Ed Hart's development group wants more time to raise money for Kentucky Kingdom

Posted Thursday, April 25, 2013 9:16 AM | Contributed by VitaminsAndGravy

The group planning to reopen Kentucky Kingdom wants more time to raise the money to refurbish the amusement park and is expected to get a 60-day extension from the Kentucky State Fair Board when it meets Thursday morning.

Read more from The Courier-Journal.

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Thursday, April 25, 2013 9:07 PM

You know, I've been paying attention to this Kentucky Kingdom saga since it was closed. Which took away my perspective; how weird is it that a major theme park has been closed for, what, four or five years now? Moneymaking rides and attractions sitting, rotting, behind a barbed wire fence for this long? Is that not absurd? This is mismanagement, definitely, but how could mismanagement ever lead to what is essentially bankruptcy of a large theme park?

Considering how much food and parking is upcharged, how much tickets are probably upcharged (compared to the cost of park operations), this just seems ridiculous.

Last edited by bjames, Thursday, April 25, 2013 9:08 PM
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Thursday, April 25, 2013 9:12 PM

Especially considering how badly the place sucked the one time I was there.....

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Thursday, April 25, 2013 9:28 PM

To add to bjames comment, why would the fair board and SF want to close this park? If it just sits there, it doesn't make any money. It in fact loses money. They lost four or five years of revenue so far. I agree that it does sound ridiculous.

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Thursday, April 25, 2013 9:36 PM

Well, opening it costs even more money that they may or may not make back. It's not like opening the park means it will magically turn a profit.

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Thursday, April 25, 2013 9:43 PM

I know. Which leads me to ask, why would they have allowed the park to closed in the first place. They had to know that it was a huge mistake.

Can someone remind me about the problem that Six Flags and the Fair Board had with each other that caused the park to be closed? If I recall correctly, it had something to do with a parking dispute. I remember blaming the Fair Board for whatever happened. I think they told SF to pay more or leave and SF said, "FINE! WE WILL!" lol

I doubt that I will not be visiting KK when it opens unless they get some awesome rides. Never been there, and I only live about 2.5 hours away.

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Thursday, April 25, 2013 9:48 PM

Well hopefully, LostKause, Hart adds some cool rides (fairground rides are cheap), a lot of them, and definitely expands the waterpark. In fact, I would frankly be surprised if Kentucky Kingdom isn't turned completely into a water park with a ferris wheel in a few years....they basically got nothing left theme park-wise.

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Thursday, April 25, 2013 10:29 PM

Frankly I don't think that KK ever made any money, under either ownership, and I seriously doubt that it will in it's latest incarnation, if that ever comes about.

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Thursday, April 25, 2013 10:35 PM

Unfortunately, the most likely scenario in which KK could turn a future profit is as bjames' glorified waterpark.

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Thursday, April 25, 2013 10:58 PM

If they keep Thunder Run (well, re-build it basically) along with the waterpark.....I'll call it a win. Not unlike Waterville USA with Cannonball Run.

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Thursday, April 25, 2013 11:20 PM

So you guys don't understand that an operating park could be losing more money than a non-operating park?

Suddenly, the reaction to Geauga Lake makes a bit more sense.

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Thursday, April 25, 2013 11:56 PM

Gonch - are you're saying that leaving KK shuttered loses less money than trying to reopen anything, or that having it waterpark-only loses less money than having a waterpark with amusement rides? I'm not entirely sold that the park can be a money maker in any fashion at this point...but I'd love for Ed Hart to prove that it can.

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Friday, April 26, 2013 12:07 AM

Oh, I have no idea, Gator.

It was meant more as commentary on the earlier comments in the thread. Seemed weird that no one was getting the concept that Profits - Operating Costs = less than zero. Everyone seemed to wonder how a non-operating park was better than an operating one. Seems like common sense to me. It's called a failing business model.

I can see how a restructured park could be profitable or preferable. (the Geauga Lake reference)

I don't know enough about the situation to make a call. I went to SFKK once in 2006 and it mostly sucked.

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Friday, April 26, 2013 8:48 AM

It seems to me that for Six Flags, it was kind of a no brainer to just walk away. The story at the time was that they went to the Fair Board with a proposed amended lease. I can only speculate that this amended lease included lower payments to the Board and that the park was either not profitable as it was running or was in the way of their restructuring plans for some other reason.

The Board said no so Six Flags was able to just walk away. If I recall correctly, they paid an exit fee and ended up with a ride or two (that probably legally wouldn't have belonged to them if they hadn't pushed). So for Six Flags, a non operating park probably didn't hurt them at all. They had washed their hands of it.

The Fair Board are the ones probably paying the price of a non-operating park. They likely went from sitting back collecting lease payments and parking to being on the hook for property taxes and other expenses of vacant/rotting/abandoned property. From their perspective, there are a lot of things I don't understand either but again we don't have enough information to really say much at this point.

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Friday, April 26, 2013 4:33 PM

Which is what I was getting at. (Look here, Gonch.) The Fair Board was making money when SF leased it, and when SF's better deal was rejected, SF left and the Fair Board is left with paying taxes and upkeep yearly instead of a stream of income. I guess that really depends on how much SF had to pay to get out of the lease, but I doubt it was enough to cover upkeep loss of profits all these years. Thanks Uncle Coaster for giving the details.

Edit to add... It may have been better for the Fair Board to have accepted SF's offer years ago. They would have been bringing in less money, but it might have been a better deal for them than bringing in no money.

