Cedar Fair agrees to add two board members, Q will drop suit

I'll mention some things that will probably come up

The number of share options awarded to the big boys is probably going to be looked at. That's like rewarding them for hanging on. Those awards will probably become more closely tied to performance.

It's kind of funny, the CF boys made snide comments about what Al Weber made at Paramount and how that was a big cost savings, and then it looks like they gave Dick the combined salary of both. (This is a guess, as I do not know what Al's salary was). So I imagine some upper level salaries might get adjusted downwards.

I think the inability to leverage the technology they acquired will eventually bubble to the surface. The core of the team that put a lot of that technology together was kept intact, and is now putting their talents to use in the world of finance, but I doubt they would come back. I am not sure how many of the park level guys are still there that could reverse-engineer some of that technology, and put it to work.

The licensing will probably come up, and I think the choice of Peanuts over Sponge Bob will be questioned. I know the Nick licenses were expensive, but the younger generation doesn't know Snoopy. Why do kids prefer McDonalds happy meals over the others? Because McD always has the better tie-in.

Eventually, the level of inexperience with finance is also going to bubble up. The amusement industry is capital intensive, and has an odd cash flow situation. Paramount had the advantage that Uncle Sumner could loan them some bucks to cover the cash flow pinch. CF is going to have to get smarter about how to get their money to work for them, and I would bet Q ends up turning over that rock before very long.

What is the technology part that you mentioned? What did they acquire?

One of the big things was the Gate-central tech. They are only using a small part of what there is in the season pass system. Al Weber could sit in his office here an Charlotte, and tell when there was a surge of people going through the gate at PGA. Having it like that allowed at least two things, instant response (there's a load of people coming through the gate, lets get some more people working in the park) as well as finding trends to better plan.

There was also a downtime reporting system. The maintenance guys were logging the downtime into a database. This also allowed looking at trends. I could sit in my office in Charlotte, and look at the database of all 5 parks. I could pick out which rides were downtime monsters across the system (even if they weren't the worst in that park) and we could look at off-season improvements. The system was still in development, but it was making changes in how maintenance worked. Techs also had to put in what they did, so managers could watch for "reset and run", which leads to further downtime.

I think CF uses a spreadsheet.

I know they had other systems for the other departments, these are just systems I worked with.

I think the keys are going to be in figuring out how to maximize revenue. Sometimes that means cutting costs, but Cedar Fair runs lean enough...sometimes almost too lean...that there isn't a lot of cost cutting to be had. But there are opportunities to make investments and achieve demonstrable return on that investment. Cedar Fair has done a pretty good job of doing that with their attractions capital, but they need to do it in other areas. The ability to collect, manage, and implement strategic data is something that the entire amusement industry is well behind on, and Cedar Fair is behind even some of the parks it bought. The Paramount parks knew exactly how many customers were in the park at any given time and could probably tell you what percentage had paid what amount to be there. I'm guessing that at Cedar Point even knowing the exact number of people in the park is an educated guess at best. Being able to track customer habits is key to figuring out ways to maximize their spending in the park. The dynamic pricing on the upcharge attractions at Kings Island has been cited in one thread around here...how do you think they know *exactly* what to charge for their Skycoaster to get just the right number of riders? How about food, drink, souvenir, service, and accommodation pricing? Maximizing revenue isn't just about maximizing the sell price, it is about finding the right balance of price versus volume that will generate the maximum total revenue. Their job is to figure out how to get their money out of my pocket, and the only way to make that happen is to make me *want to* give it to them.

Cedar Fair, from a promotions perspective, is a terrible brand. But one of the great strengths of Cedar Fair is that many of their properties are themselves very strong brands. Kings Island, Cedar Point and Canada's Wonderland are the top three seasonal parks in North America. The corporate branding is really only an issue in overlapping markets, where running identical commercials (which, by the way, were shot at Knott's Berry Farm) for Kings Island and Cedar Point in the Columbus media market is (a) confusing, (b) silly, and (c) idiotic. Each park is its own entity and needs to be promoted as such. But there is nothing wrong with a little cross promotion. Instead of running the same spot for Cedar Point and Kings Island, why not run a different spot in Columbus that highlights both?

As for the product licensing...from what I have seen walking around Kings Island this season, I think Cedar Fair probably made the right decision with expanding the Peanuts instead of keeping Nickelodeon. In my opinion, the Nickelodeon brand would be better for pushing traffic to the parks, because, as noted, today's kids know the Nickelodeon characters better than they do the Peanuts. But Cedar Fair doesn't need to use the kiddielands as a way to pull people into the parks. People will come to the park anyway. Ultimately, it doesn't matter which cuddly character is featured in Kiddieland. What matters is that there *is* a cuddly character. I think this is one area where, probably as a result of their success with the Berenstain Bears (the what?!), I think Cedar Fair probably made the right decision, as surprising as that may be. The fact that the Peanuts license is somewhat exclusive to Cedar Fair, as opposed to Nickelodeon appearing in every shopping mall in America, probably doesn't hurt either.

