USA
Registered: Jan 2001
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posted 05-09-2005 03:26 PM
It has been a very long time since I was last a commercial theatre owner, so some of this may be out of date.
If you are buying a "profitable" open theatre from an independent owner, the going rate was a usually around 1½ times the yearly gross profit, plus the value of any equipment/seats/etc. that does not belong to the landlord. However, unless the theatre is very profitable, nobody actually pays that much. In most cases (execpt large multiplexes), you can get though the door for the cost of the used equipment, security deposits to the landlord, plus a few thousand to the prior owner. You also should have an extra 50k in the bank to cover bookings, taxes, payroll, advertising, etc. It's not that you can't get by with less, but let's say you are booking 4 screens and hit a few months of duds, you can eat up your reserve very quickly.
Landlords, even big ones, ultimately live by supply and demand. If they currently have a tenant under lease, or one that just pulled out, they are going to want top dollar for the space. On the other hand, if the theatre has been closed for a while, it is not unheard of for a landlord to rent it for the cost of taxes plus a percentage of the boxoffice. While landlords want top dollar, remember, it is going to cost a lot of money to level the floor and convert the space to other retail.
My suggestion would be to find a location that is closed, or just getting by, study it, and decide what YOU could do better than the current operator. Then come back and ask on Film-Tech if your ideas make sense.
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Dylan Marchetti
Film Handler
Posts: 27
From: New York, NY
Registered: Oct 2004
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posted 05-16-2005 06:24 PM
I disagree that any location will profit if managed correctly. It's a huge part of the equation, but only part of it. There are a host of factors, some out of your control, that will determine if crowds show up. What is the competition like? Has a new theatre recently opened in the area? If so, the location is likely closed because it was inferior to the new one, and the crowds fled to the new theater. What's the neighborhood like? Are there restaurants and bars in the area that can drive walk-up business?
Another factor you should strongly consider is the state of the building. To be competitive in today's market, any closed location that was built over 7-8 years ago will likely require expensive renovations. If you don't have stadium seating and digital sound (at the minimum), your odds of success are very low. If someone were to open a new theatre anywhere near you, your business takes a hit. If they've got all the new amenities, and you've got old seats, sloped floors, and bad sound, that hit will probably be fatal.
The worst thing you can do is simply throw open the doors on an existing complex. The theatre closed for a reason, and audiences have been going somewhere else. Without a compelling reason to come back, things can turn very bleak very quickly.
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