Cirque du Soleil files for bankruptcy and cuts 3,500 jobs | Hacker News Reader

Cirque du Soleil files for bankruptcy and cuts 3,500 jobs

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36 pointsdoppp12 comments

This is truly sad. Cirque is one of those organizations that creates magic. Every single thing they do (on stage) has clearly been obsessed over, refined to perfection, and rehearsed beyond any possible doubt. Part of the joy of their shows is beholding a group of people who care that much about their work.

On the other hand... later on in this article, it points out that Cirque du Soleil is $1 billion in debt. That probably didn't happen in the past three months. Perhaps Cirque is yet another swimmer who's being exposed when the tide goes out, as Hertz was.

Their debt comes from their acquisition. I'm not sure I understand how this is even possible, but it seems that hedge funds are able to buy entities (like Cirque du Soleil) and transfer the cost of acquisition as a debt for the acquiree -- and, of course, not be responsible for this debt.

https://en.wikipedia.org/wiki/Leveraged_buyout

Same thing that happened to Toys R Us if I recall correctly.

So sad.

I mean KKR and Bain took over Toys R Us in 2005 and it filed for bankruptcy in late 2017. At the time of the LBO in 2005, Toys R Us was already hurting and not in the best place. Though we can't know the path not taken, it's probable that Toys R Us would have shut down earlier, the LBO might have been its best chance of success.

Based on the articles that I've read about the LBO, I think there is an argument to made that Toys R Us was mismanaged after the takeover: a gargantuan sum was spent every year to service the debt that was taken on after the LBO. People point out that because of this, Toys R Us was unable to make the capital investments to compete with Amazon and big-box stores.

But it's not clear to me that TRU could even begin to compete, even if they had the money for capital investment. Most of TRU's business is holiday gifts, which is particularly sensitive to disruption by online retailers. No one is stopping into TRU at the last minute for same household staple, everytime someone needs a toy you know in advance (birthdays, holidays, etc). Because of this, how could they ever have competed with Amazon?

The Bloomberg story is a lot better. It talks about some of the upcoming options, and it says Cirque will likely survive in a smaller form, so I doubt this is Chapter 7.

https://www.bloomberg.com/news/articles/2020-06-29/cirque-du...

Bloomberg is consistently the best source of business and finance journalism, even over the Wall Street Journal.

Bloomberg is in the business of supplying news to people who actually really care about the details (traders, investors, etc), while WSJ is not. It's amazing how great Bloomberg is and how far they've expanded in recent years: tv, podcasts, longform, breaking news, etc. Like Google, this is all possible because of their obscenely profitable core product (the Terminal), though unlike Google, Bloomberg actually is in it for the long-haul.

Cirque du Soleil served as a case study for innovation[1][2] in the business book Blue Ocean Strategy (2004)[3].

[1] https://www.blueoceanstrategy.com/bos-moves/cirque-du-soleil...

[2] https://www.blueoceanstrategy.com/teaching-materials/cirque-...

[3] https://en.wikipedia.org/wiki/Blue_Ocean_Strategy

Sad. Love the Cirque aesthetic.

There's also investigations ongoing into some of the people behind Cirque du Soleil, see e.g. https://circustalk.com/news/franco-dragone-prosecuted-for-fr...

RIP

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