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Sega Sells Gameworks To Investors

Posted On: 5/21/2011

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Sega, Sega Corp., Gameworks, DreamWorks, Game Works, Steve Dooner, Mosaic Capital, Darlene Keyes, Charis Gaillard, Dina Kelley, Corey Haynes, arcade, family entertainment center, FEC, arcade games, amusement park, amusement business, coin-op news

LAS VEGAS -- Sega Corp. sold its Gameworks chain, which now consists of seven locations, to an investor group headed by theme park and arcade chain veteran Steve Dooner.

To finance the purchase, Dooner said, Los Angeles investment bank Mosaic Capital syndicated a deal with private investors and HNB Capital (Redondo Beach, CA). The purchase price was not disclosed.

Now known as Gameworks Entertainment LLC, the company has moved its headquarters from the Chicago suburbs to Las Vegas.

Dooner is familiar in coin-op and theme park circles. He spent 30 years in operations and development with such organizations as Chuck E. Cheese's, Disney, Universal, Discovery Zone and ESPN Zone, among several amusement companies.

Dooner will act as Gameworks' new chief executive. He replaces Corey Haynes, whom he praised for "beginning to turn Gameworks around strongly."

Other key members of Dooner's new management team include Darlene Keyes, former vice-president of operations for resorts in Florida and Panama. She is now in charge of Gameworks game operations. Charis Gaillard, former MGM Resorts director of food and beverage, has the same post at Gameworks. Former Cisco executive Dina Kelley is vice-president of marketing.

Dooner said he originally tried to buy Gameworks in 2001 and discussed the possibilities of making the acquisition a second time in 2004 before the chain was declared bankrupt. His third and successful round of negotiations with Sega began in January 2010 and was extremely complex, he said.

The new owners have taken possession of a chain that launched in 1997 with more fanfare than any other in the amusement industry. Gameworks originally linked the names of a trio of high-profile partners in a marriage of Tokyo and Hollywood, uniting Sega and Universal Studios with the glitter of Steven Spielberg and his DreamWorks Studios.

Each Gameworks facility typically cost $10 million or more and plans initially called for up to 150 locations. But early results proved disappointing and the scope of the operation was severely curtailed. Eventually Sega's two partner firms sold their interest to Sega.

At its height, Gameworks operated about 18 venues in the U.S., as well as three overseas locations in Guam, Mexico and the Dominican Republic. But as traffic and earnings foundered, Sega revamped the concept more than once, changed management several times, experimented with new store sizes and layouts, and even briefly put Gameworks into bankruptcy.

In April and May of 2010, Gameworks closed seven of its stores, leaving venues in Seattle, Las Vegas, Ontario, CA, Tempe, AZ, Schaumburg, IL and Cincinnati, as well as the World Sports Grill in Tuscon, AZ. | SEE STORY

Regaining a robust earnings capability is "going to be a challenge," Dooner told VENDING TIMES. He indicated that broad changes will be made to technology, menus and marketing, with a strong emphasis on social media.

Gameworks may open new stores later this year or early next year, Dooner said.