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Carnival & Fair News
Carnival & Fair News
State-of-the-Industry Interview: Larry Yaffee/ Firestone Financial:
Fairs & Mobile Amusements Considered Stable Industry
Wednesday, April 6, 2016
  • Rides 4U - New & Used Rides
  • Rides 4U - New & Used Rides

Like many in the carnival and fair industry he has long been underwriting loans for, Larry Yaffee,  Senior Vice President of Sales and Marketing for Firestone Financial, is part of a multi-generational tradition.

Firestone Financial, which celebrated its 50th anniversary last year, was started in the mid-1960s by Paul Firestone then, following his death, was purchased by Michael Miller, a lawyer, and Robert Fanger, a food broker.    

Ed Yaffee - Larry's father who had a background in vending machines sales - was Firestone's first employee, hired in the founding year of 1965. Firestone first financed mainly restaurants and coin operated equipment,  until 1991 when Ed Yaffee led the company's expansion into the mobile amusement industry and related businesses. 

A quarter of a century later, Firestone Financial has invested more than $300 million in the fair industry, issuing almost 6,000 loans, according to Larry Yaffee. "We are invested in this market and want to continue to provide financing to help our customers," he says. 

Larry Yaffee first joined the company in 1986 as an intern and has been part of Firestone's top executive team for more than 20 years (Ed Yaffee retired in 2000 and passed away in 2011). Larry Yaffee has long been a recognizable presence in the Fair and Mobile amusement industry, currently holding the position of 3rd Vice-Chairman of the (OABA) and previously served as its Treasurer. 

Carnival Warehouse requested an interview with Larry Yaffee in order to explore the financial infrastructure on which carnivals and related business rely. Not only does he have decades of experience in the mobile amusement business, there are few vantage points as his, making him a uniquely astute observer of industry trends. 

For example, he has seen the number of players decline - likely due to consolidation in the industry - while at the same time the financial value of the industry has increased.

Aside from turning a half a century old, Firestone Financial was recently acquired by Berkshire Bank - said to have more than $9 billion in assets - although Firestone Financial operates as a wholly owned subsidiary with its own management team, credit committee and staff. 

The company has more than 50 employees, and Larry Yaffee leads the team dedicated to the financing needs of the Outdoor Amusement Business.  

Carnival Warehouse: How long has Firestone been in the Mobile Amusement business? 

Larry Yaffee: We just celebrated our 50th year in business and have been serving the Mobile Amusement business for 25 years. For the past 15 years Tony Costanza, our AVP of Sales, has focused on the carnival market and he has done an amazing job at growing the business. He understands the customers and their financing requirements. 

CW: What has been the biggest change in the industry from an investment perspective?

LY: The biggest change from an operator perspective is a more disciplined approach to purchases. In the past there was a greater focus on gross revenues, today the profitability of an attraction as a factor is paid more attention. We are seeing our customers value each ride on its contribution to the bottom line and they take into consideration the expenses associated with the ride.

CW: Has the number of companies seeking loans increased or are the same or a shrinking number of companies seeking more loans? 

LY: The amount of businesses in the industry has decreased, but in our 25 year history we have seen overall increases in loan activity. One of the changes has been more used equipment in recent history. From 2009 to 2010 we saw a significant increase in our annual loan activity and it has remained at the higher level since then. We don't see a difference in risk between new or used equipment.  

CW: What has made the industry such a good investment?

LY: We invest in people as much as we do equipment. The pride that our customers have in their business and in providing quality entertainment to their customers makes it a fantastic investment.  We have financed generations of businesses in the amusement industry and are extremely proud to carry on that tradition. 

We are a relationship lender, 80 percent of customers come back to us after their first loan because we take great care of them. It makes financial sense because it is an extension of the relationship and trust we have built with the preceding one.

CW: What is the growth potential of the industry?

LY: We see the carnival and fair market as a stable industry and worthy of investment. The local fair has been a long standing tradition in our country and today's Showmen have respected that tradition and found new attractions that continue to enthrall audiences. 

CW: What do you mean by a stable industry?

LY: The fact is it is a mature industry. Growth would mean a lot of new people in the industry, that the number of carnival companies and the numbers of fairs, are not increasing. All these are pieces of what makes a mature industry. They aren't diminishing, but they are growing, and one of the concerns is getting the next generation to come into the industry and stay in the industries.

CW: Are there advantages to being a stable industry? 

LY: Yes, Most of the companies remain healthy. I think back to late 1990s, there was a lot of growth, but too many of carnival companies were taking on too much debt too quickly, which can be damaging to the growth of any industry, because that creates a cyclical bubble. We saw that happen nationwide of course in 2007 and 2008, which led to the worst economy of my lifetime.  

CW: What was the impact on the mobile amusement industry of the Great Recession?

LY: It was a hard two or three years, from 2008 to 2010. We worked very hard to keep our levels of lending high, and we came out of it. We had a marketing tagline
"We're Still Lending," and that mind set helped us and our customers, because we were ready to lend sooner than many other campiness during that people. 

The fair industry is very resilient group of people, everybody struggled during that economy, but most people in the fair industry figured out a way to manage their business through the downturn. 

In 2010 - 2011, we had 57 percent growth in our loans and we've able maintain that growth.  One of the things that we are very proud of is that we served our customers during the downturn.

CW: How to did you help your customers?

LY: We are more than just a line of credit, we are informal businesses advisers. We never recommend what to buy, but we do advise on things like debt, that if you have too much debt, to help your cash flow, help them figure out what piece of equipment they can sell that won't deteriorate your business. We also get asked what have you heard, what is a good piece of equipment to buy.  

CW: So, is this industry recession proof as so many like to claim?

