Big Dipper owner a mystery, bids for Geauga Lake land too low to sell
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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.
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And personally, I think they should hold out too, if the Astroworld sale has taught us anything.. though they were in a hurry for that one.
I had some communication with this writer and I think to say it comes off as an enthusiast induced puff piece is being a bit harsh. If the only sides that are really talking about this ARE the enthusiasts then it stands to reason that is how the piece will come off.
egieszl said: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.
Not really, as I'd be more tempted to pay down the debt I already have, but I'm not going to suggest what I do with my personal funds is what a company should do with its own funds. All I'm doing is questioning why a park operator would want to more than double its debt when the market for theme parks is supposedly soft right now.
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.
What evidence is that? I don't see it. I see two years of half-assed decisions followed by two years of decisions clearly indicating the company was bailing out. Most companies dedicate more than two years to making something work, especially if it initially cost them upwards of $100 million.
Sorry, but if Cedar Fair did its homework, they should have known that the park wasn't a viable business and therefore shouldn't have purchased it in the first place. Spending so much money on an acquisition only to later discover that there's no chance it's ever going to make money seems like a novice mistake, not one that a company with decades of success would make. If CF didn't purchase the park with 100% intent to close it down, then it had a very short leash before that plan would be implemented. That's my belief and almost a year later, I still stand by it.
Keep seeing what you want to see. Most companies don't like to fail on purpose, believe it or not.
All I'm doing is questioning why a park operator would want to more than double its debt when the market for theme parks is supposedly soft right now.
Most businesses borrow money to grow. The cost of borrowing money is cheap and the benefit generally far exceeds the cost. You're saying soft right now? Yes now, but when Cedar Fair purchased Geauga Lake in 2004 the market wasn’t soft. So are you saying that Cedar Fair knew it would be soft? I'd like to have that magic ball. Cedar Fair seeems to be proving that they're quite capable of managing their debt.
What evidence is that? I don't see it. I see two years of half-assed decisions followed by two years of decisions clearly indicating the company was bailing out. Sorry, but if Cedar Fair did its homework, they should have known that the park wasn't a viable business and therefore shouldn't have purchased it in the first place. Spending so much money on an acquisition only to later discover that there's no chance it's ever going to make money seems like a novice mistake
Novice mistake? Based on your reply I can tell you’ve never taken any kind of risk like opening a business. Risk often comes with huge rewards, but it can also come with failure.
Despite what you seem to imply, the fact is, success is never guaranteed. If it were we’d all be billionaires. No matter how much due diligence a business does the unexpected can happen and result in failure. Cedar Fair could not have predicted that unexpected decline in attendance. Had they known that they never would’ve touched Geauga Lake.
Please don't tell me that they knew Geauga Lake's attendance would fall a half-a-million short of what the park averaged annually for an entire decade prior to the Six Flagging. No one would've expected that and had they known the price paid would've reflected that.
You claim they intended to close it from the start. So if it was there intent to close it all along then why did they bother operating it at a loss for three additional years? Why? Operate it to make the financial situation even worse? Huh?
Cedar Fair is in the business of operating amusement parks, not closing them, disposing of assets and selling real estate. They are gaining nothing from closing Geauga Lake other than cutting their losses earlier rather than later.
If that was their intention to buy and close Geauga Lake then they poorly executed the plan. The brains in Wall Street would see through this and the executives in Sandusky would pay the price for their poor decision making.
You want evidence of their intent to operate Geauga Lake. That $25 million spent on building that waterpark clearly shows their intent. They never would’ve built that waterpark had the intent been to close the amusement park.
A stand-alone waterpark in a non-resort area of Ohio is a potential recipe for disaster. Just wait until we have one of those cool summers . The only reason that park is staying put is because you can’t easily tell the shareholders that you’re scraping the $25 million you invested just two years ago.
They’d of had better options had the waterpark never been built. One option would’ve been a downsized amusement park-water park combo. Another option would’ve been to close the entire property instead of being left with a challenging waterpark.
You can believe what you want to believe, but no one on that side of the fence has been able to back up their opinion with any solid facts or evidence. I’ve argued this all over the Internet because there is very little if anything to gain from buying and closing Geauga Lake. Geauga Lake, even at its Six Flags peak, was hardly competition for Cedar Point.
It really doesn't matter who would've bought Geauga Lake. The park would've likely closed no matter the operator. On the outside it looked like a good investment, but on the inside it was rotten all the way through.
*** This post was edited by 8/26/2008 2:10:08 AM ***
I have to admit that I scratch my head over the idea of spending $100+ million on an amusement park and intending to close it down. Of course, the way people talk, the park was destined to fail regardless of who purchased it, so if that is the case then why didn't Cedar Fair see the writing on the wall? I deal with people conducting market research all the time. There are people that can be hired to gauge market conditions and the viability of specific businesses in specific markets. If CF couldn't predict the future of the Cleveland/NE Ohio market when it came to its ability to support an amusement park, there were people they could have turned to. Either they turned to the wrong people, or they didn't bother in the first place.
We've all been over this before, and frankly I have to wonder why even I am still bothering with this discussion because neither side refuses to back down. I just don't understand how anyone can say there is no evidence that Cedar Fair ever intended on shutting down the amusement park. A new waterpark was built on the side of the lake opposite the existing amusement park. That would have made sense if CF intended to expand the amusement park, but they didn't because a good portion of the park's marquee coasters were removed and sent elsewhere, with no replacements installed or even planned (as far as we know). The park's marketing department was pretty much eliminated and marketing in the region eventually came to an end. Hours were cut, including the park's Halloween event. I'm not saying some of those decisions were the result of declining business but it became pretty obvious that CF had no intention of investing in the park. It doesn't take an industry expert to realize investment is the key to survival. CF certainly gets this- look at their successful properties.
