Cedar Fair attendance up 8% in 4Q, 3% for year

In one respect the economy will work in CF's favor: In July 08 gas was $4+ per gallon. In July 09 it could be less than 1/2 that.

This economic slowdown is definitely not from fear mongering, if anything, unrealistic optimism delayed the crisis (and made it much worse). Both households and our government have spent more than they've been making for a decade. Housing prices, which historically have always been about 3x income in any given area, skyrocketed way too far (for a number of reasons) and money was loaned out against them. Many banks didn't care because they planned on repackaging the loans and selling them to others (after their initial fees), even though many ended up back with the banks. (Housing prices are still too high by historic averages by the way).

That's more than the Marshall Plan, Vietnam War, Louisiana Purchase, S&L Crisis, Korean War, New Deal, Iraqi War (this one), and Apollo program combined! And that is adjusting for inflation!

Cedar Fair did benefit from people cutting back last year. Unfortunately, I think they're going to be hurt by people cutting back this year instead (if not this year certainly in 2010). Theme parks did survive the Great Depression though, and I hope to see Cedar Point (and most of the others) around after this crisis.

I don't know when it happened.

But somewhere along the way, something went terribly wrong.

See, the way a capitalist market is supposed to work is like this: Every product or service has some value to somebody. Every product or service has a cost associated with its production. If the value exceeds the cost, then you can generate a sale, where the price is based on the value of the product or service sold.

We can extend on that concept in order to finance companies. Companies provide goods or services, for which they receive payment, and that gives the company an intrinsic value, and people who have money are willing to invest that money in those companies based on the fact that the companies themselves have some intrinsic value which can be recovered through the investment in stock shares.

This is true for everything in the economy. Any good that can be bought or sold has some intrinsic value, and that intrinsic value is going to determine the selling price.

But somewhere along the way, something went horribly wrong. All across the economy, the intrinsic value of goods, services, and commodities was completely forgotten. For reasons that I can only begin to fathom...presumably because so many people in the modern economy are middle-men who don't produce *anything* but get fees for shuffling stuff around...all over the economy, participants grew increasingly insensitive to price. Price is always below value, so there is always some equity, so you can buy anything and sell it for more than you paid, right? If that becomes your attitude, then you don't care about price anymore. You only care about you margin on sales. If you are a middle man, you don't care about the price. You only care that you can sell for a few pennies more than it cost you to buy. Well, when that happens, you get a positive-feedback system that pushes prices up all through the system. And that positive feedback, because it is positive feedback, continues until the end consumer, the one person who actually cares about price, declares that the price is too high. The person who was ultimately going to pay for the whole system simply walks away from the deal.

When that happens, the whole idea of intrinsic value comes back with a vengeance, and middlemen who bought on the promise of a margin get stuck with a product they didn't really want, but that they can no longer sell at a profit. Instead, they start taking losses. It happened in high tech companies, it happened in real estate, it happened in crude oil, and it's happening right now in health care. I keep thinking it is going to happen in amusement park per-caps, but we don't seem to have reached the breaking point yet.

It's an oversimplification, I know. But that's basically what got us into this mess: simple ignorance of basic economic principles in the pursuit of short term gains.

--Dave Althoff, Jr.

I agree entirely again, Dave.

I think the loss of concept of value started disappearing as we shifted from a production based country to a service based one. We don't make things so much anymore, we do things.

That can't sustain itself forever. That's just people trading wealth, not creating wealth.

I'm sure I'm oversimplifying and have no business even speculating. Just one guy calling it as he sees it. :)

The cause for the transition to a service based economy isn't simply a choice though. It has been in part enabled by technology. We produce fewer physical goods but service what we do make. It's our inability to innovate and compete in the realm of physical goods that we're not doing well on.

Our inability to compete is largely on the cost of production. When some guy in India is willing to build that widget for $1/hour (or $0.25/hour), it's cheaper to get it from him, even if you have to pay to move the widget from India to the US.

The simple fact of the matter is that one can no longer expect to lead a "middle class life" doing something that requires modest skills but physical labor.

The places we can compete are areas where it takes a more developed skill set and technological base to enter the market. For example "specialty steel."

^But there are only two routes to this "more developed skill set and technological base" - either continuous enhancement and plowing profits into reinvesting in a brighter future, or by ignoring the pitfalls and wating for a disaster to start fresh (with severe consequences for all but the most well-off). Since C*Os are evaluated on quarterly net profits, employee development is almost always tabled in favor of inflated numbers NOW. So, here we are in the midst of a financial and economic debacle of our own making, rewarding those who have short-changed ALL our futures in the name of immediate gratification. The recipients of these billions of dollars of bailout funds? Not mom and dad, that's for sure - it's the same people who derailed our economy in the first place, through their greed and short-sightedness. (Yikes, I used the G-word, LOL)... ;)

It's not a company's job to train its workforce to advance up the skill ladder. The company, by its very nature, treats those with modest skills as replaceable cogs---because lots of people have those modest skills. Worse, training its employees just encourages most of the best ones to leave, because they can do better.

It's the employee's job to seek out such training---preferably, by building a foundation with a real education before becoming an employee.

A lot of folks in Michigan still think they can get a high school diploma, and maybe a few years of training in one of the trades after that, and get "a good job." A few do---if they can survive the years on the low-levels of the seniority ladder, getting almost no work, and putting in their time around the union hall. A cousin of mine's husband went this route as an electrician. Several years of on-again off-again work just about ruined their marriage before he could finally get enough to pay the bills.

And, before everyone blames the greedy companies, remember that we all do this, every day---we all try to get the most for the least, and in a very real way, we're the ones putting all this downward pressure on the manufacturing sector. That's how the market works.

In the words of Mr. Corleone: It's not personal. Strictly business.

Brian Noble said:
And, before everyone blames the greedy companies, remember that we all do this, every day---we all try to get the most for the least, and in a very real way, we're the ones putting all this downward pressure on the manufacturing sector. That's how the market works.

Just wanted to quote this in particular so that it gets read. It's something I've said in the past (concerning park pricing/policies) that people seem to lose sight of.

With that said, the entire post (and his preceding one) are prime examples of why Brian is one of the go-to guys on these forums when they veer slightly left-of-topic like this.

Mostly because he seems to take what's in my head and say it much better than I ever could. :)

What's weird about that all to me is that I'm "pining nostalgically for the good old days" - and I'm the liberal one! Nonetheless, I'm more of a realist than anything (or so I tell myself)...and denying what IS, is the biggest mistake of all. What I guess is different is that now every individual really needs to view themselves as their own corporation - to get the most from their "employer of the moment". Anyone that isn't switching jobs every 2-3 years...is getting taken. (I fit in that description).

Mostly because he seems to take what's in my head and say it much better than I ever could.

Yet, surprisingly, I'm a bleeding heart liberal, in 'gator's camp. ;)

So is it time to replace "It's a Small World" with "We are the World"? LOL, that Obama guy has been riding my coattails for far too long. :)

On Food - That "cut" at CP a few summers ago was hardly a cut of any meaningful percentage, and when CP pricing makes Disney in park pricing look quite valuable you know there is a problem.

As far as the step child business - from personal CP experiance Foods has always been treated as such, mainly in regards to investment and quality of training. Although with the Job market taking yet another dive perhaps CP can get a far better selection of applicants and not just resort to high school kids from Erie county. Judging how nasty the complaints have gotten this year, it does not take a rocket scientist to realize that soon its going to start doing permanent damage.