Last edited by LostKause, Friday, April 26, 2013 4:35 PM
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Sunday, April 28, 2013 4:10 PM

LostKause said:

why would the fair board and SF want to close this park? If it just sits there, it doesn't make any money. It in fact loses money. They lost four or five years of revenue so far. I agree that it does sound ridiculous.

let's try this first, Revenue (even four or five year's worth) is irrelevant if "costs > revenue" over the same period:

1) SF went bankrupt chain wide. It wasn't just SFKK. However, KK had now been part of two bankruptcies. The first, as a failed business model and poor design/implementation; the second as part of the SF House of Cards. The only one to make money on the park was Hart, salvaging the carcass of the first failure, and resuscitating it long enough for SF to need it. He probably made more off of it than he should because of SF's need to continually buy more parks to keep their "scheme" rolling. (see #3)

2) In order to exit BK one has to have a Plan and be able to finance said plan. (see below #5)

3) Six Flags built up boatload of debt, far more than anyone should have been allowed to, by continually buying smaller parks, and rolling them into the total mix. By constantly having a new baseline to compare "EBITDA" to (not the same as income), SF basically was able to perpetuate the growing house of cards until it imploded. All smoke and mirrors, that the Wall Street crowd was eager to 'overlook', until it crashed on the shore. Many Buzz'ers were able to see where it was headed, shocking that Wall Street couldn't (snark intended).

4) Many of the parks that SF bought weren't profitable either before or after SF Bought them. The promise of revenue generating, or cost cutting, synergies not equating to the additional capital invested, and then as things started to hit the fan, it accelerated as they raped customers with higher prices, reductions in service, operating capacity, etc.

5) To exit BK you have to have a plan of reorganization, (i.e. a Plan that shows that you can make money), one that satisfies creditors (not necessarily monetarily), and that has a chance of actually happening. You also have to have a Plan that a bank or someone will finance (you're broke remember), so the plan has to be somewhat feasible or nobody will loan you new money. You can't do that if you have a bunch of dog parks and/or are stuck in leases that are unfavorable or above current market rates.

6) Once you file bk, you have the option of "rejecting executory contracts", basically you can get out of contracts and leases (with issues to be ignored here). Basically any bad contract got jettisoned, and SFKK was probably number one with a bullet

6) The park sat empty the first year, as the SF bk dragged out. These things don't happen overnight, and SF had 120 days from the bk date to decide what to do with the Operating Lease (and potential litigation and exceptions can go on much longer than that). After that was the argument (i.e. proposed litigation) over who owned what rides (arcane legal arguments that had real impact on what would be left at the park) which would have immediately chilled any interest in someone coming in and running the park (even if all other issues had been resolved favorably).

7) the Fair board is not a theme park operator. They run a fair, where a significant part of the operations are leased out (midway, theatricals, etc). They had little to no ability to run a park. They also had the smarts (and I use that loosely when it comes to my native state's govt officials) to know that the park, as it was most recently operated, was not a money maker. Trying to propose using state funds to refurb/restart the park would have been a no-go.

8) In order to get the park back up and running, even shortly after the bk, there had to be discussions with operators, and there was still long standing litigation tied up in the BK courts (See #6)

9) The other elephant in the room is that prior to SF getting their hands on KK, Holiday world went from being the sleepy little park up the road, with a few kiddie rides and a waterpark, to become a significant force in the market. Essentially siphoning off the Indianapolis market, the Western Ky. Market, and as word spread, actually significantly impacting the Southern Ohio, Central Ky market. Ad that with the consistent growth/operations of Kings Island and you've got a tough call for someone to pony up money to start afresh at SFKK. Given that all the metrics in the regional park industry were crappy (Remember how close CF was to derailing?), there just wasn't a chance for anyone to come in.

10) Parks have no intrinsic value if they're not operating. You can't sell your hot dog stand or your souvenir shop, the only thing of real value is the land. In this case the majority of the land AND the parking lot, were owned by the fair board, and not the park, That prevented anyone else (even if their had been a player or access to capital) to come in. The longer a park sits, the less likely it ever opens again.

11) Flash Forward and examine the Koch family interest. I still maintain that it was a win-win for the Kochs to either get their claws into the carcass of KK, either figure out a way to operate it without cannibalizing HW (small local water park, with maybe a ferris wheel as someone up thread reminded us), or screw around with it long enough, before putting any real money into it, to further chill interest, and preclude another operator from jumping in. Remember, every year HW and KI get better, it makes new competition that much more expensive.

12) As the carcass rots, with some solutions to the BK litigation, the Koch's interest/lack thereof, gets us to the point where the infrastructure needs to be replaced, the costs are mounting to fix/repair, and the fact that the park is hobbled by a poor design, ride placement and boundary problems, and it just reinforces that there are few operators who could/would want to screw with it. Hart is realistically the only one, but who knows if his terms put undue risk on the State, and if so, it might be worth it just skip it. Remember, that if the State gives a favorable deal, incentives, etc (all reasonable in an attempt to resuscitate a tax stream, property, income and payroll) and then fails, the critics will start looking for scalps. Imagine all the talk about Solyndra, etc, now magnify the impact by making it local, ("who approved the investment in a twice bankrupt ride park") and that's how you end up where we are today.

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Sunday, April 28, 2013 5:07 PM

Thanks for the reply, CreditwhOre. That puts everything into perspective.

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Sunday, April 28, 2013 5:50 PM

Six Flags had recently filed for bankruptcy right around the time Kentucky Kingdom closed over the dispute with the board. It is safe to say that Six Flags probably was looking for ways to cut back on spending at the time. When approached by the board about higher lease prices, Six Flags clearly wasn't in a position to spend any more money. So they basically said screw it and left.

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Sunday, April 28, 2013 8:24 PM

The last few times I went to Kentucky Kingdom, I parked myself on Greezed Lightnin' - which was total heaven for me. Other than that, I agree with most on here: it sucked. But going in to basically have ERT on one of my favorite rides was worth stopping in (on the way to, and from, Holiday World).

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