Continued: Cedar Fair announces Geauga Lake will be water park only

Monday, September 24, 2007 5:54 PM
This is a continuation of the comments on the news item.
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Monday, September 24, 2007 6:02 PM
Of course, the economy not being an issue, what is the possibility that CF won't sell the ride side land, but rather invest in an open air "lifestyle" type outdoor mall with a TGIF, Johnny Rockets, Starbucks, Panda Express, and all the other franchises they now hold. They could keep the entrance portico to Geauga Lake and nicely landscape it. Bring in some other retailers that they lease the space to, etc. A sort of Downtown Disney, or similar to what Knott's has with the California Marketplace. A restaurant over looking the water would be nice. Not sure if the economy in that area could sustain it, but I recall the houses near the park seemed pretty nice to me.
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Monday, September 24, 2007 6:15 PM
I don't think any of those are "owned" by the park. PLus I can't see much more retail being able to be sustained in that location. There is already 1,069,473 square feet of new retail across the street and directly next to Geauga Lake. None of that was there 5 years ago.

http://mcgillpropertygroup.com/ohio10.htm
*** Edited 9/24/2007 10:15:34 PM UTC by Jason Hammond***

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Monday, September 24, 2007 6:25 PM
I have a couple of interesting points about GL.

First of all, Kennywood Entertainment tried to buy the park years ago but was outbid by Premier Parks which later acquired Six Flags and took their name. Had KW acquired the park, I strongly doubt that they would have closed the park but would have kept it going as mid-sized traditional park similar to KW itself. Each park would be targeted to their local market but the parks would also cross promote each other to attract those looking for another nearby park to go to.

Someone also mentioned about GL becoming like HW with free drinks, etc. I said all along that the Lake Compounce approach might work well with this park. LC exists under the shadow of a megapark (SFNE) but has found its niche in its region.

Finally, I wonder, how much of GLs business will go to KW or WP as opposed to CP. KW has been advertising heavily in the Cleveland area and I expect WP to do the same next year with their new coaster.

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Monday, September 24, 2007 6:27 PM
In actuality the proximity of these shopping areas almost makes perfect sense for the current parking lot of Geauga Lake. Then still mix in a nice bit of upscale housing along the lake and I am pretty sure Cedar Fair will make a mint off the property along the lake alone.

I will miss Geauga Lake. I dont want to see it close but reality is that it probably was dying long before Cedar Fair got a hold of it.

I hope many if not all rides are saved. It will be sad to lose any of them but reality is what it is and that it might not be feasible to salvage them.

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Monday, September 24, 2007 6:42 PM
^^^ They are, at least at Knott's. CF pays the franchise fees and the locations are operated by the park.

All the CA Marketplace shops are currently owned and operated by CF, though in the past, it was a mixture of independent retailers who paid Knott's, and then, CF, rent.

The last, Bob's Men's Shop, closed to make way for TGIF, though there are still some independent venders inside the park who lease space.

That is interesting though to see that development. It was under construction the second time I was there, but as you say, not there at all during my first visit.

In fact, in my first visit I thought GL was out in the middle of nowhere, but it seemed much more suburban the second time.

However, I am referring to a more "lifestyle" oriented center...they are all the rage in Southern California. Outdoors, and entertainment based, they usually have arcades, movie theaters, ice cream parlors, etc. No large Big Box stores like Target or Kohls. Of course it assumes a high amount of disposable income in the area, since one would not be buying essentials like at a Target. *** Edited 9/24/2007 10:48:32 PM UTC by Jazma***

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Monday, September 24, 2007 7:03 PM

beast7369 said:
In actuality the proximity of these shopping areas almost makes perfect sense for the current parking lot of Geauga Lake. Then still mix in a nice bit of upscale housing along the lake and I am pretty sure Cedar Fair will make a mint off the property along the lake alone.

That is why I believe this has been the plan since CF took over the park. They had a fairly new water park already, keeping the crowd on one side of the park would have helped from having half of the park seem dead. So they built this new water park on the other side of the lake and gave up on the ride side. The ride side is the more valuable piece of property, it sits right on Rt.43, across from all the new development. I feel CF had very little intention on making this park work. I feel that the master plan was to build this sparkling new water park and if the ride side fails, then so be it! They can ship the rides to other properties and get a considerable price for the prime real estate in the booming neighborhood. Then they still have their sparkling water park, which will in turn fail also in a few more years.

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Monday, September 24, 2007 7:37 PM

But the problem is that you're taking it to a whole different place. You still haven't explained to me how a business owner should follow his emotions when making business decisions instead of following the plan that makes the most business sense.

I'm not talking about our side of the fence, I'm talking about theirs.

