Cedar Fair to acquire Texas Schlitterbahn water parks

Posted Thursday, June 13, 2019 11:24 AM | Contributed by ShaneDenmark

From the press release:

Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and immersive entertainment, today announced that it has signed a definitive agreement to acquire two iconic water parks and one resort in Texas – Schlitterbahn Waterpark and Resort New Braunfels and Schlitterbahn Waterpark Galveston for a cash purchase price of $261 million, subject to certain working capital adjustments related to the timing of the closing. Additionally, Cedar Fair has the right to acquire a property located in Kansas City, Kansas, for a cash purchase price of $6 million.

“We are very excited about the opportunity to bring these two award-winning Texas water parks into the Cedar Fair family,” said Richard Zimmerman, Cedar Fair’s president and CEO. “These properties represent new markets for us with attractive demographics in the growing Central Texas region, and they align with our strategy to identify compelling opportunities to accelerate our growth and profitability. The investments we have made over the past five years to strengthen our back-of-house and customer-facing systems will support a smooth integration of these properties by ensuring a premium guest experience, strong team collaboration and superior execution.”

Zimmerman continued, “Schlitterbahn employees are known throughout the industry for their innovation and dedication to the quality of the guest experience. Because of their work, the water park located in New Braunfels has been recognized as the ‘Best Water Park in the World’ for 21 straight years, and Galveston has received recognition as the ‘Best Indoor Water Park in the World’ for a decade. We look forward to adding these parks to Cedar Fair’s industry-leading portfolio of regional entertainment resorts.”

In 2018, Cedar Fair entertained 25.9 million guests, reported $1.35 billion in annual net revenues and generated Adjusted EBITDA1 of $468 million (35% Adjusted EBITDA margin1). The two Texas water parks and the resort entertained 1.2 million guests in 2018 and generated annual revenues of approximately $68 million. Cedar Fair expects the two Texas locations to achieve an Adjusted EBITDA margin in line with Cedar Fair’s standalone results as management implements a number of growth and operational initiatives at the parks over the next two years, reflecting an accretive EBITDA multiple post synergies. Following this transaction, Cedar Fair’s portfolio will consist of 15 parks, resort accommodations totaling more than 2,000 rooms across six parks, more than 600 luxury RV sites across four parks, and two marinas.

In addition to the two Texas properties, Cedar Fair has the right to acquire a third site, located on approximately 40 acres in Kansas City, Kansas, which previously operated as a Schlitterbahn water park, for a cash purchase price of $6 million.

Read the entire press release from Cedar Fair.

Thursday, June 13, 2019 11:29 AM

Makes me wonder what, if anything, will change to their flagship park. New Braunfels' homegrown slides with precarious drops and usage of river water would seem to conflict with Cedar Fair's buttoned-up operations.

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Thursday, June 13, 2019 12:40 PM

I don't entirely understand the option part about the Kansas City park. For $6 million, I would think it would be worth that for the land alone.

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Thursday, June 13, 2019 1:05 PM

I'm pretty sure the home park got out of and sold off their slide manufacturing business awhile back.

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Thursday, June 13, 2019 2:06 PM

PhantomTails said:

Makes me wonder what, if anything, will change to their flagship park. New Braunfels' homegrown slides with precarious drops and usage of river water would seem to conflict with Cedar Fair's buttoned-up operations.

Cedar Point draws water from Lake Erie for Thunder Canyon so I dont know why using river water would be that much different.

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Thursday, June 13, 2019 5:01 PM

For one, swimming in water is a lot different than getting some splashed on you. Second, some of the slides actually dump people into the river which has wildlife (water moccasins anyone?) and whatever hazards decide to come through.

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Thursday, June 13, 2019 5:15 PM

The river isn't some wild and raging untamed and unkempt waterway. Thousands of people go through there a day on tubes. If it were full of hazards and dangerous wildlife, they wouldn't. It's probably as clean and safe as any waterpark lazy river. And my memory may totally fail me, but none of the slides dump into the river itself that I can recall. Some of the tube chute rivers interact with the river. I'll go out on a limb and guess that Cedar Fair knows what they're getting into and won't do too much to screw up something that's been humming along fine for decades.

Last edited by bigboy, Thursday, June 13, 2019 5:18 PM
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Thursday, June 13, 2019 6:05 PM

I'm surprised no one asked this yet... Will my Platinum Pass work at the Texas waterparks?

