Need advice on selling equipment in place to landlord.

[Ronda Love]

We've closed our three remaining locations in Pa, and we're looking for a way to estimate a fair market value for the liened equipment that's still in place in the locations that want to keep it. Anyone have a suggestion? I'm on the hook for the loan either way, but I'd like to give the landlords a chance to keep the locations as movie theatres if they want to do so.

[Randy Stankey]

I'm not an accountant but the way I've seen it done is to take the purchase price of the equipment and subtract a certain amount in depreciation, per year, times the number of years the equipment has been in use. Price minus depreciation is the current value of your equipment.

Further, the buyer/landlord can ask for a discount because you won't have to spend the time and money to remove the equipment. You should expect a certain amount of bargaining or haggling over this issue.

In the end, you, your landlord, your accountant/lawyer and their accountant/lawyer will have to sit down and agree on terms.

[Mark Gulbrandsen]

Like Randy said... or what may actually happen to the gear, is you end up getting the per pound scrap value when you take it all to the metal re-cyclers. Back then, Aluminum, Brass, and Copper brought the most $$$ per pound. Back in 2014 one customer of mine took close to 100 Christie and Strong platter decks to the re-cyclers and ended up with over $800 in cash. Today he wouldn't get near that much!! today, scrap copper is the most value per pound, while scrap steel is almost worthless. Steel is worth about $130 per net ton, or you are best off taking it to the landfill.

[Randy Stankey]

Yeah, you could scrap everything or you could sell things off, piecemeal, as parts.

You could use Ebay, et. al., or you could sell everything off to an electronics salvage dealer who will do most of the work for you. However, that guy has the right to get paid for his labor and expenses so you should expect to receive a discounted price for things.

Who knows? Maybe there is some other theater owner, out there, who is just dying to get his hands on some "gently used" projectors for a good price.

This is, really, all just supposition until you do some research, yourself.

Selling everything off a scrap would be my last choice. Not only do you get the least amount of money for your (presumably) good, working equipment. It would be a shame to scrap good equipment that somebody else could put to good use.

[Dave Macaulay]

One large multiplex here has all (24) of its disused 35mm consoles still in the booths. The platters were scrapped but not the consoles. They had zero value as used projectors after the conversion, and the the labor cost to remove them or dismantle them to get the valuable copper out first was more than the scrap value (and there's lots of room up there). So if anyone really needs Simplex Millennium or Highlight II parts...

[Marcel Birgelen]

Really sorry to hear you're closing up shop...

For me, it's hard to judge your current situation. What kind of locations you've been running? Purpose-built theaters or converted generic business/retail locations? Depending on how well those locations can be used for anything other than a theater and how desirable those locations are, I'd say it's better to leave as much stuff in there as you could and find someone willing to continue the business(es) as a movie theater and make a deal between you and the new party. Obviously, there has to be a maximum on the horizon in which this has to happen.

[Mark Gulbrandsen]

Yeah, you could scrap everything or you could sell things off, piecemeal, as parts.

You could use Ebay, et. al., or you could sell everything off to an electronics salvage dealer who will do most of the work for you. However, that guy has the right to get paid for his labor and expenses so you should expect to receive a discounted price for things.

Who knows? Maybe there is some other theater owner, out there, who is just dying to get his hands on some "gently used" projectors for a good price.

This is, really, all just supposition until you do some research, yourself.

Selling everything off a scrap would be my last choice. Not only do you get the least amount of money for your (presumably) good, working equipment. It would be a shame to scrap good equipment that somebody else could put to good use.

Exactly! Copper then Alumnium always brought the most cash. Steel and iron the least. What's interesting is you got more cash for a Simplex 35 than you did for a Kinoton because the latter is mostly steel. Keeping intermittents, film runners, shutters,sprockets, pad rollers, pulleys, and gears would be good. They can be sold on Epay. Entire projectors are more expensive to pack and ship than just the parts in them will bring.

[Frank Cox]

I had the impression that she's wanting to value some digital cinema equipment, not 35mm stuff.

[Mark Gulbrandsen]

I had the impression that she's wanting to value some digital cinema equipment, not 35mm stuff.

If it is digital, photos would help a lot... projectors, manufacturers tags on projectors, servers, sound racks, speakers, quantities, etc. Series 1 may be on the same value level as if it were film equipment. Even if the S-1 gear works, parts are gonna be scarce to non existent. If S-2, do the projectors all boot up ok, and without errors? If they've been sitting too long, they may not.

[Ronda Love]

Ah, I suck. Let me try again. I appreciate all your advice so far. We did end up taking most of the old 35mm equipment to the scrap yard, unfortunately.

We have two GDC Supra 5000's, 12 Christie Solaria 1's, with GDC imb's and one of the basic digital processors and random amps. Speakers, high back chairs, newish poppers. We also have 7 Christie 2220's and 2230's if I recall correctly, also with GDC imb's. All were operational as of March 4th, and they've continued to be powered one. Presumably, we could reopen tonight. I'm working on a full equipment inventory.

I was more hoping for an idea on the value in place as an operational theatre, vs selling to a used equipment dealer. There's not a lot of places to get values as far as I can tell.

[Marcel Birgelen]

Let me add my two cents of how I would handle this. I'm operating on the other side of the pond, but the basics are roughly the same and I have sold businesses in the past and I've been involved in acquiring them...

To me, it sounds you have an essentially functional business. I guess you're not closing up shop because business is flying high, but all the wheels are still in place and someone could come in and take over a functioning exhibition business of up to three locations.

If I, for example, would be interested into acquiring your business, then I would acquire the equipment for the value on your balance sheet. If the business still makes a profit and has a somewhat positive outlook, I'd pay you a premium based on what's usual for this industry. If the business didn't make a profit and you could get more money for the equipment on the open market, I'd consider paying you a premium based on that.

For what the equipment is worth on the open market, that's dependent on a lot of factors. Ballpark figures for those projectors with working IMBs and lens is anything between $10K and $25K a piece depending on condition and hours.

[Leo Enticknap]

If the new owner of the buildings does not want to operate them as movie theaters, one possibility would be to contact a cinema equipment dealer with your inventory, and ask for a quote to take them off your hands. We regularly buy equipment from theaters that close down, and either refurbish it and sell it on, or in some cases (e.g. if a projector arrives with a bad light engine) part it out, especially if we have customers looking for specific parts that are either no longer available from the OEM, or have long lead times (Christie Series 2 touch panels and NEC-configured TI ICPs come to mind). The drawback there would be the cost of shipping everything, but if a dealer who is relatively close to the sites is interested, this could be an option.