CGA news for next season

GooDFeLLoW:

If 2025 or 2026 was the end, you'd think they'd be trying to suck every last penny out of us that they can for the last few seasons haha and Winterfest seems like a huge moneymaker.

So my thought process was the same as yours, why not do it to make money if they already have all the stuff. But then I wondered if the park is planned to cease existing at the end of 2025 season and they are going to start clearing out. Not sure what the content of the lease is, do they need to remove everything from the land, all the buildings? The rides? What can be left behind, maybe they need a year plus to clear out to not pay penalties? If so maybe they don't have time to do Christmas at the park?

TheMillenniumRider:

So my thought process was the same as yours, why not do it to make money if they already have all the stuff.

Yeah the more I think about this, the more likely it makes 2025 to be the final final season. They have all the decor sitting there in storage, the staff already knows where everything goes, so setup should be a breeze and quite cheap for Winterfest and the other 2025 events. The fact the decor is moving out ASAP leads to a conclusion of starting to clear out the park for good, and letting other parks use the decor for their own events.

The terms of the lease agreement (in terms of demolishing, etc) isn't clear to anyone, because as of now the city has the land zoned as a theme park only. Prologis obviously wants data centers instead of a theme park, but at this moment the city hasn't approved anything other than a theme park. It will be a surprise to all what happens next.

Fun:

In general, I think one of the accounting strategies right now is to get as much depreciation on the books in 2024 & 2025 as possible so that things look better in 2026

Right idea, but it's not "depreciation". It would be "impairment", for things that haven't fully depreciated, but most of that stuff (Anaconda, etc) would have already been fully depreciated by now. Certainly for tax purposes, if not book.

So, company wide, you are correct that they are making announcements and plans, and booking those expenses or reserves for upcoming expenditures, in fiscal 2024 (sorry, unsure if fiscal calendar moved with merger). To your point, that's financial "pain" that gets expensed in the year it's identified, (even if not spent until 2025). Expect to see a huge such number in the YE financials, which may also represent removals in 2025 that haven't been "announced" yet (see rumor on KI's Bat, and other items). I expect the 2024 financials to be a mountain of merger/impairment/reorganization/refinancing/debt forgiveness as part of SFoG buyout, crap. The footnotes to the financials will be interesting reading.

GooDFeLLoW:

and Winterfest seems like a huge moneymaker

Is it though?

I guess it does or CF would have scaled it back (looks at World's of fun, and now CGA)

This year I hit 3 of the 5 CF Winterfest events (Usually hit two per year, but managed KD for the first time). I can't figure out how the parks make money on them. I am dying to know the split of Pass Vs. Gate admission, and actual out of pocket Meal purchase vs Dining Plan. Granted, I usually go early in the Winterfest season, and perhaps the mix is more heavily skewed to Park Nerds.

More than casual review of the Festhaus, Harmony Hall and Fireman's outlets certainly seem to skew heavily towards Dining Plan/Drink plan (80/20 - 70/30 every time I ask a worker). The finance weasel in me is dying to understand the actual economics.

TheMillenniumRider:

why not do it to make money if they already have all the stuff.

You realize that the expenses are more complex than that, right? The "stuff" doesn't just magically appear. Installation for holiday events takes months and is expensive. The energy costs for holiday events are high. You have to staff it. You risk losing money if the weather turns bad in areas prone to that. As others have indicated, it's much more complicated than the company being too stupid to not realize an opportunity to squeeze money out of people.

CreditWh0re:
More than casual review of the Festhaus, Harmony Hall and Fireman's outlets certainly seem to skew heavily towards Dining Plan/Drink plan (80/20 - 70/30 every time I ask a worker). The finance weasel in me is dying to understand the actual economics.

Perhaps these holiday events make money by driving increased season/dining pass sales. A Black Friday sale is more appealing if I can use the pass now rather than waiting until Spring. Dorney even has a promotion right now where if you buy a 2025 season pass, you get a free ticket to Great Adventure's 2024 Holiday in the Park.

