Cedar Fair to sell California's Great America for $70 million

Posted Monday, September 19, 2011 11:35 AM | Contributed by Jeff

[Ed. note: The following is an excerpt of a press release. -J]

Cedar Fair (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today announced that it has entered into a definitive agreement to sell its California's Great America amusement park, located in Santa Clara, California, to JMA Ventures, LLC ("JMA") for $70 million in cash. The Company, which purchased the park in 2006, expects to use the cash proceeds from this sale to reduce its senior secured debt.

"Our decision to divest of our California's Great America park was not an easy one," said Dick Kinzel, Cedar Fair's chief executive officer. "This is a quality park that has terrific employees and serves a strong market. That being said, as part of our regular comprehensive review of our portfolio of parks, we determined that divesting a smaller park like California's Great America at an attractive market value created a compelling business opportunity that we couldn't pass up. Among other things, it provides us the opportunity to immediately de-lever our balance sheet resulting in additional financial flexibility for growth and unitholder value creation in the future. California's Great America and its employees have always demonstrated tremendous capability in providing its customers with the highest level of family entertainment in the northern California region. I'm confident the park and its employees will continue to thrive under the ownership of JMA."

"As we look toward 2012, we are building significant momentum for Cedar Fair to deliver consistent and meaningful distributions to our unitholders," said Matt Ouimet, Cedar Fair's president. "At the same time, we remain committed to driving top-line growth through a combination of new rides and attractions, marketing initiatives and related strategic expansion around our entire portfolio of premier entertainment venues. The divestiture of California's Great America will provide us with additional financial flexibility earlier than anticipated to achieve these goals and maintain Cedar Fair's position as one of the most attractive growth and yield stories in the leisure and hospitality industry."

The transaction, which is subject to approval by the City of Santa Clara and customary closing conditions, is expected to close in the fourth quarter of 2011. Cash proceeds received at closing are expected to be applied to the Company's senior secured debt under the terms of the Company's credit agreement. A Form 8-K with the material terms of the definitive agreement will be filed with the Securities and Exchange Commission by the end of day Tuesday.

California's Great America is northern California's leading amusement park, with more than 50 rides and attractions. JMA Ventures, LLC is a California-based full service real estate investment firm, serving as managing partner of over $500 million in existing projects spanning hospitality, leisure, residential developments, retail, office and industrial/telecom.

Read the entire press release from Cedar Fair.

Monday, September 19, 2011 11:55 AM

Not at all surprised but I do want to know what they spend on lawyer fees over the past couple of years with regards to the 49ers parking issue. There was no local government support of Great America so Cedar Fair wasn't left with much of a choice other to sell and get out.

This news helped to deflect from the news that they are raising ticket and parking prices at Cedar Point with only a few weeks left in the season. Such a bush league move, as I told a friend, that they resort to every year.

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Monday, September 19, 2011 11:57 AM

This seemed to be inevitable. Though I didn't think it would be sold to another company who planned to run it. I thought they would figure something out with the city and/or the 49'ers. Then move/sell the rides and demo the rest..

I'm confident the park and its employees will continue to thrive under the ownership of JMA

We'll see. Will this company be any happier to run the park with the new stadium in their parking lot?

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Monday, September 19, 2011 11:59 AM

wahoo skipper said:
they are raising ticket and parking prices at Cedar Point with only a few weeks left in the season.

That's when the raising of their ticket prices has occured in recent years. They do it right around Halloweekends. Assuming there is decent weather, the park will be crowded despite the higher prices.

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Monday, September 19, 2011 12:14 PM

wahoo skipper said:
Such a bush league move, as I told a friend, that they resort to every year.

I bet you hate it when gas prices go up just in time for a holiday weekend!

If you have 50,000 people wanting to get into you park why wouldn't you raise the price?

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Monday, September 19, 2011 12:20 PM

Cedar Flags.............. 70mil probably won't pay the interest on the debt.

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Monday, September 19, 2011 12:26 PM

Shades said:
If you have 50,000 people wanting to get into you park why wouldn't you raise the price?

Plus, it allows you to either:

1. Say you didn't raise admission prices this year

or

2. Double up on the standard hike without being too noticable about it

Feels like a win/win.

Really though, what's the difference in the timing of the hike? It happens in September instead of May. Still an annual price hike either way.

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Monday, September 19, 2011 12:36 PM

They should absolutely be raising prices during Halloweekends. You get at least 50% more entertainment, so they should charge more. I mean, local haunted houses are charging $15-25 when the park has several haunts, plus the scare zones and everything that the park already offered. It's the right thing to do.

