San Diego Sues SeaWorld for Unpaid Pandemic Rent

The city of San Diego has filed a civil complaint in San Diego Superior Court against its most popular tourist attraction, SeaWorld, claiming it is owed more than $12M in back rent that went unpaid during the pandemic.

The lawsuit, which alleges a breach of SeaWorld’s lease with the city, is seeking $12.2M, which includes interest and late fees as well as outstanding rent.

SeaWorld San Diego is operated by Florida-based SeaWorld Entertainment, which has a long-term ground lease with city, amended in 1998 with a 50-year lease that expires in June 2048.

The lease covers 190 acres of waterfront property on Mission Bay at 500 Sea World Drive, the home of SeaWorld since 1964.

According to a report in the San Diego Union-Tribune, SeaWorld is required to pay rent as a percentage of gross park income, with the minimum rate adjusted every three years based on past performance. 

During the pandemic, for the years 2020 through 2022, the aquatic-themed amusement park’s minimum annual rent was set at 10.4M plus a 3% surcharge.

SeaWorld reported in a May regulatory filing that it paid $500K in rent in 2020, $11.1M in rent and prior-year charges in 2021, and $13.6M in rent and prior-year charges in 2022.

In response to county and state lockdown mandates, SeaWorld was forced to close for five months between March 2020 and August 2020, and then again for two months between December 2020 and February 2021, the newspaper report said.

According to a lease audit performed by the City Treasurer last year, the theme park owes $8.9M in unpaid rent for the period between Jan. 1 2019 and April 30, 2022. The outstanding sum has been compounded by $3.4M in interest charges and late fees.

“Their position is that they were impacted by the pandemic, and they therefore should have been excused from the lease terms and the city should just swallow the losses, which we’re not willing to do,” Mara Elliott, the San Diego city attorney, told the Union-Tribune.

“This is a very lucrative company that’s done well. We’ve got a long-term relationship and expect them to pay what’s due, just like everybody else did,” Elliott said.

In the first half of 2023, SeaWorld Entertainment reported $70.6M in profit on record revenue of more than $789M across all of its parks.

SeaWorld’s contract includes a force majeure clause, which is used when natural disasters and other calamities prevent parties from fulfilling contractual obligations.

According to Elliott, landlords in California have prevailed in Covid-19 force majeure cases, the newspaper reported.