CreditWh0re:

It would be "impairment", for things that haven't fully depreciated, but most of that stuff (Anaconda, etc) would have already been fully depreciated by now.

It seems illogical to me that an amusement park bean counter could could claim a coaster had fully depreciated if it was still operating. I'd be curious how they impair a ride like TT2, which is an "improved" (debatable) asset running on the bones of a 20 year old ride.

There are two sets of depreciation rules. One is generally accepted accounting principles (GAAP). Its what is used for financial statements. Other is tax. Typically, tax depreciation is more rapid than GAAP (provides incentives to invest in depreciable assets). Depreciation starts when an asset is put into service. But at that time, you do not know with certainty what the actual useful life of the asset will be. So you estimate it.

If a $20 million coaster is expected to be in service for 20 years, you will depreciate it (using straight line depreciation) $1 million per year. If after say 18 years you determine it will remain in service another 7 years, you typically do not change the amortization (net of depreciation, its on your books at $2 million at that point). So, in 2 years, it will be fully depreciated for GAAP purposes even though its still in service. It may have lasted 15 years at which point you would take an impairment charge of $5 million at the end of the 15th year (in addition to $1 million of depreciation for that last year).

Per a Cedar Fair 10-K:

Property and equipment are recorded at cost. Expenditures made to maintain such assets in their original operating condition are expensed as incurred, and improvements and upgrades are capitalized. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. The composite method is used for the group of assets acquired as a whole in 1983, as well as for the groups of like assets of each subsequent business acquisition. The unit method is used for all individual assets purchased.

In terms of TT2, expect TTD was fully depreciated. They would have capitalized the costs of converting to TT2 and depreciate those costs over the expected useful life of them.

They have rules they use for determining when they expense amounts spent on rides and when they capitalize (and depreciate) them. Typically, that determination is made based on whether the useful life of the expenditures is benefit more than one year. Trying to match revenues and expenses. Sometimes there are policies where certain expenditures may last more than a year are expensed as maintenance because its just easier to account for them that way.

bigboy:

You realize that the expenses are more complex than that, right?

Aye ya, of course I understand expenses are more complicated. You have to consider guest spend, cost per hour for rides and include your mechanical wear, your staffing, utilities, advertisement, etc, I can continue.

What does the data look like that I can’t see, what is my mix of pass vs tickets, what is my revenue for each, let’s draw up some nice charts in tableau and give a slide deck to the execs, whatever, I’ve lived that life plenty.

Here’s the data point I do have, the event started in 2016, I would like to assume for a moment the the boardroom bozos are smart enough to go, “duhhh green good red bad” when they looked at those charts and based on that kept the event going this long because the charts were green and not red.

If the event was that unprofitable then it probably would have been killed long ago. The area the park is in California has fairly solid weather year round, sure they might have a couple rainy days, but with averages of 2 inches in December it isn’t much rain to stress over.

They already bought the equipment, so the more times they use it the more return they can extract from that capex. Assuming they get return, but again, we are discussing a 9 year old event.

TL;DR- If the event was unprofitable it would have been killed long ago, I believe there is something else at play.

Millennium RIder: Dude, you're missing the biggest cost of these events, which is labor. Install/Takedown, hourly folks to staff rides, security, shops, entertainment etc. The actual decor is probably minimal compared to the labor.

Mr Six - If everyone is in there on Passes (because the Cheap Black Friday sale included current year Winterfest), then the cheap pass amount has to support Winterfest year 1, Full summer season/Haunt, AND next year's Winterfest.

Lord knows I hit it that way. Again, I must be missing something.

This is just my anecdotal evidence, but everyone I went with to Winterfest this year (different friends w/families a bunch of times) all did not have Season Passes and were just buying 1 day tickets. A lot of posts from friends I know who went also don't have season passes. A whole lot of people are buying single tickets to Winterfest this year for sure. Who knows how many, but a higher proportion than I expected for sure

Higher percentage of your season passholders who renew year over year, the less incentive there is for the "buy now and get remainder of this season and all of next season" offers. And the higher percentage of visitors who have season passes for everything (gate, food, drink, etc), the less incentive parks have to extend the season. But the parks have the data on season pass breakdowns on pass purchase rates, daily ticket buyers and spend amounts for each.

