SeaWorld Must Pay Up

The city of San Diego has prevailed in a lease dispute with SeaWorld San Diego on the Mission Bay land it occupies.

A three-member arbitration panel found in the city’s favor on rent the theme park pays based on revenues collected. Following the panel’s unanimous ruling, SeaWorld’s rent will increase this year to an estimated $10.2 million, or about $2.8 million more than it paid in 2003.

SeaWorld had requested reductions on the percentage of sales for a variety of revenue sources. The cuts would have lowered its rent on the 173-acre park by about $2.1 million this year. City consultants argued a fair rent for the land was between $11.5 million and $14 million.

“We consider this a very favorable outcome, and we commend the arbitration panel which did an outstanding job in their deliberations,” said William Griffith, the city’s real estate assets director.

SeaWorld, a unit of Anheuser-Busch Co., triggered the arbitration in September when the two sides were unable to come to agreement over the rent the theme park should pay on the sales it makes at the popular tourist destination. The city collects a percentage of the sales made from 17 different revenue sources, including admissions, food and beverages, parking, paid amusement rides and boat slip rentals.

Corrine Brindley, a SeaWorld spokeswoman, said the request for rent reductions was based on four appraisers’ valuations of other theme parks in the nation.

According to the arbitration panel’s decision, SeaWorld’s total revenue last year was $190.7 million and its EBITDA earnings before interest, taxes, depreciation and amortization was $61.2 million, or 32.1 percent of total revenue.

With an average annual attendance of just under 4 million over the past 10 years, SeaWorld is the fourth most-popular theme park in California behind Disneyland, Universal Studios and Disney’s California Adventure, according to a report from the city manager’s office.

Mike Allen, San Diego Business Journal