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Sky Zone Failed as a Sport, Won With Trampoline Parks

March 23rd, 2012 No comments

Sky Zone Failed as a Sport, Won With Trampoline Parks

By Karen E. Klein - Mar 21, 2012 11:26 AM PT

(An earlier version of this story incorrectly reported the size and the growth rate of the family entertainment center industry in the fourth paragraph.)

Sky Zone Players soaring through the air, bouncing over a court made of trampolines and competing to score points by jumping through a spinning hoop six feet off the ground: That was Rick Platt’s vision for SkyZone, a new sport he helped found in 2004. Jeff Platt in a Sky Zone trampoline park in Plymouth, Minnesota. Photographer: Patrick B. McCutchan via Bloomberg Though he built it, spending $2 million to recruit athletes and construct a 17,000-square-foot arena in Las Vegas, the crowds never came. SkyZone, as a sport, was a flop. But soon local skateboarders started banging on his door to play in the arena, so Platt bought a cash box and began charging $8 a head. Six months and 10,000 jumpers later, he realized he might have a business after all. When his son, Jeff, opened a second indoor trampoline park in 2006 in St. Louis, where he was attending college, it was cash flow positive within six weeks.

On average, a typical family entertainment center in the U.S. draws about 200,000 visitors each year, according to data from the International Association of Amusement Parks and Attractions. There are about 1,500 centers in the U.S., a number that’s increasing by 20 or 25 each year, says David Mandt, a spokesman for the trade group.

Now based in Los Angeles, Jeff Platt is chief executive officer of Sky Zone Indoor Trampoline Park. The company had $15.7 million in revenue from four corporate and 15 franchise locations in 2011 and plans to add 34 franchises this year. Sky Zone has about 50 full-time and 500 part-time employees. Platt faces a pair of challenges: managing the company’s growth and luring repeat customers after the novelty wears off.

Platt spoke recently to Bloomberg contributor Karen E. Klein about the unexpected success of Sky Zone and how he’ll prevent trampoline arenas from becoming a short-lived fad.

Q: What was your father thinking when he started SkyZone?

A: He met some guys who had this idea for a new team sport where a 6-foot-8 athletic individual would have no advantage over a small guy who could jump. He’d just gotten out of a very successful scrap-metal business and wanted to take a leap of faith, so he bought their patent and decided to make it happen. My mother was telling him he was crazy, and I was thinking this was the coolest thing in the world because we would own our own sport.

Q: What challenges do you face at Sky Zone?

A: As you grow a business and get different operators and franchisees, everyone has a different management and training style. It’s critically important to maintain consistency as you grow a brand, so we want to get our training the exact same way at every location. Your competitors can adopt what you have created and do similar marketing, but they can’t clone your people.

Q: What are the barriers to your continued growth?

A: Real estate is surprisingly challenging for us because we need unique buildings with high ceilings. A lot of landlords prefer industrial tenants. And there are also city zoning challenges for retailers in industrial areas.

Q: How difficult was it to get insurance for a business that involves trampolines?

A: It took a long time. I must have tracked down 30 insurance companies and nobody would touch it. Trampoline injuries mainly happen because they are not enclosed with nets, they’re not maintained properly or they are unsupervised. We got an insurance company to realize that we had figured out all the safety hazards and designed the arenas with nets so people cannot fall off, and we spread people out so we can manage the risk with proper supervision.

Our activity is similar to skiing. Broken bones do happen, particularly when people try to do things beyond their limits. But even when people are in control, there are freak accidents. A big part of safety is educating customers and scaring them a little, so we give a rules speech with a safety video. So far we’ve been fortunate not to have any major injuries.

Q: When did you start franchising?

A: In 2009. We have a lot of deals under construction, in site development or looking for real estate right now. Our franchise license is reasonable, $60,000, but the total investment is $1.1 million to $1.5 million due to construction of the 25,000- to 40,000-square-foot facilities.

Because of that high cost, most of our franchisees are prior business owners in their mid-30s to 60s who have been C-level executives or professionals earning a nice income. This is not something for a startup entrepreneur.

Q: How do you advertise the locations?

A: We are doing some TV ads and trying to get local news attention from magazines and newspapers when we open a new franchise location. Of course we get a ton of word-of-mouth marketing, and we’re focusing a lot of effort on social media: Facebook, Twitter and YouTube are a tremendous pull for us.

Q: How do you prevent Sky Zone from becoming one of those concepts that hits big and then fades?

