There's a third option, while nuts, would meet the 2024 requirement. That is to build SNW at the EU site and enough infrastructure to support it solo until the rest of the park is constructed. With each piece of EU isolated, SNW could be constructed and people bused in from their current campus without having the rest of the park ready. It'd be absolutely crazy, and I doubt this would even be under consideration, but here it is.
To expand on "nope":
In doing that, they would incur all of the same costs of building SNW plus the extra costs of the infrastructure built just to support it as a stand-alone, but would probably get a much smaller attendance/revenue bounce than in USF or a complete EU. It would also likely be insufficient in driving the demand to justify building significantly more hotels on the south property until the remainder of the park is completed.
In my mind I think there are three general scenarios for how Covid recovery goes for UOR:
1. Scenario 1 would be that we get a vaccine approved this winter, it goes into distribution throughout spring, and the parks can relax distancing and mask policies for most of the 2021 summer allowing them to bounce back to post-Potter attendance levels quickly, and build back to 2019 attendance within a few years. In this scenario, it makes the most sense to move forward with EU for 2024 given high demand and the extent to which they have maxed out the current resort site. (More on that below)
2. Scenario 2 would include the types of outcomes where a vaccine takes 6-12 months longer and economic damage becomes greater, resulting in more substantial attendance impacts. Perhaps much of 2021 attendance is lost with 2020, and then a slower rebound to ~70% and an additional few years if not more to get back to 2019 levels. In these scenarios, I believe the best option would be SNW in Kidzone for 2023/24 because it would reduce CapEx compared a full EU while also being able to drive demand to help get the resort back to 2019 type attendance quicker.
3. Scenario 3 would be the unlikely and tragic case that we don't get a vaccine in the near term and masks/distancing become longer term realities. In this situation the current theme park business model is basically broken and we should be talking about ability to stay in business, not any sort of expansion.
I don't see an outcome where your proposal makes more business or financial sense than one of the above.
Most major theme park investments are really close to the hurdle rate when you look at it from the accounting nerd angle. It’s not out of the realm of possibility that losing a tax break pushes the return either too low or close enough to the hurdle rate that you have to prove it out again.
I don't doubt it, but I also think the circumstances of Epic Universe are fairly unique. Looking at where UOR was heading into 2020, it was apparent that they were quickly maxing out the current resort in terms of land available for auxiliary development. We as fans like to talk about how they could make the current parks even better (and rightfully so), but the business reality is that they were going to face diminishing returns building more big lands in USF and IOA because they couldn't also build more hotels, water parks, and entertainment district restaurants to generate revenue from the additional guests. Instead, with the opening of Epic Universe, they would suddenly have a whole bunch more land set up for hotels and other development, all anchored by the adjacent theme park featuring some of the biggest IPs around.
If they still have long term aspirations of major growth in the Orlando market, Epic Universe is the
only option. I think that diminishes the impact that something like tax breaks has on whether the project goes forward.