Meltdown at Madame Tussauds as owner Merlin loses its magic
The wax museum Madame Tussauds has received questions about its relevance in recent years – Paul Grover/Paul Grover
On a blustery, overcast morning in September, even the chaos unleashed by the strikes on the London Underground has not put off the mass of chattering tourists queuing along Marylebone Road for Madame Tussauds.
Once inside, bubblegum pop blasts from the speakers, while eerie replicas of Sir Sadiq Khan, Harry Styles, Meghan Markle and Elizabeth II grin lifelessly at them.
Depending on how you look at it, the 189-year-old waxwork museum is either a nostalgic ode to the pre-influencer era of celebrity or, at nearly £30, a claustrophobic and overpriced way to spend a couple of hours.
To its owner, Merlin Entertainments, it is one of several multimillion-pound headaches, which raise questions about whether the theme park and attractions giant has lost its magic.
Best known as the owner of Madame Tussauds, Legoland, Alton Towers and Chessington World of Adventures, Merlin runs around 120 attractions globally, hosting more than 60 million visitors annually. The company achieved record revenues in 2023 amid a bounce-back in tourism after the pandemic.
However, despite rising visitor numbers in 2024, revenues fell by 3.2pc to £2bn (or just under 1pc with currency fluctuations stripped out), while the company plunged to a loss before tax of £492m, widening from a loss of £214m last year.
The loss came after the company was forced to slash £384m from the value of some of its biggest brands, including a £163m write-down of Madame Tussauds, which has faced questions over its relevance in recent years.
“[Madame Tussauds] is a model that has felt past its shelf life for a long while. That idea of seeing famous people on what feels like a real-life basis, I don’t think that works now,” says Greg Johnson, an analyst at Shore Capital.
It goes beyond Madame Tussauds. The company also slashed £110m and £35m, respectively, from the value of the recently opened Legoland sites in New York and Korea, admitting both “continue to trade below initial expectations”.
At the same time, worries are growing about almost £3.9bn of debts, much of which was racked up when it was taken private in 2019 and throughout the pandemic. The cost of servicing its debt alone was just short of £380m in 2024.
Last month, S&P Global Ratings downgraded one of its parent entities, Motion Midco Ltd, to CCC+ from B-, while also downgrading the issue ratings on its senior secured debt from B to B- and its senior notes from CCC to CCC-.
Analysts at S&P warned that “persistent high cash burn could lead to insufficient liquidity after 12 months, absent any cash injection”, calling the company’s current capital structure “unsustainable in the long term given the high level of debt compared with the size of the group and high cash burn.” It sent Merlin’s bonds into a spiral.
Merlin is owned by a consortium of the private equity giant Blackstone, KIRKBI – the family company of the billionaire Kirk Kristiansen, of the Lego dynasty – and the Canada Pension Plan Investment Board. Much of Merlin’s debt is the result of a take-private deal, which saw it leave the London Stock Exchange in 2019. Further borrowings were piled on during the pandemic.
One investor told The Telegraph they believed the pace at which Merlin is burning through money could leave the company with “no buffer” – highly problematic in an industry where your success is often dictated by how much you spend.
“In our industry, we live on repeat visitation, and repeat visitation is driven by capital expansion and new rides and attractions every year,” says Dennis Speigel, the founder of International Theme Park Services. “Some of the parks that have gone through dry periods and not put rides and attractions in for three or four years, the attendance peels off dramatically.”
Merlin has been spending heavily. In 2024, Merlin opened Hyperia, the tallest roller coaster in the UK, at Thorpe Park, as well as a new “family roller coaster” at Legoland Windsor. At Alton Towers, it relaunched its long-standing Nemesis rollercoaster to high praise.
In 2025, so far, it has continued to invest, opening the world’s largest Legoland to date in Shanghai and a massive new Peppa Pig theme park in Texas. At Madame Tussauds, too, Merlin has installed new waxworks of celebrities such as The Last of Us actor Bella Ramsey.
