Merlin Entertainments have been hinting at a flotation for a good couple of years now (they ditched plans at the last minute in 2010 in the face of a bleak outlook for private equity-backed companies). The hype's been building again this year and now the latest round of news reports all but confirm an imminent float. Right now, a stock market listing for the UK's largest attractions operator promises just one thing: uncertainty.
How will an business all too familiar with ruthless cost cutting fare on the markets? Will potential investors be looking for a quick profit, or be happy to wait around for the long-term? Writing in his autobiography, John Wardley highlights just how ruthless Nick Varney and the Merlin board can be when it comes to new attractions, demanding the "killer image" criteria which incentivise the creative team to build a ride based on gimmicks marketable in the short term, rather than comprehensive propositions which stand the test of time. If the wrong investors get on board, this process can only get worse.
I'm also interested in what this means for the enthusiast community. Across their portfolio, Merlin parks have a huge amount of fansites, and it's no secret that many in these communities know the fine detail of future plans. At the very least, enthusiasts know the right places to dig if they're looking for new information. When TowersTimes leaked the new Merlin Membership details earlier this year, Merlin fired out a round of legal notices on the grounds of "commercial sensitivity". A few days later they gave in completely and, in what looked like a rushed effort, released the information without the fanfare they likely had in mind. For any floated business, the timing of announcements is key. Leaks can unleash chaos on stock prices. Add in the inevitable City scrutiny around insider trading for good measure, and you create a very volatile environment in which to do business.
Something else caught my eye with the Merlin Membership saga. The terms and conditions feature a new clause, giving clear grounds for a pass to be revoked for "activity ... disruptive to ... any Merlin business". It's obvious that it's aimed at guests causing trouble inside an attraction, but that definition could be very easily used to strong-arm anyone saying something Merlin doesn't like in public. And when there's a stock price at stake, criticism directed in the right channels could have a devastating impact, wiping millions from the business value overnight.
It's not wholly negative: there's a bunch of positive scenarios that could arise from the flotation. With the right investors, we could see more money flowing into the parks and into better attractions. As Merlin mature as a post-Tussauds business, they are getting a better feel for their target market for each attraction (as highlighted by the recent repositioning of Thorpe Park's marketing strategy), and being accountable to shareholders will make them double-down on their efforts here, leading to more robust plans for the long-term. (I can't see shareholders taking kindly to the 2011 Shrek debacle at Alton Towers, for example.)
In the United States, listing an attractions operator is a path well trodden, with the likes of Cedar Fair, SeaWorld, Six Flags and The Walt Disney Company all previously having listed successfully . Here in Europe, Merlin are the trailblazers, albeit down a rocky road full of uncertainty. It's going to be an interesting journey.