With that said I'll repost my original comment that got us here regarding business owners and emotional choices:

"Not only can it be ignored, it should be ignored. Letting emotions get it the way of business is a surefire way to fail."

You've still said nothing to the contrary.


Fair enough, I'll try to be clear (not always my strong suit :) )

To maximize $$$ CF needs to act in a way that maximizes cash flow from GL while minimizing negative emotional reaction from the public.

1) Cedar Fair could have given customers time to work through a "grieving" process with, say, a "farewell fling at GL" campaign in August. If Jeff is right and no one really cares than giving those few diehards an opportunity to work through it should have been enough.

2) Move some of the rides to the Sea World side and run a family oriented ride & slide park.

3) Move some of the water park to the ride side (with 4 coasters gone there should be extra room available :) ) and run a family oriented ride & slide park with expenses consumate with revenue from 700,000 guests.

side note: obviously the water park is not a huge draw. GL drew 700,000 the 1st year CF owned the park, about the same after Phase I of the water park opened, about the same after the (much reduced) Phase II opened.

There is an equation to make GL profitable as a ride & slide park at 700,000. If MiA can be profitable at 600,000, with the additions someone noted above, certainly GL, which saves some expenses by running some functions out of CP, can be reconfigured to do so as well. CF was simply not interested in doing so.

side note 2: Few stand alone waterparks make it. Munarriz doubts this one will. Yet CF has had good success with ride and slide parks. Dorney (which I admit I've never been to) has grown over the years, yet trip reports indicate that the water side is packed during the day and the ride side not so much. But the ride side is what draws the percaps.

Kinzel noted on the CoasterBuzz podcast that Dorney Park drove him crazy. But they stuck with the plan it and it is a huge success.

WoF (which I have been to) has, according to CF 350 acres vs GL's 670. Before the instalation of a $14m coaster they drew under 900,000 per year. Now I am NOT saying add a $14m coaster to GL. I am saying if GL can be cut to WoF size (350 acres) it should be able to be run, PROFITABLY, drawing 700,000-800,000 per year.

Since buying WoF in 95 CF added 4 coasters (Boomerang, Mamba, Patriot, Spinning Dragons) while removing one (Orient Express). Presumably it is profitable. CF should be able to run a park that draws 20% less profitably--after all, no one is saying add 4 coasters to GL.

As it is CF has invested $165m in GL. Even using generous accounting, the value of the rides CF is moving is a fraction of that. Moving those coasters does not remove their costs from CF's books--it merely relocates them.

Does anyne expect Steel Vennom to increase crowds at Dorney? Half Pipe coasters haven't been particularly big draws. Would KI's attendance been lower without X-flight? It sounds like it is lower despite X-flight. Are there enough people in MiA's market area to make Thunderhawk worth--in cold, strict, ROI business terms--$10m to CF? (Note: $10 mil at $30 a ticket and $40 percap means over 142,857 guests. Assuming you figure that over 10 years that's about 15,000 guests per year just to meet that figure, not counting operating, mantinence or relocation costs. If MiA's attendence rises 3% next year and they hold that for 10 years it doesn't come close to recouping costs. If MiA need a new attraction in 5 years, double those numbers.

From a business standpoint CF needs to recoup that $165m plus a profit. It is unlikely relocating those coasters will come remotely close to doing so at "bigger" parks. And no one--least of all Munarriz--believes Geauga Lake Water Park can do so either.

So you have a choice: use the patience you had at DP and rightsize GL and run it profitably like you have done MiA and WoF, or move the rides, put the numbers on currently profitable parks' books, and keep the water park open as long as you can--because if you close it all those D&A costs becomes current, not spread out over 20+ years. Closing GL does not reduce CF's fixed costs. That's why they are fixed costs.

So, are GL's variable costs over the $29 mil in revenue? Highly doubtful. Remember, WoF is profitable on $35m and, with 4 coaters less than 10 years old, some fixed costs of their own.

Financially, the only hope Kinzel had would be to do to GL what he did to WoF and MiA. He does not reduce fixed costs and he loses whatever excess over variable costs GL generated. Unless he gets a nice chunk of the GL crowd to spend enough $$$ at CP to match/exceed that excess, CF's numbers do not improve--in fact they could look worse.

Under those circumstances, pissing off the 700,000 visitors you need to draw to CP to make this work is not my idea of Plan A.

(Yes, I know. The plan could be to close GL at some point in time and take a huge one-time charge and get ALL those costs off the books at once. But that only affects bookeeping numbers, not cash flow.)

The $165m has already flowed out the only question is how much variable cost would GL need expend to get $29m per year in revenue? My bet: less than that $29m. Otherwise GL would have never opened this year. And WoF has less than $35 in fixed AND variable costs combined.

