As we predicted in July, Ardent Leisure chairman Neil Balnaves (AKA Chubbs Petersen) will retire at the company's Annual General Meeting next month, abdicating to IAG's former CFO George Venardos.
In a statement released on Monday, Chubbs brags that on his watch Ardent's market capitalisation has grown from $106 million to over $1.2 billion. Which is hardly a full or fair measure of his success, or otherwise.
See, Chubbs took over what was then Macquarie Leisure Trust in April 2003 – a listed Macquarie Group subsidiary. It was just Dreamworld and d'Albora Marinas (and a minority stake in another operator, Omnia). Since then, Chubbs has dropped $60 million building WhiteWater World, $14.5 million on SkyPoint, $67.4 million acquiring AMF Bowling, $10.8 million for KingPin Bowling, $60 million for Goodlife Health Clubs (sold very well last month for $260 million) and $59 million for six Main Event arcades. Ardent has since opened 21 more Main Events, at a capex cost (assuming a sale and lease back) of approximately US$15 million per arcade. That's AU$417 million already. And they're promising to open another 173!
Any mug can generate capex-driven upside. Ardent's is not a story of organic growth, cash generation or market dominance.
How about operating performance? We went back to Macquarie Leisure's 2002/03 1H results, posted six weeks before Chubbs took the chair. Back then, its main asset, Dreamworld, delivered spend per visitor of $50.68 (which adjusted for inflation is today $69.58 per head) on total attendance of 567,294. More than a dozen years later, CEO Deborah Thomas just delivered $46.90 per visitor spend, in real terms, down a third, even though visitation has quintupled. How does a business ride population and inbound tourism growth to massive footfall gains yet, in a fixed cost business, preside over a fall in per capita yield?!
After all that capital thrown at milk bar-era ten-pin bowling and hillbilly burger chains, and 1980's laser tag, oh and the avant-garde Peter Brock collection of Boogie Nights-era cars for big spending bogans wearing location-tracking ankle bracelets, we sure hope Chubbs enjoys his retirement more than AAD investors ever will.
