China has been having a rough go of it lately.
The country's economy has stopped growing at the crazy potent rate that it once did, and the new man in charge has been cracking down on fun stuff like the internet. All in all, it's starting to feel like there about 1.3 billion folks that could use a fun night out.
Well, TPG Capital ain't the kind of firm to just sit on its hands and miss out on the opportunity to entertain a nation.
On Monday, a consortium of private equity investors led by TPG agreed to buy Cirque du Soleil for 1.5 billion Canadian dollars, a purchase that will pave the way for the company to expand into China.
1.5 billion Canadian Dollars is still a lot in terms of real money, so this move by TPG is clearly aimed at capitalizing on the hope that Chinese audiences are so desperate for something new that they'll pay to watch this.
But according to Cirque du Soleil's previous forays into Chinese markets, there is no guarantee that this will work.
In 2012, a lavish Cirque production in Macau closed prematurely because of poor attendance. Chinese gamblers, unlike their counterparts in Las Vegas, where Cirque has eight permanent shows running, don’t have much interest in entertainment.
Perhaps mainland Chinese prefer their artsy-fartsy circus acts straight up, with no slot machine chaser. For Cirque du Soleil's bottom line at least, they had better. The company's owner, Guy Laliberté, has been trying everything to get his troubled ship back on smooth seas in the past few years.
Cirque struggled, as some new shows failed. “For the first time, after 25 years of constant growth, we went through a crisis,” Mr. Laliberté said.
A closing forced by the 2011 tsunami in Japan eventually led to the shutdown of a major production there. Other shows around the world did not attract sufficient audiences, or were so costly that profits were minimal. Its New York efforts have largely faltered; the 2010 production of “Banana Shpeel” at the Beacon Theater was a flop, and then a production of “Zarkana,” at Radio City Music Hall, ran only two summers, instead of the anticipated five.
In 2012, Mr. Laliberté returned to active management, and ordered a strategic review. The company cut roughly $100 million in annual costs, including laying off 400 employees.
If China is Laliberté's one last best chance, maybe he should leave "Banana Shpeel" stateside.
Regardless, China is about to get a taste of Quebecois Cirquis* whether they like it or not.
*We are reasonably sure this is how French Canadians spell "Circus"
Cirque du Soleil Being Sold to TPG-Led Private Equity Group [NY Times]