SeaWorld Still Owes San Diego $10 Million in Back Rent Despite ‘Robust’ Summer Revenue

There’s a continuing saga of how SeaWorld owes the City of San Diego nearly $10 million in back rent. And this despite the park’s “robust” revenue intake this past summer. The other day U-T reporter, Lori Weisberg, gave the paper’s subscribers an update, and here are some of the take-aways:

• San Diego officials just recently renewed their demand that the theme park write a check for nearly $10 million. This demand comes after a formal audit by the city treasurer confirming that SeaWorld owes more than $9.7 million in back rent, plus nearly $12,000 to cover the cost of the audit.
• SeaWorld is the only city lessee, out of about 800, in default on their required lease payments;
• SeaWorld has argued after refusing “repeated offers of a rent deferral plan,” that it should not be required to make rent payments when they had to shut down completely during the pandemic.
• City officials point out that there is nothing in the lease, the law or state and city emergency orders to justify that conclusion. Rents could be deferred, but not waived, the city said.
• Also, SeaWorld officials state that the park deserved some special consideration above and beyond what other lessees were given because the marine park, unlike others, didn’t have the option of shedding all of its expenses during its prolonged closure. And while it was closed no longer accommodating guests, it still had a large collection of animals to care for, animal rescues to perform, and rides it had to operate periodically to ensure they were in working order.
• The city countered: “While SeaWorld may have been closed during the pandemic, the city did not close. We rely on the minimum rent from our ground leases to make sure we can operate the city. That’s the purpose of establishing a minimum rent.”
• Last week, SeaWorld stated that:  “Our position remains unchanged, the City of San Diego has been a great partner of ours over the years and we continue to work with them in an attempt to resolve this issue.”
• SeaWorld’s rent, like that of many lessees, is structured so that San Diego shares in the revenue it collects. The park’s lease payments for its 190-acre site are calculated on the basis of a specified percentage of its gross income from admissions and in-park spending or, alternatively, a minimum yearly rent, whichever is larger. That minimum rent is currently set at $10.4 million for a full year, plus a 3 percent surcharge. Just $2.2 million was paid in 2020, the city audit showed.
• SeaWorld’s parent company, SeaWorld Entertainment, is preparing to release its latest earnings this week. In August, the Orlando-based company reported record revenue of nearly $505 million for the second quarter ending June 30, although overall attendance was still lagging pre-COVID levels.
• While SeaWorld does not break down revenue or attendance for its individual parks, the monthly lease payments made by the San Diego marine park are a clue as to how well it is doing as they’re calculated based on a percentage of the money it took in from visitors to the park.
• They were especially robust this summer. For the month of July, for example, SeaWorld paid the city more than $2.2 million in rent. By comparison, the payment for July of 2019, before the pandemic, was nearly $1.9 million.
• SeaWorld is looking to bring in even more visitors as it doubles down on new attractions. Earlier this year, the park debuted its newest coaster, Emperor, and is on pace to open yet another roller coaster — Arctic Coaster — next spring.

Weisberg:

At stake are millions of dollars in monthly rent that lessees — from Mission Bay hotels and marinas to parking lots — pay San Diego for the right to do business on city-owned land. When the pandemic significantly curtailed the operations of many businesses in early 2020, theme parks took an especially big hit as they were forced to close completely for many months.

While the city eventually agreed to defer rent payments for a time to help struggling businesses recover financially, that concession ended in the middle of last year, and the city offered instead the 24-month payment plan.