Fun Spot America Atlanta is closing and many are wondering about the future of its iconic World-Class roller coaster ArieForce One. There have been rumors that it could be demolished for a tax write-off, moved to Fun Spot Orlando or sold to another company. With regard to the sale option, what would a fair price be for the ride? To figure this out we can use publicly available information about the cost of the ride and combine them with standard depreciation practices. When we take the cost and figure in depreciation we arrive at a figure of about $7 million.

When we take the cost and figure in depreciation we arrive at a figure of about $7 million.

Using public information we can discern that Fun Spot spent about $13 to $15 million on the ride itself plus another $3 to $5 million on site prep and installation. To make things simple, we’ll go with the middle value of $14 million. Roller coaster depreciation usually follows the Modified Accelerated Cost Recovery System (MACRS), classifying the track and equipment as 7-year property with an assumed 10–20 year physical lifespan. The Internal Revenue Service (IRS) actually has a specific classification for amusement park rides (Asset Class 80.0) that allows for the 7-year depreciation schedule. This is a pretty aggressive schedule allowing a park to take larger deductions more quickly as compared to a 10 year or 20 year depreciation schedule.

Therefore, in “straight-line” depreciation Fun Spot could deduct $2 million/year ($14 million divided by 7 years) in depreciation. With ArieForce One opening on March 31, 2023 and closing August 2, 2026 it will have operated in ~3.5 years meaning the coaster is on Fun Spot’s books for about $7 million ($14 million minus $7 million). Depreciation starts when the asset generates economic value and ends when it is sold. Depreciation can be prorated by the month so a lot depends on when the park would theoretically sell it. This $7 million would be called the Net Book Value (NBV).

So is it just as simple as selling it for $7 million? Not really. You have to look at a sale compared to Fun Spot’s other options. If you demolish a depreciating asset there are tax implications. If you let it just sit there (SBNO) or put it in storage where it doesn’t generate revenue there are tax implications. Probably the cleanest thing is if it moved to Orlando where it could continue to depreciate as-is. Even if you sell a depreciating asset there are tax implications depending upon what the price is relative to the Net Book Value. Darren Torr of RMC estimated moving ArieForce One would be about $10 million less than buying new. If we assume ~10% inflation on the original coaster price we get $16.5 million today, so the math works.

If we assume another park paid Net Book Value there’s still more costs it will have to incur. If we assume their install cost is the same as Fun Spot we can add $4 million to it, however it may be more with inflation and if site or ride modifications are required. The coaster will also have to be disassembled from Fun Spot Atlanta which could be $1 to $2 million more. If Fun Spot sold the coaster they would likely be spared this coaster themselves. Also, all the hardware (nuts and bolts) need to be replaced as they can’t be reused per ASTM spec once they’ve been torqued, so add another $1 million there. Add this all up and you’re at $14 million, a good portion of the way to the original cost of the project. Granted though, the ability to get a proven World-Class coaster doesn’t come along every day.

So what does this all mean? It means this is complicated. Unlike a company going out of business where things are just sold to the highest bidder, Fun Spot is thriving down in Florida and needs to make prudent financial decisions to protect its overall business. A tax deduction can be valuable to use against profits elsewhere. Would someone pay over book value? Would they sell it for less than book value? We don’t know if this makes sense for another company or Fun Spot without knowing more particulars about their finances (debt, profit, planned capital expenditures, etc.). This is merely a quick look at what a reasonable price for ArieForce One might be on the open market. I also want give a shout-out to Ryan the Ride Mechanic who did a deep dive on the financial and practical implications of moving ArieForce One.