Merlin: Alton Towers
£5.4 billion in debt. At current profits, it would take Merlin close to ten years of core earnings just to clear it. That's the company behind Alton Towers, in a year when guest satisfaction hit a record high.
ALL BREAKDOWNSTHE BREAKDOWN
9/17/20265 min read
£5.4 billion in debt.
At current profits, it would take Merlin close to ten years of core earnings just to clear it.
That's the company behind Alton Towers, in a year when guest satisfaction hit a record high.
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THE SETUP
Blackstone bought Merlin for around £102.5m in 2005 and brought in Kirkbi, the Lego family's investment arm, for a stake tied to the Legoland parks.
Two years later Blackstone borrowed to buy the Tussauds Group, adding Alton Towers, Madame Tussauds, Thorpe Park and Warwick Castle to the business for close to $1.9bn.
To help pay for it, Merlin sold the freehold land under all four sites to property investor Nick Leslau for around £622m and leased the parks back for 35 years. At the time it looked like smart housekeeping, cash raised without giving up a single ride.
For years the public risk everyone watched was safety, not the balance sheet. In 2015 sixteen people were seriously hurt on the Smiler rollercoaster at Alton Towers, two of them losing a leg. Merlin was fined £5m. The judge said outright the accident hadn't damaged the underlying business, which was still pulling in close to £50 million a year from that one site.
Selling the freeholds in 2007 solved one problem and created a second. Land is something a bank will lend against cheaply, because it can be sold if things go wrong. A licence, or a rollercoaster, is much harder to lend against. By selling the freeholds, Merlin gave up the one asset that would have made its next big loan easier to get and cheaper.
It didn't need that backup for over a decade. Then in 2019, Merlin borrowed more than it ever had before, this time with one less thing to offer as security.
Then in November 2019, Kirkbi, Blackstone and Canada Pension Plan Investment Board paid £4.8bn to take Merlin private again, at a 37% premium to the pre-deal share price. Shareholders who sold got cash. The debt raised to buy them out stayed with Merlin. Four months later, covid shut every park the group owned.
The earlier borrowing remained. It had been refinanced, rolled forward and added to. In Merlin's own accounts, that totals £5.4bn, most of it in bonds, the rest in lease payments on land it no longer owns.
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THE PLAYBOOK
1. A brand it licenses
Every big theme park company wanted one thing: a family brand no rival could copy. Merlin never owned Legoland. In 2005, Kirkbi, the family that owns Lego, gave Merlin permission to build and run Legoland parks under the Lego name.
Merlin didn't own that name. It just had permission to use it.
Disney owns its characters. Universal owns its films. Merlin's biggest brand still belongs to someone else, the same family that also owns half of Merlin. That permission is worth a huge amount to Merlin's business. It's worth almost nothing to a bank, because you can't borrow money against something you don't own.
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Takeaway: If you don't own it, you can't borrow against it. A business can build its whole identity around something valuable that still counts as zero when asking the bank for money.
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2. Lots of small bets
Merlin doesn't run one giant theme park and hope for the best. Most of its business is smaller attractions: Madame Tussauds, Sea Life aquariums, the London Eye, spread across more than 130 sites in over 20 countries.
A single Madame Tussauds branch costs a fraction of a theme park to build and it opens in months, not years. If tourists stop visiting one city, or a rival opens nearby, it barely shows in Merlin's overall numbers. Disney and Universal put their money into a handful of enormous parks. Merlin spread the same kind of money across more than a hundred small ones instead.
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Takeaway: Spread a business across lots of small bets instead of a few big ones and no single bad year, city or rival can hurt you.
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3. Guests never stopped coming
Merlin's parks have been through real trouble that had nothing to do with money. Terror attacks in London in 2017 kept visitors away from several sites for months. A pandemic shut every park in the world in 2020. None of it changed how people feel about the rides themselves. By 2025, Merlin was welcoming 60.5 million guests a year, more than ever before, with the best satisfaction scores the group has ever recorded.
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Takeaway: A business can keep its customers happy through terror attacks and a global pandemic and still be in serious financial trouble. Demand was never the problem here. What a company owes and to whom, can sink it even when everyone still wants to walk through the door.
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ONE MORE THING
The Discovery Centres weren't sold to some outside buyer. Lego bought them itself, for around £200 million, in a deal that closed in February 2026. The Kirkbi family owns Lego. That same family is also Merlin's biggest shareholder. So the family that lets Merlin use the Lego name just bought part of Merlin's business back.
The next big date is 2027. That's when Merlin has to pay back around £617 million of debt. Right now, Merlin's credit rating is so poor that borrowing new money to cover it will be expensive. Whatever new loan Merlin takes out to replace this one will cost more than the old one did. That means even less cash left over to pay down the debt.
Kirkbi could just write a cheque and make the problem disappear. Lego made about £1.5 billion in profit last year and barely has any debt of its own. The money is there.
When a company gets into this kind of trouble, the rides don't usually stop. What usually happens is the owners change, like they did in 2005, 2013 and 2019. The difference this time is the deadline. It isn't set by how many guests show up, or even by what Merlin's owners want. It's set by that 2027 repayment date.
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THE PAPER TRAIL
Lego buys back its own name from Merlin
3 minute read
The Kristiansen family sits on both sides of this deal. Their investment company, Kirkbi, owns half of Merlin. Their toy company, Lego, just bought part of Merlin's business back.
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Ten years on, the Smiler still won't smile
4 minute read
The BBC's decade-later catch-up with two crash survivors who lost limbs on the ride, and why "moving on" was never really an option.
https://www.bbc.com/news/articles/c3d4mx75dm9o
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The judge who called Merlin's safety plan "a shambles"
3 minute read
Inside the 2016 sentencing hearing where a £5m fine came with a verbal beating: "a needless and avoidable accident" that could have killed, not just maimed.
https://www.theguardian.com/business/2016/sep/27/alton-towers-owner-fined-smiler-rollercaster-crash
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£58m loss, same old spin
3 minute read
Merlin's 2025 results dressed a £58m operating loss and 2.3 million fewer visitors as a story of "resilience" and "discipline". Riderater breaks down the gap between the press release and the numbers.
https://riderater.co.uk/12782/merlin-entertainments-reports-58m-loss/
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