Cedar Fair takes hit through three quarters, will suspend distribution in 2010

Hopman said:
So Jeff, should we boycott all CF parks or just go to Kinzel's house and hold him hostage until he steps down?

For someone who posts as much as you do, you don't actually contribute very much.

I don't have a particular issue with the cap ex program. Dominion in particular is another success story waiting to happen, and I think the growth potential is enormous there, especially if they can lure people down from Baltimore. Smart cap ex is (generally) something they get right.

It's the adaptation to market conditions, or lack thereof, that annoys me.

PCWCoasterBoy said:
So what does $90m get you... two oversized coasters, a log flume, 3 new kids rides and a moved ancient-drop-tower. YIKES!

While KD's could be considered oversized, I think Carowinds got exactly what that park was lacking.

It also gets you new live entertainment, merchandise shops, restaurants, bathroom renovations, and infrastructure improvements all 18 parks in the company. While yes, most of that $90m is going to major attractions at a few parks, thats how much the CFEC is spending company wide on improvements. Starlight Experience is expanding to three new parks for 2010, and I know for a fact my home park (which shall remain nameless, but is a CF park) will be receiving upgrades and renovations...not to mention which parks are yet to be converted to the new ticketing system.

Sounds like Shapiro is looking more yummy then Kinzel in this day and age.

Jeff said:
The worst part of it is that, to add to the hassle of micromanagement, they previously told folks all over the company that they were going to cut back on things like sick time. For real?

The company I work for is up roughly $14 a share over the last 9 months, yet we were recently told the same thing. They also just seriously downgraded our health plan options. I think it's more a case of companies using the economic conditions to force concessions from employees than an actual indicator of the company's health, although I believe it's probably the latter in CF's case.

My company just announced as well that we were going to be cutting back on sick pay as well. I'm ok with it since I rarely ever use my sick pay, but I have some co-workers who were planning on using theirs for extended surgeries and such. All of my friends with CF have said that since the PPI purchase they have focused more on "quantity" over "quality". Sounds to me like if they can get it cheaper in bulk they really don't care how quality a product is. They are getting some of their sick pay back from what I've heard.

Cutting back on sick time is one of the stupidest, most short-sighted decisions a company can ever make. Nothing like forcing sick employees to come to work infecting the rest of the workforce to kill productivity...

You guys want to be that the bigwigs will be getting bonuses for "saving money?"

How long before all the drones get replaced with robots?

tigellinus said:

In addition,lower the food prices some and I'll stop leaving KI for Gold Star, orleaving CP or Dorney for McDonald's. It's a win-win!!

My family may be the worst platinum passholders in history. After purchasing our passes, and making 6 CP trips, 2 Dorney Trips and 1 WWK trip our grand total of extra expenses was $6.00. Two bags of cotton candy for my wife, not one single game, souvenir, meal, drink, t-shirt or anything. We justified the pass expense as a great entertainment value over the long haul of the summer. We could never justify the value of the in-park products, way overpriced for everything there. My wife, however, justified the cotton candy because, well, she wanted it! :)

Tom

Some interesting things I pulled out of the Conference Call.

First, it sounds like the attempted sale of ValleyFair and Worlds of Fun was strictly considered to try and save the Distribution. Now that the Distribution has been cut I think Kinzel was pretty clear that they will no longer market the sale of those parks and instead try to squeeze more from the sponge to bring up their profit levels.

Second, it sounds like the discounting and incentive packages were offered only after it was realized that there would be no takers on the two parks above. Here is where I have a problem with Kinzel and the leaders. The loss of Group Sales business had to be an apparent problem early in the game this year. To not react to that until late August was a mistake as far as I'm concerned. As Jeff has pointed out, the Florida parks have been discounting for the better part of the last year and have show some success in that regard.

The nearby markets of Detroit, Toledo and Cleveland (at the Point) reacted more favorably to the discounting than did markets outside 150 miles. That tells me that there is a definite value discussion going on in those families and if Cedar Point doesn't do something about admission and in park pricing next season they will be no better off this time next year.

They also mentioned the layoffs that were done, predominantly in the seasonal staff at the Paramount Parks. It will be interesting to see the results of "operating thinner" next year.