I'm not going to pretend to know what the company had planned for the park, but maybe the purchase price made sense. Maybe they figured they could send the expensive rides to other parks (distribution of assets), sell the land and eliminate a park competing in Cedar Point's market. There is no concrete proof of that, but there's also no concrete proof to support any other theory. Only a few people know the company's true intent from the very beginning, and chances are they're not going to tell anyone what it was.
This would have left the locals with the Geauga park they had come to know. The rest of the failures were PR/management blunders like the school reading program, the decision to go with non-union workers, etc. The kind of things that alienated the LOCAL population that had supported the park for some 100 years...
You have to dial back the years. So much of your comments are based on what is known today and not what was happening at the time of the decisions.
In 2004 Cedar Fair wants to grow their business. That’s how you increase your stock price. At the time there haven't been any major amusement parks on the market for a couple of years. Six Flags has rapidly grown. No one knows for sure that a couple of years from now Viacom will put up for sale the Paramount Parks and Six Flags will offer to sell several of their properties.
Suddenly, Six Flags decides to sell Geauga Lake in a rather sudden exit move. They’ve failed to build a competitor to Cedar Point in the Ohio market and they approach Cedar Fair.
Suddenly, a major park with a lot of recent investment comes on the market. It's in Cedar Fair's backyard. They know attendance is on the decline. They know it’s going to present some challenges since Six Flags is failing. Six Flags is willing to sell the property at what appears to be a big discount. There are risks.
There are two things that come to mind that they may have been thinking: Opportunity to grow Cedar Fair’s portfolio of parks; Chance to keep another operator from owning this park that is close to their flagship – Cedar Point.
Possibly they feared that Geauga Lake would one day be competitive with Cedar Point, but “IF” Cedar Fair knew in advance of the opportunities that would come to purchase large parks they may have passed on Geauga Lake.
The single biggest problem is the huge "unexpected" decline in attendance. I stated it above. You keep saying they turned to the wrong people or should have known. Can you predict the next natural disaster, the next act of random violence? -No, you can't predict everything.
You point to building the waterpark on the other side of the lake as a reason for closure. Let’s go back in time to when the decisions were made and what was happening then.
The idea for the waterpark in my opinion was born prior to the purchase of the property. They knew they weren’t going to operate the animal portion of the park, so they were left with a large void in the property.
After a disappointing 2004 season the announcement was spun to investors as the answer to the serious attendance problems. They clearly were hoping this would bring back the attendance in 2005 after the unexpected decline.
I think you’re also forgetting the original plan that called for a two phase, two-year expansion that would total a $50 million investment.
The logic to this expansion shows their intent to operate the entire property since a stand-alone waterpark in northeast Ohio doesn’t made a lot of sense.
End of 2005 season the attendance failed to improve. Cedar Fair now scales back their waterpark plans to reduce the amount of cash their investing in the property. They’re forced to finish the new wave pool for 2006, to save money versus being forced to have a waterpark split between the two sides.
By the end of 2005 and a second year of disappointing attendance, Cedar Fair at this point knew they were in trouble and they needed to cut costs and hope for a miracle. That’s when they started to cut full-time staff, eliminated departments and expand the responsibilities of the existing departments in Sandusky. They shortened the operating season and cut operating hours. It’s cost cutting in an attempt to possibly safe the operation. For 2006 they attempted to appeal to the local market with reduced gate prices.
At the end of the 2006 season when attendance failed to improve, this is the point where they probably knew they’d have to consider closing the park. However, prior to this point the evidence points to their intent to operate the entire park. Now we start to see evidence that the park may close with the removal of two major and costly to operate roller coasters.
I’m sure if they could reverse decisions they never would’ve built the waterpark on the SeaWorld side. Had that not happened they’d of been left with a much more desirable option – a downsized amusement park in combination with the original waterpark. That also would’ve meant $25 million less invested in this failure.
Why would Cedar Fair want to send a bunch of used product to their existing parks? If anything, the disposal of the Geauga Lake assets may have messed up some of their expansion plans at some of these parks. A Vekoma SLC for Michigan's Adventure? That's a product Cedar Fair wouldn't touch. A Boomerang for Carowinds in 2009? That’s another genius idea, but they’ve got no choice. These rides sell for pennies on the dollar, so they're forced to recycle some of them into their existing parks.
Cedar Fair auctioned off rides recently that they paid dollars for and were sold for pennies. That’s not a smart business move.
Rollergator, a timely downsizing would’ve only worked had that been the plan from the time of purchase. If that would’ve been the plan then they would’ve offered to buy the park for far less. The purchase price and capital invested from that point forward set the performance requirements for the property. You can’t recover from that unforeseen decline in attendance unless the attendance would’ve rebounded.
By deliberating relocating the waterpark to the sea world side and closing the ride side, they can maintain almost the entire full gate price with just the waterpark and thereby significantly reduce operating costs compared with a full fledged amusement park. People in the area who preferred traditional rides would head to CP in theory and be forced to pay the higher gate price.
Tom Woosnam wrote on Jul 1, 2008 4:20 PM: " As the buyer at the auction of this coaster, time for action is NOW. If you want to talk about it, go ahead. If you want to save it, money is all it takes. There is a deal available for anyone who wants to do something about it, not just talk about it.
Contact me for details. "
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