Big Dipper owner a mystery, bids for Geauga Lake land too low to sell

Posted Thursday, August 21, 2008 6:44 PM | Contributed by Jeff

Cedar Fair's chief executive told financial analysts today that two of the three bids for the three parcels that make up the 550-acre park were not high enough to make their sales worthwhile for Cedar Fair. While all but one of the other rides sold at the auction have been removed from the park, no one, including Cedar Fair, has learned who the real Dipper buyer is.

Read more from WKYC/Cleveland.

Also read more from The Plain Dealer.

Related parks

Thursday, August 21, 2008 6:52 PM
Jeff's avatar That's some pretty lame reporting from WKYC, by the way. Parts of it sound like it was written by some boo hoo disgruntled enthusiass.
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Thursday, August 21, 2008 8:43 PM
eightdotthree's avatar Its really odd that the Big Dipper's buyer won't tell anyone who they are.
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Thursday, August 21, 2008 10:26 PM
I'm not surprised that the bids are a bit low. Remember, the decisions on closing Geauga Lake were based on estimated of a few years ago, before the real estate bust.
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Thursday, August 21, 2008 11:16 PM
Jeff's avatar No they weren't.
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Thursday, August 21, 2008 11:53 PM
Oh remember Jeff they "bought it to eliminate the competition." I just don't understand how people find that to be logical.
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Friday, August 22, 2008 1:05 AM
Cedar Fair can say that land is worth whatever amount they want. If they don't find someone who thinks it's worth the same amount, they're not selling the property.

As a unitholder, I'd like to see them sell the land and pay down the debt. As a park enthusiast, I hope park owners get the message that, for now at least, the land their parks are on aren't going to fetch a hundred grand an acre to be used for office space and housing developments.

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Friday, August 22, 2008 8:57 AM
Definitely a poorly-written article but the reporter is right about Cedar Fair being hypocritical about the sale of the ride. If they're so concerned about the Big Dipper and its historical significance, why would they approve the sale to a mysterious party? Shouldn't they have demanded that- and the intended fate of the ride- to be revealed if they were going to have to approve it? As usual, I don't get Cedar Fair, who continually talks out of more sides of its collective ass than I knew existed.
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Friday, August 22, 2008 9:38 AM
eightdotthree's avatar Did I miss the press release where they said they concerned about the Big Dipper and its historical significance?
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Friday, August 22, 2008 10:10 AM
The Mole's avatar But Rob, it's all for the greater good... the greater good...
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Friday, August 22, 2008 10:29 AM
^^ Obviously you did since the article quites Robin Innes as having said, "it's a very special ride. We want to make sure it has a proper home."
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Friday, August 22, 2008 10:29 AM
Clearly, Innes -- presumably at the order of Dick or the board -- was only paying lip service when she said Cedar Fair cares about the fate of Big Dipper. It was no more than an attempt to mollify a few of us 'boo hoo disgruntled enthusiasts'.
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Friday, August 22, 2008 10:39 AM
Exactly. The company clearly doesn't care, so they should stop acting like they do. It's clearly lip service meant for the "boo hoo disgruntled enthusiasts", which is surprising because I thought enthusiasts are a non-factor?
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Friday, August 22, 2008 10:58 AM
Jeff's avatar Well, you know me, I don't care if they care. :)

If the expense to hold the land is around a million dollars a year, and they are willing to hold it five years, then the eventual selling price has to be $5 million plus whatever amount of interest would be incurred on the amount of debt equal to the sale. As a unit holder, I would very much prefer they get as much as they can.

You now, there is a light in this story that people are overlooking, that they've indicated to analysts that their debt load is now $1.8 billion. Remember when they bought the Paramount Parks it was around $2 billion. That says to me that they're managing the debt pretty well.

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Friday, August 22, 2008 11:02 AM
But what's to say the land is eventually going to be worth what they expect it to be worth? And what if Cedar Fair eventually gets $5 million for the land? That's a drop in the bucket compared to $1.8 billion in debt. How long ago was it that the Paramount Parks were purchased? Two years? At this rate, the debt is going to be erased in another 18 years. That's a lot of debt, and for a very long time.
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Friday, August 22, 2008 11:09 AM
Jeff's avatar That's a lot of what-if's. Real estate markets tend to be cyclical. There are million dollar homes a block from the park. They definitely should hold out.

Remember that Cedar Fair started out at around $800 million in debt when they bought the Paramount Parks. They're not going for a zero balance in the short term. Debt isn't inherently bad if it's managed right. I mean, you have a 30 or 15-year mortgage, right?

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Friday, August 22, 2008 11:33 AM
Real estate markets are definitely cyclical, but that still doesn't mean there's any guarantee that land will be worth what the company feels it should be worth in five, ten or even fifteen years. I mean, it's likely it'll retain its value and eventually increase in value, but there are a lot of variables at play.

I do remember Cedar Fair having debt before the Paramount Parks acquisition. I guess that was from purchases like Geauga Lake, Worlds of Fun and Michigan's Adventure? Still, if I had $800 million in debt, I'm not sure I'd want to more than double it, regardless of how well-managed it is. My wife and I have a 30-year mortgage and we manage it well, but we're not about to go out and assume another one.

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Friday, August 22, 2008 2:08 PM
18 years is a long time? Then why is a 30-year mortgage for a home so popular.

Also, when has debt become such a negative with regards to a business? You're drawing all your conclusions from what you've read about Six Flags, however this is Cedar Fair, not Six Flags. There is a huge difference.

Rob you might be willing to go out, buy a second home and assume a second mortgage if say your salary doubled? When Cedar Fair acquired the Paramount Parks their business grew and thus they were able to justify the increase in debt.

The real estate sale at Geauga Lake is not a desperate move to pay down debt. Six Flags was so short on cash and available credit that some where questioning if it would impact their ability to resume operations for the 2008 season. Cedar Fair is not in the same situation as Six Flags.

I also don't buy the argument that Cedar Fair bought Geauga Lake to eliminate the competition. There is no evidence that Geauga Lake was serious competition for Cedar Point. Past attendance patterns suggest that and I doubt we'll see any change this year that will point to the demise of Geauga Lake as the reason for any attendance increase at Cedar Point.

I will accept that Cedar Fair may have been quick to buy the property to keep it out of the hands of other operators. However, the evidence that they intended to operate Geauga Lake as one of their parks is clearly there.

I don't think it matters how long Cedar Fair holds onto the property. They're clearly not in a situation where they're desperate for cash.
*** This post was edited by egieszl 8/22/2008 2:12:11 PM ***

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Friday, August 22, 2008 5:53 PM
rollergator's avatar If holding costs are really that low, and the market is as bad as it is, they'd be "stupid" to sell now.

Still think Dipper could have stood virtually alone with the waterpark and would have remained a good drawing card for the place. Hopefully it will find a good home. Which strangely sounds just nostalgic coming from me, but from Innes sounds like he's talking about an unwanted puppy instead of a 80+ year old coaster that delivered almost as well as any Miller ride left standing...

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Friday, August 22, 2008 6:06 PM
I agree, Lame reporting but however doesn't the land owner have a right after a certain time limit to remove the ride unless some type of lease is arranged?

This ride is very much in danger of a the wrecking ball if you ask me.

Chuck

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