--Dave Althoff, Jr.

I think that they're actually using this or at least the gate part of it. I don't know about the maintenance piece.

I also don't know if it's chain wide yet. I know that WoF and several other parks are on the system though and they have real time data for all of the parks.

One of the issues is knowing what to do with the data. And some of what P&C was referring to is an IT infrastructure that gave the park maintenance people communications and data tools that allowed them certain kinds of remote access to critical data. Some of those tools were discontinued when Cedar Fair took over in the name of cost cutting.

This is why "cost cutting" is a poor way to look at financial performance. The goal isn't really to cut costs, it is to maximize revenue. If spending a few extra dollars per month gets you improved reliability, and you can translate that into more customers served, or less maintenance overtime, or less crew overtime, you might find that the added cost has actually increased revenue by more than its cost. That's called a return on investment, and it is very important to Cedar Fair. But it requires looking beyond costs. Some of these infrastructure type things seem expensive until you realize how valuable they can be.

--Dave Althoff, Jr.

RideMan said:

Kings Island, Cedar Point and Canada's Wonderland are the top three seasonal parks in the country.

Exactly which country would that be? ;)

Oops. I gotta go fix that. stuff happens... There, I fixed it. I was originally thinking US, then I remembered that Wonderland (a) is a Cedar Fair park and (b) has recently surpassed both Kings Island and Cedar Point in attendance, so I had to go with North American parks.

Does this parser support strikeout text?

Sorry, Canada, eh?

--Dave Althoff, Jr.

RideMan said:
One of the issues is knowing what to do with the data. And some of what P&C was referring to is an IT infrastructure that gave the park maintenance people communications and data tools that allowed them certain kinds of remote access to critical data. Some of those tools were discontinued when Cedar Fair took over in the name of cost cutting.

Snip

--Dave Althoff, Jr.

Rideman is correct on the tool piece. Not only could I get the downtime for all 5 parks in my office, I could get it sitting on my deck, or on vacation. It was an app that ran on our Blackberry. So was the attendance piece. CF has the attitude that their people have to be at the park 18/7. Paramount used tools like the BB's to let their people have a life, but still respond to the needs of the park.

I had all of the ride programs and as many of the drawings as I could on my laptop. I was set up to help the techs troubleshoot rides anyplace I had a cell phone signal and a place to set my laptop.

Some other pieces - I had a Sharepoint database where we had all of the ride stats, and I was putting all of the Operators Manuals, Drawings and programs. So if something happened with one ride, we could compare the docs on the similar rides to see if it was a system wide issue.

CF couldn't even run sharepoint on their network.

I thought of another tool the IT guys had going. They had the cash registers (Pacer Cats) tied into the warehouse and the purchasing system. I didn't work with it on a daily basis, so I don't know how far they got with it, but I think you can see where this is going. It takes a certain amount of time to drive your gator around the park. If you know a stand is getting close to running out of burgers, you can send some up before that happens. The CF way, it's all manual. And if you can automagically track your inventory, then at the end of the night, the food order goes out automagically.

Dick and Jack thought that was all toys.

And that demonstrates just how out of-touch they are. Few things can save you money like a lean and effective supply chain. That's how Wal-Mart is able to keep everything cheap (along with China and bullying vendors into its pricing, of course :)). Less inventory and less waste saves a heap of cash.

Power & Control really spells it out nicely. He doesn't even remind you that a lot of the technology has been around for 10 years or more at Paramount, that is how far ahead of the curve they were when it boiled down to numbers and cents, literally. I can specifically recall the Resale Department being as technologically advanced as retailers like a Target or JCPenney. Is it any wonder that the majority of those who weren't shown the door when Cedar Fair took over eventually went running for the door?

I have had the priviledge of working for several of the big players in the industry: Funtime Inc., Paramount Parks, Six Flags and Cedar Fair. Each had their own unique successes as well as missed opportunities. I am not exactly sure what the words are I am looking for but....for the size of Cedar Fair versus the reality of how they manage and operate, it is like being in the dark ages. It is one reason why every time I see people I know who are full-timers I always give them a thanks and remind them how all of their hard work and effort (versus being able to just work "smart" if they were given the tools and culture to do so) does make a difference for us, the guests.