Could CF find a scenario that makes the numbers work? The more I break things down into detail the more I think so. But they are trying another plan *** Edited 9/24/2007 11:45:27 PM UTC by Captain Hawkeye***

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Monday, September 24, 2007 7:49 PM
^ Wow. Very impressive post.

Someone posted a while back the last per-park numbers they saw showed GL pulling in a profit. Does anyone have recent cold-hard numbers that show GL was operating at a loss?

Could it be that the land is just more valuable than the profit they're making at the park? Could someone have approached the park and offered them "X" amount of money for the land and they just took it?

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Monday, September 24, 2007 8:35 PM
Another comparison to MiA? Have you been to Muskegon? There's the beach, and there's the park. To say nothing of the fact that Cedar Fair didn't pay $145 million for the place, and they don't pay high taxes to two municipalities.

You can spin whatever numbers you want. If they were making money and not losing it, we wouldn't be having this discussion.

And enough already about "this was their plan all along." This is a public company. If it was their intention, they would've said so. Investors don't like liars, and they certainly don't like failure. This is one hell of a failure.

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Monday, September 24, 2007 9:16 PM
Captain Hawkeye said:

Does anyone expect Steel Venom to increase crowds at Dorney? Half Pipe coasters haven't been particularly big draws.

Just so we get the terminology right, it's an Impulse coaster, not a Half Pipe coaster which is another product in Intamin's line.

In my opinion, I think Voodoo will absolutely provide a spike in attendance (pun intentional). Hydra was fairly dull and also bumpy. The look on the GP's faces said it all in the brake-run—Ho-hum. It's been my least favorite traditional floorless (leaving Griffon out) coaster out of the four I've been on.

Impulses to me provoke a lot of fear. Standing right in front of a train that is flying back and forth at rapid speed is nerve-wracking for someone never exposed to one. It still scares me, and I've been on three. Looking at the support structure that looks impossible will also get people's attention from Rt. 222 and I-78.

Listen, last year we were at SFGAM and Vertical Velocity had a full queue both days we were there and that was built in 01'. People love these things.

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Monday, September 24, 2007 9:27 PM

Jazma said:Of course, the economy not being an issue, what is the possibility that CF won't sell the ride side land, but rather invest in an open air "lifestyle" type outdoor mall with a TGIF, Johnny Rockets, Starbucks, Panda Express, and all the other franchises they now hold. They could keep the entrance portico to Geauga Lake and nicely landscape it. Bring in some other retailers that they lease the space to, etc. A sort of Downtown Disney, or similar to what Knott's has with the California Marketplace. A restaurant over looking the water would be nice. Not sure if the economy in that area could sustain it, but I recall the houses near the park seemed pretty nice to me.

Holy! Someone has a IDEA that could actually work! More chance than CF ever gave it.

Chuck

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Monday, September 24, 2007 9:30 PM
There has been so much said about this move having to do with directing guests towards CP and the like, but I truly believe this has more to do with KI and the Paramount purchase than it does with CP. I think CF obviously believed that these two parks could coexist and actually compliment each other when they first purchased GL. They probably also thought at a minimum it removes Six Flags from the backyard of their flagship park.

However the Paramount purchase changed everything. I believe the day they decided to purchase the Paramount parks, GL's fate was set. They will try and keep the water park going for a couple of years, to try and recognize some ROI on the money they spent there. But in a couple of years they will talk about less then stellar attendance/performance there as well, and will close it also. Does anyone actually consider Cleveland as a viable market for a stand alone outdoor water park run by a major chain? *** Edited 9/25/2007 2:19:13 AM UTC by Lurker***

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Monday, September 24, 2007 9:32 PM
It will be interesting to see how much investment they make in Wildwater Kingdom in the next several years - if any.
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Monday, September 24, 2007 9:40 PM
Jeff said:


You can spin whatever numbers you want. If they were making money and not losing it, we wouldn't be having this discussion.

I don't think the discussion is whether or not they were making money, I think we can all agree they were losing badly. I think the discussion is more about how hard were they really trying to make money with this park. Especially since they purchased the Paramount parks.

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Monday, September 24, 2007 9:53 PM
In response to whoever it was that said I was ignoring Gonch's well-worded posts (sorry, I forget who it was)- Gonch and I disagree on a lot but I'm sure he'd agree that I'm pretty good when it comes to responding to him, just as he's good about responding to me. Not sure why I felt compelled to mention that... just did, I guess.

Getting back to the whole "emotion vs. business" thing, Captain Hawkeye touched upon the point I would have made. Many businesses make their money because of emotion. An amusement park isn't something people have to frequent- they do it because it's something they enjoy. Look at some other emotion-driven things:

Cars. Ford sells Mustangs because of emotion. If someone wants a car to get from Point A to Point B quickly and safely, they'll buy a bland sedan. A Mustang is the kind of car that gets the pulse racing. Someone buys a Mustang because they want a Mustang.