My guess is Winterfest/Holiday In The Park at the Six Flags parks draw almost exclusively from their primary market (typically 90 minute drive or less), increasing the proportion of season pass holders at the park.

Dollywood & SDC are destinations and draw from hours away.

I'm rooting for Kentucky Kingdom with their winter event, but I think they are going find out the hard way that they aren't going to get some of those secondary markets they need to make the event successful.

Hypothesis (totally untested of course): the pricing model for regular amusement parks does not work for winterfest type events.

There are many, many holiday themed events one can go to - zoos, botanical gardens, ice rinks, state parks, etc., all with holiday lights and hot chocolate and plushy toys wearing Santa hats for sale. Whereas, for most major metro areas, there's one summertime, ride-oriented amusement park, or maybe two.*

So with more competition, people will quickly sour on paying $30 for parking and $30 or more for admission for a slimmed down set of rides, some fancy lights, and $10 doughnuts.

It's not obvious that the marketing departments can easily make that switch in their pricing approach (they don't seem to have done so, except as last-minute discounts), and it's also not obvious that a different pricing model can cover the costs of opening a significant portion of a park, including roller coasters, etc.

If it were me, at Kings Island, for example, I'd open International Street, a few rides in the kids' area, the Festhaus and the merry go round, and maybe call it a day. And charge $10 to get in and free parking, and make as much money as I could on the hot chocolate.

But I am not in the business and don't have the data, obvs.

*in several markets, now owned by the same company

Hambone:

that was essentially the model for V1 of Winterfest. Carousel, Train, Smurf ride. and maybe one or more kiddie rides, were the only rides open. There were three show venues. Hell, the first four years they took the tubs off the spinning barrel ride and replaced it with decor/scenery and spun it on slow, rather than run the actual ride.

It’s only in this 2016(?)+ version that we now have a ton of flat rides, all of the kiddie rides, and three major roller coasters open; a parade, and most of the park accessible and decorated.

Again, as we have all said, they must either be making money, or losing an amount they deem worthwhile to continue the event. I hope they keep it going. It’s been a part of my family’s holiday season for years now. However, with the exception of Pass/Dining/Beverage plan, we rarely spend any money in the park. Not being a grinch, but I don’t need to decorate cookies and I don’t buy hot chocolate. (I did buy lots of mulled wine type beverages at Busch Williamsburg this year, but that’s a different story).

Fun:

I'm rooting for Kentucky Kingdom with their winter event, but I think they are going find out the hard way that they aren't going to get some of those secondary markets they need to make the event successful.

Genuine question - is Kentucky Kingdom even getting those markets in the heart of the summer season?

Fun:

My guess is Winterfest/Holiday In The Park at the Six Flags parks draw almost exclusively from their primary market (typically 90 minute drive or less), increasing the proportion of season pass holders at the park.

I'm rooting for Kentucky Kingdom with their winter event, but I think they are going find out the hard way that they aren't going to get some of those secondary markets they need to make the event successful.

Not a soul is traveling across the country for Elitch Gardens and if they can make it work for, four years now, I think KK can make it work if they turn out a good product.

The Denver metropolitan area is twice as populated as Louisville. But if they sell a bunch of passes, maybe it will work regardless.

In my casual browsing of social media this past weekend KD and KI seemed to get swamped with pass holders with dining plans due to the nice weather and people were losing their minds over the understaffing.

It really is a crap shoot. I’ve been to Winterfest when the temp was below 20 and the usual brisk wind in the parking lot was brutal. The park was about empty, and later in the week the dates were cancelled due to extreme cold.
It’s got to be a problem for management. They can’t exactly say “We’d love to hire you, but would you mind if we wait and call you when we get unexpectedly busy?”