Birth of a Theme Park

Hard Rock Park bonds in rare position

Alarming numbers that came out last week about Hard Rock Park’s bonds should be seen as cause for further analysis - not a definitive warning sign, a researcher with Moody’s Analytics said Monday.

Last week, Reuters reported that some of the park’s bonds were trading at distressed levels with a high risk of default.

While the report is accurate, the data pool from which those risk levels were drawn is not big enough to make firm conclusions, said Tony Smith, senior director in Moody’s capital market research group from Moody’s Analytics, which analyzes bonds’ market performance against their ratings.

Over the past nine years, only 148 of the 200,000-plus observations of daily bond prices by Moody’s Analytics have been in the same situation as Hard Rock Park: They have had bonds rated as CAA2 while trading at C levels. Of those, 43 percent defaulted within the year, Smith said.

“We would not view that as a strong, statistically significant signal,” Smith said. “We’d use this more as a pointer for investors to look more deeply into the questions around this company than as a pure signal of an expectation of problems.”

Park alters prices during bike rally

Hard Rock Park has waived the $10 parking fee and is offering a two-day ticket deal during the Harley-Davidson rally that runs from May 9 to May 18.

Certain tickets sold at the front gate for $75 can be used on any two days during the rally, park spokeswoman Megan Winnett said in an e-mail.

The park will host the official Harley-Davidson rally event in its parking lot. For directions, see our PDF map.

Also, the park is running a promotion on Pepsi cans: buy one day pass and get a second, consecutive day pass for half price through June.

Reuters: Economy affecting entertainment biz

With prices across the board rising and fears of a consumer spending slowdown, entertainment, restaurant and casino businesses are hurting, according to a Reuters analysis published today.

The article included Hard Rock Park and other similar businesses. The article said:

Profit margins for these "bread and circus" industries are getting squeezed as food prices soar and consumers spend less on travel and entertainment. The health of sectors that rely on discretionary spending may offer insights into the behavior of consumers, a crucial factor in determining the severity of the U.S. and global economic slowdown.

HRP Myrtle Beach Holdings, for example, relied on debt to build Hard Rock Park, America's newest $400 million theme park, including a "Led Zeppelin" rock 'n' roll coaster. Hard Rock bonds, like those of Six Flags and Perkins, are among bonds now trading at the most distressed levels. A bond is considered distressed if it yields at least 10 percentage points more than Treasuries. When demand for a bond drops, its yield rises, indicating a higher perception of risk compared with investing in ultra-safe government bonds.

Hard Rock Park officials were unavailable for comment.