---

Skatepark Industry

ESPN X Games Skateparks (see previous article) are a small part of the mushrooming skate park industry. We believe there is a high probability that skate parks will follow the historic pattern of boom or bust seen in other new concepts like soft-contained-play centers and laser tag, where overexpansion is followed by a serious shakeout. Here's how the cycle goes. A few new facilities with the new concept open. They initially do fantastic business due to their novelty and since demand initially far exceeds supply. Entrepreneurs see how busy the concepts are and believe they are the answer to quick riches. So there is a boom in new facilities, many done on the cheap. Over supply quickly occurs; novelty wears off; suddenly black ink turns to red; and many join the roadkill graveyard.

There are signs this cycle is well progressed with skate parks. Our research has found over 2,200 skate parks already open in the US.

There is another dynamic at work with skate parks that seriously threatens their profitability. Many skate parks have been and are continuing to be developed by municipalities that are free, including some indoor ones. Those free skateparks greatly diminish the ability of for-profit skate parks to charge for the experience, or at least charge a high enough rate to offset operating costs and generate an adequate return on investment.

Teenagers make up the vast majority of skateboarders. Boys outnumber girls 8 to 1. Estimates of the number of skateboarders vary. Some skateboard industry reports are as high as 12 million. Numbers that high are an exaggeration of the true skate park market size, as if accurate, they would include occasional skateboarders. We believe Thrasher Skateboarding Magazine's report that 1 out of 10 teenagers actively owns or rides a skateboard is much more realistic. That would put the teenager market at 2.5 million and the total market at 3.0 million regular skateboarders. This is consistent with data on frequent skateboarders developed separately by American Sports Data.

There is no question there is a place for some for-profit skate parks. Most likely they will be the mega-size, branded ones like Van's and ESPN X Games that are well located at regional nodes of entertainment and shopping or for-profit skate parks in large communities where municipalities are not developing them. Whether there is a large profitable niche for community-based skate parks is still out to the jury. Stay tuned for about three years to find out. That is the minimum time it usually takes new concepts to shake out.

---