A new, stadium seating, multiplex costs about One Million per screen to buy the land, build and equip. From the early '90s to the late '90s the cost doubled from $500,000 per screen to $1,000,000. Now you know why so many theatres are in trouble.
So that complex is a $20,000,000 project. Now, because it is in a mall, the land acquisition costs will be smaller and some of the building costs will be shuffled around. Plus the theatre paid for all the finish work. The auditoriums are relatively small so lets just cut the cost in half. So the theatre cost the Mall $10,000,000 to put together.
Now most leases are for 10 years with an automatic 10-year extension. So lets say that the mall has to cover the costs in 10 years and that any lease after 10 years is the profit.
If you simply divide $10,000,000 by the months in 10 years you get $83,400 per month. Now every mall lease also includes a percentage of the income generated by the store. It is traditionally 10% of the total gross over an above the lease. For instance, our theatre would have to have grossed more than 10 times the lease amount before the percentage part of the lease kicks in.
So I am guessing that that theatre is paying about $100,000 per month to play. So if they are paying $100,000 per month for their lease, they are paying about $5,000 per month per screen, which is just about double what we are paying per screen for our lease.
Of course ours is not a brand new plex with state of the art presentation. But can you make a profit and still pay $5,000 per screen for a lease? I don't know. Remember that Lowes still has to make enough profit to repay the money they used to finish the theatre. When the dollar figures get that large, I get cross-eyed.
This has been an exercise with numbers and should in no way be considered accurate or a guide in which to plan anything. So we will just consider this numerical masturbation.