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Thursday, June 13, 2019 7:03 PM

bigboy said:

If it were full of hazards and dangerous wildlife, they wouldn't.

Well, if it was designed by the same guys who built the slide that killed that little boy in Kansas, I think a little skepticism is reasonable.

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Thursday, June 13, 2019 7:52 PM

I did a tube float on that river with a large wedding party. It’s definitely full of urine.

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Thursday, June 13, 2019 11:11 PM

Jeff said:

bigboy said:

If it were full of hazards and dangerous wildlife, they wouldn't.

Well, if it was designed by the same guys who built the slide that killed that little boy in Kansas, I think a little skepticism is reasonable.

Point taken, but the river and the activities on it aren't a part of the park.

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Thursday, June 13, 2019 11:36 PM

I adore Schlitterbahn and fulfilled a lifelong dream by visiting a couple years ago. It was one of the best days of my life.

By no means did I feel unsafe at the park, and I don't think that their activities pose any more risk than any other form of water recreation. However, the point I'm trying to make is that Cedar Fair is risk-averse which means that how the Schlitterbahn parks are constructed and operated seem to go against the Cedar Fair way.

People don't die in droves by swimming in natural water, but doing so creates a non-zero risk with things like bacteria and amoebas, snakes and other animals, and debris among other things. If you swim by yourself in a lake or stream you assume that risk, but because it's part of the attraction Cedar Fair is going to assume liability for anything that happens.

I think the best equivalent in the amusement industry to Schlitterbahn would be Knoebels. They made their own coaster over seven years, run ancient bumper cars that hit hard, and take seat belts off of coaster trains. As a result, my understanding is that they're self-insured. Is Knoebels an unsafe park? No, but at the same time I'd never expect Cedar Fair to keep operating that way in the hypothetical scenario that they buy the park.

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Friday, June 14, 2019 10:00 AM

I am more surprised because it had seemed Cedar Fair was getting out of the standalone waterpark business, and now they're jumping back in. They do get a foothold in a new market however.

The option on the KC site seems like it would eliminate the possibility that anyone (other than Cedar Fair) opens a waterpark there, at least for the length of the option. Who's going to invest in the property knowing that a competitor might immediately claim it? (And I wouldn't see Cedar Fair opening a waterpark there, unless they decide they need the real estate under Oceans of Fun to expand the amusement park, which seems unlikely.)

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Friday, June 14, 2019 11:27 AM

All unresearched speculation here: Maybe based on the recent tragedy of the KCK property it is truely no longer viable as a profitable waterpark attraction. Hence why Schlitterbahn never planned to open this year before the sale.

6 million might be a deal for land (maybe? I don't know the market) But that still puts Cedar Fair in the bad publicity of buying a property to redevelope. Not their business line and lessons learned from Northeast Ohio.

The option allows them to make a power play in the case an actual operational competitor comes around. But chances are its sits for a while to put some distance of time behind the stigma. Or another buyer with different use comes in and washes away any Ocean of Fun competition. Win-Win without spending a dime preemptively.

Last edited by Kstr 737, Friday, June 14, 2019 11:33 AM
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Friday, June 14, 2019 11:38 AM

All unresearched speculation here

I mean, isn't that what the internet is for? Throwing in my purely baseless speculation as well.

Could CF be angling for a land swap deal with Hunt?

Hunt owns the underground land rights under WoF/OoF for SubTropolis, along with the land bordering the park to the east. If Hunt was interested in development near the speedway and casino, CF picking up Schlitterbahn cheap might make acquiring the surface-level rights to that eastern parcel feasible for whatever the park might want to do down the road.

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Friday, June 14, 2019 8:43 PM

Kstr 737 said:

Not their business line and lessons learned from Northeast Ohio.

You have to remember that the ENTIRE upper management of the company is different now.

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Friday, June 14, 2019 10:26 PM

Yeah, and I would say the current management seems to and is hopefully more interested and apt to focus on operating successful parks, not efforts to swap real estate (Soak Cities, PGAm and SFWoA) like the previous admin did. Hence the only interest in KCK should be ulterior ultimatium (if that makes sense)

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Saturday, June 15, 2019 12:28 AM

How does this sound: Sports Force Park Kansas City?

I think it likely the waterpark is dead. Too much bad PR. But based on the fact we are seeing continued investment in Cedar Point's Sport's Force, it must be a fair money maker. Kansas City is far enough away it would not be cannibalizing business from Sandusky.

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