A: One thing we’re doing is offering all kinds of fitness classes, from yoga to Pilates and martial arts. Our instructors put a new spin on basic exercises to incorporate the trampolines and they have come up with some unbelievable workouts. Some of them are the original athletes who trained with us to play our new sport, which my dad still plans to start someday.

To contact the reporter on this story: Karen E. Klein at karen@kareneklein.com

To contact the editor responsible for this story: John Tozzi at jtozzi2@bloomberg.net

http://www.bloomberg.com/news/2012-03-19/sky-zone-failed-as-a-sport-won-with-trampoline-parks.html

Kidspace Expanding It’s Reach

March 21st, 2012 No comments

Richard Farley’s kids often brag about their dad to their young friends. “They embarrass me sometimes,” laughs the father of two.

It’s easy to understand their excitment. He’s director of Kidspace Adventures Ltd., a two-location family entertainment center (FEC) in the United Kingdom.

Along with Nick de Candole, his “best mate” of more than 25 years, Farley sought to open a facility unlike anything else in the UK—one larger in size and scope than the competition. To achieve this goal, Farley and de Candole traveled across the United States, Germany, Holland, and Belgium on a fact-finding mission.

“We took the best of each element and brought it back here,” says Farley, who dabbled in film post-production and residential real estate before entering the FEC universe.

Their Romford spot opened November 2005, followed by Croydon two years later. Among the facilities’ highlights: a central climbing structure, rock wall, sky trail, electric go-karts, and laser tag, as well as special programs and attractions for preschoolers. Their third location—with a twist—will debut this summer. Funworld recently asked Farley about his extraordinary business venture.

What did you learn on your fact-finding mission?

It was crucial. The major difference between Holland and Germany and here is the sheer scale of their family entertainment centers. Some of them are 80,000 square feet with varied and much better play equipment.

But because property prices are considerably higher here, it’s virtually impossible to build centers of that scale and size and still be viable. We tried to condense what we saw and put as much play value into an affordable space, which for us was 25,000 square feet. The average center in the UK is between 8,000 and 12,000 square feet.

We would just max out all our space. For example, we put the sky trail above the restaurant, doubled up the main play frame of the laser tag zone, and added crawl mazes wherever there was a square bit of space.

How else do your facilities stand out?

We wanted to make the attractions more challenging and more diverse to draw an older age group. For instance, the play equipment in Croydon is made out of wood, which makes the child a little more cautious when running around.

Little things like that make a difference. Our age range stretches to 12 years old; a typical center here loses their audience around age 9.

We also did everything at a much higher spec. We spent £2 million (US$3.1 million) on a site, where most others spend £300,000 (US$460,000).

Were you nervous putting out so much money?

Not nervous—excited. We had a little bit of money, but we had to raise quite a bit of funds. Once you’re past that initial hurdle, then you can relax a lot more.

With dance, drama, music, and art classes, you offer a variety of programs for preschoolers. Why is this important to you?

A play center should be a community hub. By having these preschool classes, it helps us to do that. It doesn’t make much money, but I think it’s essential.

What are your plans for the future?

In July we will be opening a 50-acre site in greater London. The indoor part has the same attractions and play value of our other Kidspaces, but this new one will feature an outdoor experience with zip wires, labyrinths, tunnels, and a working farm so you can see animals in a natural environment. It’s a whole experience.

This attraction also will be based around a fantasy book, which is currently being written. It will be themed up and more American. We’re very excited.

What lessons have you learned from your experiences?

It was inevitable that mistakes would be made. There isn’t any guru you can tap when trying a new concept. Some play equipment was wrong, and we had to replace it. We still don’t have the process of getting people through the door quite right yet. You can’t be afraid to admit you’re wrong and make the necessary changes.

What advice do you have for someone new to the industry?

You shouldn’t just go up against local competition and think you can simply emulate what they have created and still be successful. It’s just a mistake. The competitor will have the experience under their belt. They’ll be savvier to the local market. And because they won’t be bogged down by initial gearing, the competitor can reinvest in their site and put a unique offering in to undermine what you’re doing. It’s always better to find an untapped location, which is never easy. If you manage to do that—and that’s half the battle—you should succeed.

What do you love most about your job?

I still feel like I’m at university. It’s just one big learning curve. I love the research, the creative side of it, the day-to-day operations, the fundraising. It’s all new to me, and still quite exciting.

Contact Contributing Editor Mike Bederka at mbederka@IAAPA.org.

http://www.iaapa.org/industry/funworld/2012/mar/features/BiggerBetter/index.asp