They are predicting paying down approximately $100 million on the debt next year. They still have a way to go on that. My guess is that we don't see the return of the Distribution for at least 3 years.

When is Kinzel retiring?

The Paramount Purchase is going to stick with this company for a while. I'll say it again. Dick was the right person at the right time for a lot of years...but I think the company has outgrown him.

wahoo skipper said:
When is Kinzel retiring?

I'll say it again. Dick was the right person at the right time for a lot of years...but I think the company has outgrown him.

Or has Dick's ego outgrown the company? Has anybody thought about that?

If there's one thing CF needs more that a new woodie, it's a new person at the helm. Who's up for a goold old-fashion lynching?

I didn't look closely at the third quarter results of Six Flags and Cedar Fair. And I understand that SF's attendance figures for the third quarter were pretty much flat. But did that translate to the bottom line for the quarter? Investors tend to care more about profits than attendance numbers. Lower attendance numbers with higher profits are preferred over higher attendancee numbers with lower profits. Don't know if there is enough information in the earnings releases of the companies to make that determination.

And with respect to CP, I have said before that I think a very big issue is the fact that the region from which they draw their core customers has very little population growth and with respect to recent down turns, that region has lagged behind the rest of the country in terms of recoveries.

Wahoo, Kinzel should be out after 2012. He extended his time six years from the Paramount Purchase in 2006.

I quite strongly agree that there needs to be change at the top, and more importantly it should be someone from outside the company. Investment in things that don't have a directly identifiable impact on customers' wallets has been lacking, and I don't think anyone at the corporate level coming up would change that.

Okay. Here's an idea: do a reality show ala the "Next Iron Chef."

The next CEO would have to pass 8 tests.

1. Customer service: Can you handle a screaming family and a pissed-off coaster junkie while controling the weather?

2. Food: Take park food and turn it into somerhing edible while being able to price it as a meal for less than $10

3. Adapablity: You come into do some work in the office in a suit and tie and find out that your garbage crew lead and half the crew is out sick. Are you willing to get your best Brooks Brother tie and Armani shoes dirty lumping trash?

4. Rides: You have three bids for a new ride. All three will break records. Here's the issue: Will you go with the one that's the cheapest, the one that's the smoothest, or the one that bigger than the rest and requires two other rides to be ripped out?

5. Marketing: You have $3 million to spend across 5 parks Do you use it on one Super Bowl ad that will reach millions in one shot .or spead it around a market parks locally?

6. History: a 30 question rapid fire test on coaster and ride history

7. Respect: One of your first year crew comes to you with an idea to serve the guests better. Do you bursh him off because he's "not important enough," or think about it and give his idea shot?

8. Management: You see a crew member stopping to help a lost child instead of being at his normal poast in games. nitpick him for not helping the child the correct way or do you praise him for going above and beyond?

Do you honestly think this is what he deals with on a daily basis?

So I take it Kinzel is planning to stay on until things turn around enough to reinstate his pension plan, better known as the quarterly distribution?

So here we have a perfect storm--

o US economy in general in the donniker
o Economy in the major markets for Cedar Point, Michigan's Adventure, Dorney Park, Kings Island, Carowinds, and Knott's not just in the donniker, but somewhat past the P-trap
o Weather in at least the CP/KI region has absolutely SUCKED this summer (Cold! Wet! Miserable!)

Okay, so there isn't much they can do to control the weather. But why have they done nothing about the things they can control? Why is it that thread after thread over on PointBuzz indicates that Cedar Point in particular, and Cedar Fair in general, have a huge problem providing *value* in just about every facet of their business except park admission? And the results seem to reflect that. Consider a couple of interesting cases...

Pat Koch at Holiday World was very candid this year in noting that their group sales business declined horribly this year, but that their walk-in business completely made up for it, and they set an attendance record. Put another way, their prior year group sales efforts paid off handsomely: people came to the park with their groups, and ultimately determined that the park was a good enough value to come back and pay the admission on their own. What Pat Koch failed to mention was that because their park, which has a relatively high ticket price...$42, which is about the same as Kings Island...is identified by their customers as a "good value".

