Does Big Profit Lurk Within?

It’s minutes before dusk, and Robert McBroom is checking out the growing line of teenagers outside his FrightFair haunted house in Chatsworth.

Several hundred will pay $10 a head tonight to be scared by ghouls and goblins in cinema-quality costumes. But McBroom isn’t close to knowing if the attraction will turn a profit.

Profit? Yes, the haunted-house business, once an October fund-raiser for civic groups and charities, has evolved into a for-profit industry. McBroom and his investors have put up $85,000 for this attraction, including about $18,000 for payroll.

“The reality is, when you have that much money tied up in a Halloween attraction, it’s a business first,” says McBroom, 33, who is also in the Christmas-tree-lot business.

Entrepreneurs around the country build and market these attractions to an American public crazy for Halloween, now the second-highest-grossing holiday in retail sales in the U.S., behind Christmas.

Oddly enough, considering Los Angeles’ entertainment-capital status, Southern California is not one of the bigger markets for these endeavors, according to D’Ann Degan, president of the International Assn. of Haunted Attractions. That distinction goes to cities such as Dallas-Fort Worth, St. Louis and Detroit, where there are permanent haunts and a rabid fan base.

Observers say it’s because there are so many entertainment options in Southern California. Major theme parks, such as Knott’s Berry Farm (re-dubbed Knott’s Scary Farm for the season), Universal Studios and Six Flags Magic Mountain, pull out the stops with special Halloween events and spend big promotional bucks to pull in crowds.

“California is a tough market” for haunted-house entrepreneurs, says Leonard Pickel, editor of Haunted Attraction magazine.

Long gone are the days when haunted-house producers could elicit squeals by dispatching sheet-clad actors into a dark room. Today, patrons weaned on high-end video games and movies look for animatronics, hydraulically powered beasts, spinning tunnels and the like.

“The audience expects more,” FrightFair’s McBroom says. “Our direct competition is film.”

This makes it tough for cash-strapped entrepreneurs who need to buy cutting-edge equipment to remain competitive. Today, an animatronic character will put a producer back $5,000 to $10,000. FrightFair, for example, paid $22,500 for a Tesla coil, a device that shoots out bolts of lightning-like electricity.

Haunted Attraction’s Pickel estimates that building a high-quality haunt ranges from $100,000 to $300,000, with the average attraction pulling in 20,000 visitors at $8 to $10 a head. Do the math. This isn’t a lucrative business.

Pickel says that when sole proprietors divide the hours they work by the dollar take, they’re often earning minimum wage. “That’s pretty typical,” he says.

To defray costs, haunt producers pursue corporate sponsors, as FrightFair did (it has Boeing Co., Coca-Cola Co. and Time Warner Inc. among its backers). But McBroom acknowledges it’s a hard sell for an industry trying to move beyond the seedy image associated with traveling carnivals.

“There are no sure bets,” he says.

The challenges don’t stop. Producers have to make sure their structures will pass muster with various police, fire and safety authorities. They hire and coach actors. They must develop and execute marketing campaigns to pull in audiences--not easy since few have dollars to spare for media advertising.

“This is a very labor-intensive industry,” acknowledges Degan of the haunted-house trade group.

Some haunted houses are set up on vacant lots, while others are in warehouses and other permanent buildings converted for the season.

The Ultra Zone laser tag center in Alhambra, for example, becomes the Haunted Zone on weekend nights in October.

With a year-round business base, Ultra Zone owner David Barulich has the advantage of permanent staffing, an established location and a loyal clientele. But even that hasn’t guaranteed success.

When Barulich opened his haunt two years ago, he laid out $30,000 on local radio advertising. But proceeds didn’t cover costs.

So Barulich slashed marketing expenditures last year, figuring that nearly half of his customers heard of the attraction through the Internet. Attendance held steady, and the Haunted Zone turned profitable. (Barulich won’t say more.) This year, he’s expecting 7,000 customers at $8 each, and hopes it will again be a moneymaker.

“I want to see the curve rise slowly and keep my costs down,” Barulich says.

But the competition from haunted houses with ever-more elaborate effects keeps on coming.

In Santa Clarita, the Haunted Knightmare Mansion is a new 40,000-square-foot attraction with two mazes, a makeshift movie museum and a Halloween store peddling everything from prosthetic horns to severed limbs.

Producer Ed Marks, a 15-year theme-park-industry veteran, says total costs are $1 million, including $100,000 on safety features. He maintains a 75-person paid staff, with several employees possessing entertainment-industry-style titles, such as line producer and technical director.

This ambitious venture has the backing of private investors, with sufficient funds to last at least four years even if the mansion didn’t take in a dime, according to Marks.

“We’re as far from the mom-and-pops as you can get,” he says. “You’ve got to deliver high-dollar, high-class entertainment or people are just going to blow you off.”

By month’s end, Marks expects 35,000 to 40,000 customers to have attended one of its three shows (with ticket prices ranging from $10 to $20). Patrons move through the house and laboratory of a fictional crazed doctor and through a fun house, where those who don 3-D glasses enter the twisted mind of one of the doctor’s equally zany patients. At one point, a full-sized police car appears to smash through a wall. In the lobby, there’s a mock guillotine, where enthusiasts can have their photos taken with their heads post-chopping block for $4.

Marks is crossing his fingers that the Haunted Knightmare Mansion will be profitable, but he’s realistic about prospects in Year 1.

“We’re prepared to have a deficit this year and still continue,” he says. “This can be a very, very profitable business, if done right.”

Haunted Attraction’s Pickel sees a time in the near future when smaller entrepreneurs will be forced out, replaced by larger, better-funded enterprises staging Halloween-themed shows in large venues, even coliseums and convention centers.

“The entrepreneurs will not be able to compete capital-wise,” he says. “The dollar talks.”