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Friday, July 25, 2014

Lottemaa : A Horrible Ride for the Taxpayer

Lottemaa : The Amusement Park that Fails to Amuse

Not Lottemaa. They don't have any roller coasters. Or rides.

For the 10% of Estonians not currently on vacation in the month of July, the country has been abuzz with talk of the opening of Lottemaa (Lotte's Land in English).

Who is Lotte? Don't go to Google to figure this out. It turns out Lotte is a popular name for a lot of things, including a major conglomerate in Korea, that protested the name Lottemaa and caused delays until an agreement could be reached. Why would some Korean company care about Lotte's Land? Perhaps because they already operate a major theme park known as Lotte World:

Typical Estonian family in front of Lottemaa? Nope, that's the Korean version!

It turns out Lotte is also the name of a famous Dutch actress:
Lotte Verbeek: "Come into my world!"

After intense research, we also discovered Lotte is a popular name for porn stars, but we'll leave it to our readers to do their own research on that one. Besides, we want to keep this blog safe for work, so all our fans in various Estonian ministries can read it while they're busy at the office.

In fact, Lotte is a cartoon dog beloved by Estonian children:
"I may look cute, but wait until you hear what I did with your money!"
Think of Lotte like a sauna-going, black bread-eating, black socks with sandals-wearing, hot coffee with entree-eating cartoon character. In other words, the Estonian version of Mickey Mouse (or Minnie Mouse, to be more accurate). Numerous Lotte cartoons, books, and merchandise have been sold over the years to eager Estonian children. By any measure, Lotte is the most popular Estonian cartoon character (actually the only Estonian cartoon character, but who cares about the details?).

We Hate it When a Plan Comes Together

So why are we after cute little Lotte? It turns out some of the people behind Lotte (not her boyfriend... we mean the humans who created her) cooked up a cunning plan to set up a Lotte theme park.

On an abandoned Soviet-era missile base.

In a tiny village nearly 2 hours' drive from Tallinn.

With taxpayer money. Lots of it

Before we get into the financial part of this, let's consider: Does Estonia really need a children's theme park?

It turns out Estonia already has two popular children's theme parks (Vembu-Tembumaa and Vudila), and each is close to one of the two largest cities in Estonia. We have heard no reports about tickets being sold out or it being difficult to get in due to overcrowding. This tells us the demand is already being met.

But as we've been told many times, we're all just a bunch of idiots. What do we know about theme parks? Not much, but you know who does? The operators of the legendary Tivoli in Copenhagen. They looked at opening a theme park in Tallinn a few years ago, and decided against it.

But wait! Maybe this Lottemaa will be better than all the other theme parks in Estonia combined. Maybe it will have the tallest roller coasters, the slipperiest water slides, and the fastest bumper cars in the Baltics. Nope! No roller coasters, no bumper cars. No real rides, actually. It's just a bunch of houses in the woods with some activities inside. Here's an actual photo so you know we're not making this up:
More fun than a roller coaster! (Photo Credit)
Oh, and did we mention they plan to be open every year only from May 15 - August 31, and only for 8 hours a day (10.00-18.00)? Oh, and that ticket prices will be 15 euros per person, a high price for most Estonian families, and the subject of much criticism from many parents?

And now... the money

What does it cost to build a bunch of wooden houses in the forest? A lot. So much that the first tender failed because no company could do it within the budget set aside. So Enterprise Estonia had to toss in a bit more (1.2 million more.. but what's a few million between friends right?).

Then the project needed more money. And more money. Here's a list of all taxpayer money involved that we could find. It's mind-boggling:

  1. 73,902 euros. Tender 152020.
  2. 213,880 euros. Tender 151442.
  3. 29,850 euros. Tender 150988.
  4. 644,980 euros. Tender 144566.
  5. 153,380 euros. Tender 144564.
  6. 4,344,314 euros. Tender 144557.
  7. 13,900 euros. Tender 132901.
  8. 535,014 euros. Tender 132368.
  9. 31,955 euros. Tender 128042.
  10. 125,586 euros. Tender 119908.
  11. 280,000 euros from Pärnu city government.
  12. 4,599 euros from Halinga town, a tiny nearby village with a total of 56 children (see page 11). It would have been a lot cheaper to just buy those children season passes.
Ready with your calculators? That comes to 6,451,360 euros of taxpayer money. For a bunch of wooden houses in the forest!

(Side note to journalists at Äripäev: If you're bored and looking for something to write about, dig into the tenders above. It looks like most of them went to the same three companies, and it just doesn't smell right to us.)

Should this have been built? Did the taxpayer need to get involved? The Lotte cartoons are produced by Eesti Joonisfilm (the Disney of Estonia), and they seem to be doing quite well by Estonian standards in terms of making money. Äripäev (Estonian business daily) even wrote an entire article about them titled "The profitable Lotte fever." This hardly sounds like a charity case to us.

Adventures in Theme Parks

Lottemaa has just opened, so we can't really talk about their results yet. What we can look at is the Estonian government's previous adventures into taxpayer-funded theme parks.

Let's think for a minute: What is the stupidest possible idea for a theme park? First, it needs to be located far away from Tallinn or Tartu so that it is difficult for people to get there. It should probably be in a really small town so there won't be enough locals interested in going there either. Next, it needs to have a really stupid attraction. Can you think of a place like this? We can.

Welcome to Kiviõli Adventure Center!

"I said I wanted a mountain of CASH, not ASH!"
No, we're not making this up. They built an "adventure center" on a mountain of ash, way over in eastern Estonia in a city of less than 6,000 people. It's at least a 2 hour's drive from both Tallinn and Tartu.

Yes, their attraction is it's a mountain of ash, the byproduct of Estonia's burning of oil shale to produce power. They must be proud of it, as their website is tuhamagi.ee which means "ash mountain" in Estonian.

Brilliant marketing? Most Estonians reading this blog have probably never been there, but it's been open for a while now.

You really should visit. You paid for it. According to some reports, the project will end up costing over 6 million euros. We could confirm only 3,065,634 euros in taxpayer money so far, based on our initial search.

Market Distortion

Now imagine you're the hard-working owner of the children's theme park Vembu Tembumaa, which has been in business for years. You've built your business over time, using your own hard-earned money. How do you think you'd feel about Lottemaa sprouting up, funded with 6 million euros of taxpayer money?

Is this fair to the free market? Why should some theme parks in Estonia get millions in government money, while the rest are left to grow like normal private enterprises? The Estonian government is usually quite business-friendly, but this tactic of massive handouts to private enterprises to then compete with other private enterprises is not fair at all.

(Note we have no idea if the owners of Vembu Tembumaa are hard-working at all. We've never met them. They could just be a bunch of lazy drunks for all we know.)


Lessons Learned

The Estonian government should not be in the theme park business. There are already private companies who do this, and do it well. There are better ways to spend nearly 10 million euros of taxpayer money (much of which did not come from EU funding but directly from the Estonian budget -- check the tenders we linked to above) than by paying for theme parks in the middle of nowhere.