A Merlin spokesman says it has “a healthy operating cash flow, with ample liquidity for capex investment and business purposes” and that its recent investments prove its “continued confidence in the experience economy”, with pre-tax earnings coming in at £573m.
Merlin has burnt through bosses as well as cash. Long-time chief Nick Varney, the businessman credited with turning Merlin into the behemoth it is today, retired in 2022. His replacement, Scott O’Neil, lasted just two years before he was replaced by Fiona Eastwood, a respected 10-year veteran of the company, in November 2024.
“That didn’t help Merlin, that short period,” says Speigel. “You lose that continuity, consistency, operation, development, expenditure and everything else.”
Since Eastwood took over, she has overhauled Merlin’s business model in an attempt to slash excess costs and refocus the business on its biggest theme parks and attractions. This included an attempt to sell off its Sea Life business, although the process was halted after no suitable bids for the aquarium materialised.
At the same time, people are now spending less when they visit theme parks and attractions. Writing in Merlin’s accounts, Ms Eastwood said visitors were “increasingly selective in where and how they spend their disposable income”. Because of this, she said Merlin had to increase promotions and discounts.
The cost of living may impact sales as people are increasingly selective about where they spend their money – Fred Duval/Fred Duval
Ryan Ogilvie, founder of Theme Park Trader, agrees that inflation has muted demand. However, he believes the experience of visiting Merlin’s parks has declined in recent years.
“The cost of living is definitely having an impact on people, especially somewhere like Alton Towers, where you’ve got to pack up and go for a couple of days. Increasingly, it’s not becoming worthwhile, because half the attractions end up going down. Operations over the last couple of years have been all over the place,” he says.
He is not alone in his criticisms. While for most people visiting a theme park or spending the afternoon at Madame Tussauds is a rare endeavour, there is a vast community of theme park obsessives and a thriving online community dedicated to these venues. Many of them share the same concerns, with the lack of availability of popular rides often mentioned.
Perhaps Merlin’s biggest worry, though, is plans by Universal to open a massive new park in Bedfordshire that was given the green light this year. Due to open in 2031, Universal has said it expects 8.5 million visitors in its first year after opening.
“It’s going to draw from all over Great Britain,” says Speigel.
“My kids always want to go back to Disney or Universal Studios because they recognise the characters and the themes as soon as they walk into the park and experience it,” adds Ogilvie.
According to recent reports, massive franchises such as James Bond, Paddington and The Lord of the Rings could appear at Universal’s park.
“Disney and Universal have the luxury of just opening that entire back catalogue and dipping into whatever they want,” says Ella Baskerville, managing director of Blooloop, which provides insight into the amusements sector.
Merlin has pinned its hopes on an £85m deal with the makers of hit video game Minecraft, which will see it open Minecraft-themed rides and attractions across the UK and US.
“I think it could [be a game-changer],” says Ogilvie. “I mean, the Minecraft movie was terrible, but it made a lot of money.”
But with customers continuing to cut back and the spectre of Universal’s park hanging over it, it may take more than pixelated bricks to inject the magic back into Merlin.
“The way I see theme parks is that they should distract you from the worries of the day-to-day,” says Ogilvie.
“If I’m walking into a Universal or Disney theme park, I always forget that I spent 15 grand or whatever to get there. When I go to Alton Towers or Thorpe Park, I’m like, ‘Jesus, how much for a really s— hot dog?’”
A Merlin spokesman said: “Merlin Entertainments operates some of the most exciting and iconic branded entertainment destinations in the world and continues to deliver a solid financial performance in a challenging market.
“In 2024, we sustained robust revenue, drove increased visitor numbers and launched our global transformational strategy to improve profitability and efficiency, resulting in an underlying Ebitda [pre-tax earnings] of £573m. Since introducing a new unified operating model, we have streamlined the business to reduce operating costs and drive long-term and sustainable growth.”
