Dick Kinzel retiring from Cedar Fair board

The guy had a great legacy until he tried to sell out to Apollo. Finally...

Seriously, he should have retired ten years ago when originally announced it. How much of the story of him being coaxed to stay on by the BOD is true, or was it his ego, who knows. The last decade of him being at the helm almost destroyed the company.

It's really unfortunate, because right up until they bought Geauga Lake, one could certainly say he had a good run. I remember when we interviewed him for the podcast on the Red Garter stage, where he got a standing ovation. Things went south really quickly in just a few years. Buying Geauga Lake was a really bad idea, and Paramount Parks was handled really poorly in a hundred different ways (starting with the price they paid). Then there was the whole attempt to sell to private equity, which turned out to be an enormous and unnecessary disaster.

Ouimet was hired in the middle of 2011. He took over as CEO for Kinzel at the beginning of 2012. Ceder Fair has had record revenues and earnings (EBITDA) for three consecutive years. And the expectations for 2013 is further growth. I don't see that as being consistent with "almost destroying the company."

From everything I saw/read about the Paramount acquisition, Cedar Fair was looking to get into regions of the country with population and economic growth. I don't know enough to say if they overpaid. But that typically isn't a problem (other than its better to pay less for anything) with a healthy acquiring company and healthy target. Unless you overpay by a lot. Based on the current performance of the parks and CF's debt level, I don't think you can say they overpaid by a lot. And if some of the former Paramount parks continue to be sources of strong growth going forward, its less likely they overpaid by a lot.

Without the financial crisis of 2008/09, Cedar Fair's debt likely never becomes a news item and the Apollo sale is never proposed. Easy to look back now at Apollo sale and say it was the wrong move. Much less clear at the time. Hindsight is 20/20.

From what I have seen, Kinzel may have stayed on too long. Not uncommon but still a mistake. And micromanaged which is rarely a good thing.

^"People have to eat": You have to remember that Kinzel brought down the quality of ancillary items (food, merchandise, etc.) that his final year the amount of money spent per guest went down, after years of attendance slowly dwindling. The company was on a major precipice when he was ousted and CF was dangerously close to following what happened to SF in the 90s.

He also let the Nick license die, rumor was the price was way too high, but you think the company would have at least tried to negotiate (it was clear from over a year out CF was simply going to let the deal expire.) Outside of Disney and Harry Potter those characters have to be the biggest potential money makers for any park.

He tried to sell off WOF, VF and CGA. Yes they were under preforming parks, but the way that they publicly announced this made them look extremely weak and really affected their stock price, this should have been done more privately.

There was also the Jack firing/retiring c#*$(@#f*(* that the company is still paying for which was really bad form. Part of me hopes his retirement is part of a secret deal that Jack insisted on being the payback for him not taking his job back.

Touchdown said:

The company was on a major precipice when he was ousted and CF was dangerously close to following what happened to SF in the 90s.

What years are you talking about here? CF had record revenues and earnings in 2010 (last year before Ouimet was hired), 2011 (last year Kinzel was CEO) and 2012. And they are expecting growth to continue in 2013.

Cedar Fair is a public company so they have disclosure obligations when it comes to plans to dispose of material assets. So I am not sure they really could have kept the plans to dispose of those parks.

I am not suggesting that Kinzel didn't make any mistakes. He did. I just don't agree with the extremely negative views I have seen of him over the years on this board.

GoBucks89 said:

Without the financial crisis of 2008/09, Cedar Fair's debt likely never becomes a news item and the Apollo sale is never proposed.

Absolutely

GoBucks89 said: Easy to look back now at Apollo sale and say it was the wrong move. Much less clear at the time.

Not True. Everybody said he was selling too cheaply--even at the time.

Gotta be honest--trying to sell the company too cheaply is a sin that overwhelms a lot of accomplishments. A LOT of accomplishments.

I was talking with someone this weekend about the talent bleed from PP. The first two years at those parks was a train wreck, and the people lost are long gone. Many of them are at Six Flags, Universal and Disney now. I honestly think some will come back eventually, but it was a huge HR crisis.

A lot of people will tell you a higher price was justified because of all the "efficiency" that they could gain. By efficiency, I mean cutting people and asking those left to work more. Look at the results, it never happened. PP ran pretty well and performed consistently. That's why it was an attractive buy. But no, Dick sent Jack park to park, having people clean out their desks and lockers. Guest service ultimately suffered.

Captain Hawkeye said:
Not True. Everybody said he was selling too cheaply--even at the time.

Gotta be honest--trying to sell the company too cheaply is a sin that overwhelms a lot of accomplishments. A LOT of accomplishments.

We talked about this at length here back at the time of the proposed Apollo deal. A lot of people were saying the price was too low but not everybody. And no one actually knew it was too low. If the board rejects the Apollo offer, the company is unable to refinance its debt (at a time when we didn't know what banks would exist tomorrow much less which ones would be lending money so it wasn't clear a refinance was possible much less likely) and was forced to seek bankruptcy protection (Six Flags was in bankruptcy itself at the time), the CF board is facing breach of fiduciary duty claims when unitholders find out the board rejected an offer to pay $11.50/unit.

The approach taken by CF's board was essentially the same approach taken by Six Flags management with respect to its plan of reorganization. Though at that point, equity of SF owners was already gone.

GoBucks89 said:

Captain Hawkeye said:
Not True. Everybody said he was selling too cheaply--even at the time.

Gotta be honest--trying to sell the company too cheaply is a sin that overwhelms a lot of accomplishments. A LOT of accomplishments.

Though at that point, equity of SF owners was already gone.

That is actually an extremely important difference. If stockholders' equity is gone, from their perspective--and the perspective of their representatives, the board--it is impossible to sell too cheaply since there simply isn't any equity to get $$$ for. The creditors may disagree, but that's a bankruptcy court's problem, not the board's.

Conversely, CF had shareholders' equity left to protect. And they had the better part of a year to refinance--or GET A BETTER OFFER, which, IIRC, Q was not slow in providing

Management in a bankruptcy case still has obligations to stakeholders (mostly creditors). They can't just attempt to do whatever and then leave it on the court to sort it all out. Management of SF supported a plan of reorganization which would have converted all of the senior debt to equity of the post-bankruptcy company and left junior debt and equity with nothing. At the time, management didn't believe it could find financing to refinance that senior debt. Junior creditors argued they could find financing so that the junior creditors would get the equity which is what happened. Management of SF supported a plan which ultimately was similar to the Apollo deal: it was later proved to have undervalued the company though at the time proposed, that undervaluation was not clear.

IIRC, CF shopped the Apollo offer after it was announced. No one came forward. Q Funding did not provide a better deal. What they did was buy units of CF and make statements that they thought the company was worth more. But they didn't know either. And the problem with the refinance was there was no certainty it would happen because of problems in the debt markets at the time. Again, if the refinance fails and CF files bankruptcy and equity gets nothing (or significantly less than $11.50/unit) and equityholders (including folks who supposedly "knew" the company was worth more at the time) sue the board for not presenting the offer.

I have no interest in rehashing all that again. You can have the last word on the Apollo deal. I wish Kinzel well in retirement.

Maybe I'm reading into it, but it's almost like you give him a pass as a victim of circumstance.

Maybe its just that after having advised clients on similar decisions for 20 years I have something of a different perspective.

Perhaps it would be different if you had the context of working with him.

With respect to some of his decisions, maybe. Might be different on some decisions if I had access to all the info that he had as well.