But the value proposition is more than just the cost. Six Flags tried to compete strictly on cost and then make up the difference in volume, volume, volume a few years ago when they tried giving away the gate. They practically gave away admissions, and customers flocked to the parks...once. Then something went wrong, and in subsequent years the customers stayed away in droves, even with the low ticket prices. What went wrong? Were they put off by the $20 parking fee and the $4 soft drinks? Or was it just that the parks were so dirty, so ugly, so unpleasant and so poorly run that people didn't want to come back?

So Cedar Fair has been discounting the heck out of their already-aggressively-priced gate, and until about last season they've been mostly maintaining attendance. Then this year the bottom fell out. Why didn't people come back? Why is a clean, attractive (well, except for Great America), generally well-run park not a good value for the attendance dollar? Or maybe it is, but something else is chasing the customer away. They're pushing season passes and multi-day tickets, so why is occupancy down at Cedar Point (and presumably also at Knott's)? Is it because the hotels do not provide good value?

I keep coming back to this whole notion of "value" and the fact that it just isn't there in the Cedar Fair parks. But I need to be very clear on an important point. As I tried to point out with the two examples above, in spite of what advertisers like to say, for something to be a "good value" does not necessarily mean it is "inexpensive" and it CERTAINLY means it is not "cheap".

The problem with Cedar Point's hotels, for example, isn't necessarily that their rooms are $200/night. The problem is that their $200/night rooms are only worth about sixty bucks, and in an economy where all money has to be spent wisely, it seems unwise to drop $200 on a cheap hotel room.

Why are people staying away from Cedar Fair parks? Are people staying away from Cedar Fair parks, or are they simply only visiting once when they used to make multiple visits? Are they only making single day visits when they used to stay overnight at Cedar Point?

It's a tough business, and capital is part of the answer; I think Carowinds and Kings Dominon are going to see the kinds of success with the new coasters that King Island saw this season with Diamondback (I think Cedar Point's new flume will be successful as well, but I doubt that it will drive attendance). But they have to work on improving the value of the rest of their product. If you're going to charge me $7 for a hamburger, make it worth $7. Make me *want* to spend money in the park. Go look at what Disney does...why do people go to their parks, drop big money on admission, drop bigger money on hotel rooms, drop significant money on food and merchandise, and not feel ripped off?

--Dave Althoff, Jr.

RideMan said:
The problem with Cedar Point's hotels, for example, isn't necessarily that their rooms are $200/night. The problem is that their $200/night rooms are only worth about sixty bucks, and in an economy where all money has to be spent wisely, it seems unwise to drop $200 on a cheap hotel room.

This is a serious barrier for my wife and I living three hours away. We won't stay off the resort so we just don't go. We can get a room cheaper at Universal than we can at Cedar Point.

Food prices and quality are also completely out of control as everyone has said. Right down to where I just won't spend the money. I paid $1.50 for what was seriously the worst donut I have ever had a few weeks ago. It tasted like wonder bread.

So, Dave, I guess one big thing CP could do is blow up the Breakers and rebuild the whole thing from scrach. That the only way they can have a shot at adding value to their rooms.

I've stay at rooms a a Holiday In Express that were nicer than some of the rooms at CP.

What if CP goes the "Free Parking" route? Or if not that, reduce the parking rate to $1 or $2, but less than $5? You'd pay about that to park in some downtown areas.

Plus, CP's gotta do SOMETHING about the food.

Keep parking the same, reduce food prices drastically (not just say you did) and make it up in volume.

RideMan said:
o Weather in at least the CP/KI region has absolutely SUCKED this summer (Cold! Wet! Miserable!)

Really?? I can't remember a more perfect amusement parking summer in my 29 year existence! Even in July, the weather was pleasant and comfortable, not the usual 115% humidity crap we usually get in Ohio. It was nice being able to visit parks and spend a good portion of the day there without leaving exhausted and soaking in sweat. Was the weather that different in southern Ohio than up by the lake? (Not trying to sound sarcastic; I'm actually curious!)

I will grant though that HalloWeekends at CP suffered from some truly dreary and rainy Fridays and Saturdays in October.