Movies. People see movies because they enjoy a certain type of movie or like a specific actor. No one has to see a movie. A movie ticket is an emotion-driven purchase.

Vacation homes. A second residence is completely superfluous because you can only be in one place at any given time. People buy vacation homes because they like a specific area, whether it be the beach, the mountains or something in between.

What I'm getting at in a long-winded roundabout way is that despite emotion and business making absolutely horrible partners, it is often very difficult to separate the two. It's easy to run a business and assume that emotion doesn't play a factor in any decisions being made but I doubt there are many industries where emotion doesn't figure into the equation at some point. It all goes back to what I said about a business like an amusement park becoming part of the community and therefore being a community asset. Maybe Cedar Fair would like to believe that they can pull the plug on Geauga Lake because it's technically their property and their property alone, but it's clearly not that simple.

I'm not sure if I'm buying all this about people outside this site not giving a crap. I'm hesitant to believe the opinions of three people on this site represent the opinions of all people in the greater Cleveland area... especially when I've already spoken with two business contacts of mine (one living in Canton and another in extreme western PA) and both mentioned to me they were not happy with the news. Neither one of these people are amusement park enthusiats in any way but it's obvious they aren't happy with this decision because they're Geauga Lake customers. If anything, I'm sure there are people that are unhappy and people that are indifferent- it's not one or the other.

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Monday, September 24, 2007 10:08 PM

Lurker said:
I don't think the discussion is whether or not they were making money, I think we can all agree they were losing badly.
Apparently we can't...

halltd said:
Someone posted a while back the last per-park numbers they saw showed GL pulling in a profit.


Captain Hawkeye said:
Moving those coasters does not remove their costs from CF's books--it merely relocates them.
Yeah, to profit centers that are contributing to the bottom line, the way any of them do when they get a new ride.
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Monday, September 24, 2007 10:12 PM
And without those coasters affecting Geauga Lake's bottom line, wouldn't that help the park look better when it comes to financial figures?

Fine... the park got rid of two coasters, and could have shed one or two more. Why didn't Cedar Fair give the park a chance to show what kind of figures it could produce under different circumstances? This decision was likely made earlier in the year, maybe long before any coasters were removed.

Again, this is about Cedar Fair not having done enough and not having given things enough time to show a turnaround.

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Monday, September 24, 2007 10:22 PM

Captain Hawkeye said:

WoF (which I have been to) has, according to CF 350 acres vs GL's 670. Before the instalation of a $14m coaster they drew under 900,000 per year. Now I am NOT saying add a $14m coaster to GL. I am saying if GL can be cut to WoF size (350 acres) it should be able to be run, PROFITABLY, drawing 700,000-800,000 per year.

Since buying WoF in 95 CF added 4 coasters (Boomerang, Mamba, Patriot, Spinning Dragons) while removing one (Orient Express). Presumably it is profitable. CF should be able to run a park that draws 20% less profitably--after all, no one is saying add 4 coasters to GL.


Just some corrections, WoF has drawn over 1 million a year from 1973 to around 2000 with the record in 1998.

They also removed another coaster - Zinger.


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Monday, September 24, 2007 10:30 PM

Rob Ascough said:


Again, this is about Cedar Fair not having done enough and not having given things enough time to show a turnaround.


Oh okay. So this is what it's really all about? Is it?

Then ask yourself: from a business perspective (well, if you had one in the first place, then you probably wouldn't have posted that) how that would work...

Here you have a venue you've been running for three to four years with attendance declining rapidly season after season to a point where it's less than 700,000 heads (2006 season) in ONE operating year. 700,000. That's 700,000 people visiting a 10-roller coaster park. How should Cedar Fair justify in keeping a place like that open?

Geauga Lake park spokesman Bryan Edwards was quoted in The Plain Dealer stating that X-Flight and Steel Venom TOGETHER gave 438,000 rides rides in 2006...and putting it into understandable numbers, he said that number was LESS THAN HALF the ridership of the least ridden adult coaster at Cedar Point that same season.

Three years running the place without even MAINTAINING attendance numbers is actually MORE time the company should have spent with the place anyway. How many more years should they have waited it out Rob? Huh? How much longer should they have spent losing money running that place? How many more times does Cedar Fair have to report on Geauga Lake's incredibly dismal performance to investors at each quarterly report before they pull in the towel?

You say they didn't even get a chance to turn it around or invest anything to keep attendance up. With 10-roller coasters and two of the most popular of which together had a extremely low ride count, you expect them to go drop millions more in capital at the park? What are you thinking?

You act like you keep changing your tune on the subject and why you're an advocate for saving Geauga Lake -- but it's the same old thing without thinking it through.

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Closed topic.

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