LY: Everybody struggled in 2008 to 2010. I don't think there is anyone who didn't suffer and some companies were not able to survive. Everybody was scared, and people stopped spending. But in the fair industry, there seemed to be more people who fought through it, I really admire their resiliency.

In some other industries that we work with, we would get calls with a client saying I just can't take it anymore, here's were my equipment is, I'm out of business. We didn't really get those kind of calls from the Mobile Amusement businesses at all. I think there is also some truth to the "stay-cation" mentality, that families are going to down on their travel, and not go to Disney World, but they would still entertain their families.

This business is unique because it is such  a part of Americana. I remember about 10 years ago, I was with Tony Constanza, and we were in Maryland, and we were going to a small fair, it wasn't a state fair, it was just a small Firemen's Festival. And it was raining out, and we thought there was going be nobody coming to the fair. We parked and we were walking to the fair and there was a pretty good sized crowd walking with us, and so we asked them where are they going and they said to the fair. Even in the rain I asked and they said the carnival comes to town only once a year, we have to go.

CW: How many fairs do Firestone personnel visit each year? 

LY: Two to three dozen, that is where the relationships with our clients continue. They take a tremendous amount of pride in showing us their inventory, and it is gratifying to see that piece of equipment that we helped them to purchase.

It's more than a just a job, yes it is a job and we all want to make money, but it's also about relationships you build. It's a great balance. Besides, it's much better to meet clients outdoors at a fair then in an office. 

CW: Are election years good or bad for the fair business?

LY: I don't think they affect how many people come to the fair. When I first started in this business, whenever it was an election year, everybody was kind of waiting to see what to see what happens. What will the government do to help, are they more pro-small business, which is a good thing for the carnival companies.

We are relatively speaking, small business, we're not Google or Apple. Any policies that can accelerate small business growth is good. There were policies coming out of Washington that helped small businesses get out to the recession and that was good, but with the election, everything is up in the air again. 

CW: Are you optimistic about 2016?   

LY:  Yes, very. The evidence contributes to our optimism about our business. We've been in the fair business for 25 years, and we are always intending to grow our piece of the business. The economy is relatively better and gas prices have been low, and that helps the bottom line of most of companies we invest in. That puts more money in people's pockets and more money can snow ball. 

CW: What is the biggest threat against the industry?

LY: The threats in this industry are the same that they have been for some time.  We feel that the industry has done a great job focusing on ride safety and minimizing that as a threat.  The OABA does a great job protecting the industry and promoting its interest as it relates to ride safety, labor issues and the image of the amusement industry. 

CW: What can the industry do ensure their appeal remains fresh to millennials and young families? 

LY: The millennial generation, like generations prior wants to provide a fun, safe experience for their families. Our customers continue to engage this audience by providing attractions that excite and focusing on the entire family experience. 

The incorporation of social media tools have kept the marketing of the events strong and provided a higher level of engagement for all members of the family.   

CW: What impresses you the most about the new rides that are you are asked to invest in?

LY: The new rides have a tremendous focus on safety and an enhanced user experience. In addition to financing these rides we are consumers as well and we enjoy them as much as everyone else. Many of our customers invested in LED systems and they saw a great impact to their business. 

CW: Aside from rides, what other pieces of equipment have you been asked to invest in?

LY: In addition to new and used rides, we finance concession and game trailers, bunkhouses, generators and almost anything our customers need to run their business.

CW: Earlier this year, Firestone Financial underwrote an innovative investment for a partnership between Wade Shows and Wood Entertainment to purchase a Lamberink RL45 Wheel, believed to be the largest traveling Ferris Wheel in Fair industry, valued at more than $2 million according to some reports. Is the Wade/Wood partnership to make a reality the biggest single ride investment an anomaly or the shape of things to come?

LY: It is an interesting collaboration and we are watching it just like everyone else in the industry.

CW: This was a big risk for Firestone, are you hesitant to take another big risk or eager to do another deal this size? 

LY: We need to respect the privacy of our customers so we can't discuss other transactions. But I can tell you that the partnership with Berkshire has given us greater access to capital so that we do have the ability to finance large transactions We look forward to financing the rides that will help our customers grow their business and that means that we will finance small loans and large ones as well. 

CW: How risky is it to underwrite loans for weather-related business and how do you justify and/or mitigate that risk?

LY: All industries have inherent risk and weather is part of the risk for this one. One of the benefits of being in this industry for 25 years is understanding the risks, and having the flexibility to handle it.

CW:   What sort of negative feedback or rumors did you hear regarding the acquisition by Berkshire and did you address it?

LY: Many of our customers have negative experiences with banks. We know this and understand the issues. Our partnership with Berkshire Bank is very different than others for a few reasons. (1) Berkshire Bank became part of Firestone Financials bank group in 2013. They understand our customer base, how we make credit decisions and service our customers (2)Berkshire has been very supportive of our company and focus on this industry; (3) Berkshire worked with us on our developing our credit policy, and (4) We have the same management team, salespeople and support staff - Our sales team includes Tony Costanza, AVP of Sales with almost 20 years at Firestone, Samantha Keller, Associate Sales Executive, with 10 years at Firestone and we added Tim Dalton, Associate Sales Executive to our team last year. There have been some changes and challenges for us and our customers as we have become part of a regulated industry. However, the majority of those changes will ultimately help keep our customers and their business stronger and safer. 

CW: Now that you have deeper pockets because of the acquisition, how will the industry benefit?

LY: Being owned by a $9 Billion bank give us access to capital that we have never had in our history. They provide the fuel that will allow us to continue to offer competitive financing in our industries.

CW: How has the professionalism and expertise of the carnival companies who you are partnering with evolved since Firestone first got involved in the industry?  

LY: We continue to be impressed by the ability of our customers to be both Showmen and business people. We have seen our customers institute more financial discipline, increase their marketing efforts and embrace technology.

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