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Monday, September 19, 2011 1:15 PM

they are raising ticket and parking prices at Cedar Point with only a few weeks left in the season.

I don't see why it matters when an increase happens.

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Monday, September 19, 2011 1:57 PM

Ah, maybe I'm misinformed. If they don't raise it again before the '12 season then I guess I don't particularly have a problem with it.

But, when I was working there we would go into the season with new ticket prices (hike 1 from the previous year) and then raise them again toward the end of August (hike 2 from the previous year). And, I think you could argue that you were getting a lower value from the second hike because the staff dropped by 30% or more meaning longer lines, closed game and food outlets, no shows, etc. Which does raise a valid point that maybe their expenses go up as a result of the additional Halloweekends staff but they also went down...considerably...as the live entertainment contracts came to an end

If it is planned to happen anyway then why not, from the onset, advertise an admission price for the regular season and then a higher admission price for the Halloweekends?

And, for that matter, I can buy the argument of more entertainment during Halloweekends that justifies a higher gate price but the parking? No, I don't buy that.

I just prefer they are open and upfront with stuff. This kind of move just leaves a bad taste in my mouth.

Last edited by wahoo skipper, Monday, September 19, 2011 1:59 PM
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Monday, September 19, 2011 2:08 PM

Hence why we buy Platinum passes and it doesn't matter what they do with admission/parking prices because it doesn't affect us.

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Monday, September 19, 2011 3:05 PM

^ Second that.

We rolled up to the Parking gate Friday, looked at the pricing and said "look, parking went up to $12.00".

Then handed over our Platinum pass and never gave it a second thought.

Last edited by Bozman, Monday, September 19, 2011 3:05 PM
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Monday, September 19, 2011 3:18 PM

The San Jose Mercury News article is interesting. A couple of excerpts:

A San Francisco real estate firm and the owners of the 49ers are buying the Great America theme park for $70 million in a deal that will end the park's lawsuit against the city of Santa Clara. . .

The release said the "structure of the investment in Great America has not yet been decided, but it will be an entity affiliated with the 49ers and the York family." . . .

Santa Clara owns the Great America theme park property and leases it for $5 million a year to Cedar Fair, which bought the park in 2006 and has had a contentious relationship with the city over parking and other issues related to the future stadium. The council must approve the purchase, but no date has been set for an action. Matthews also hinted the city may consider increasing the rent. He vowed that he would not let the lease amount decrease in any way.

full article: http://www.mercurynews.com/breaking-news/ci_18928013

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Monday, September 19, 2011 3:24 PM

Wait wait wait. $70 million? Isn't that crazy low for an entire amusement park? It seems to me that when certain new roller coasters can cost a third of that, a park with 7 (admittedly dated) coasters, kids zones, retail/restaurants, and a decent flat ride collection should command a higher price tag.

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Monday, September 19, 2011 3:50 PM

Anyone have an update on how this affects the "Gay Slur" lawsuit? Assumed it stays with Cedar Fair - but i can't find anything in the tabloids about it.

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Monday, September 19, 2011 3:57 PM

I was thinking the same thing. IIRC, they bought the 5 Paramount Parks for (a crazy) 2 billion. Granted, CGA isn't worth $400 million. But $70 million does seem low. If in fact the city and 49ers are the ones behind the deal, maybe Cedar Fair will get the rides and maybe the park will go away.

Or maybe this valuation is just the result of a realestate market that is still down combined with the fact that Cedar Fair doesn't own the land. Plus, IIRC they had a long term lease on the land. Maybe they had to make concessions there to break the lease.

Last edited by Jason Hammond, Monday, September 19, 2011 4:03 PM
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Monday, September 19, 2011 4:53 PM

Jason, they bought Paramount for $1.2 Billion and were granted an extra $500 Million loan for improvements done on the said parks.

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Monday, September 19, 2011 4:55 PM

$70 million does sound low to me when I think Six Flags paid about a combined $300 million for Geauga Lake (about 1999) and Sea World (2001), then Cedar Fair paid $145 million for the Geauga Lake (2004).

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Monday, September 19, 2011 5:22 PM

Doesn't seem low to me.

CF does NOT own the land under CGA. Whoever owns the park starts off with $5m worth of rent payments to the city of Santa Clara.

As James Whitmore points out, CF paid $145m for Geauga Lake AND the former Sea World Park. And the land under both. The CGA sale includes 0% as much land that the GL sale did

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Monday, September 19, 2011 6:04 PM

Charles Nungester said:
Cedar Flags.............. 70mil probably won't pay the interest on the debt.

I'm so glad you're not in finance.

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