Kinzel says he wants to get back to running parks, not worrying about finances

Who cares if it's what he likes doing? He's the CEO of a publicly traded company. It's his job to understand corporate finance.

I don't see anything in the article that says he doesn't understand corporate finance.

You mean except the part about they have to sell the company because they can't manage their finances?

RatherGoodBear, I haven't read it *all* but I did read through that timeline. Specifically, I was trying to get some handle on the rationale for taking the deal. The best rationale I can come up with is that it is in the short-term best interest of shareholders who want to just dump the stock and be done with it, take the money and run. It saves the company from having to deal directly with solving its debt issue; it can simply concentrate on being profitable and let the parent deal with managing the debt. Basically, if all you care about is quarterly returns, it's a fairly easy way out. But if you're more interested in the long-term prospects for the company, say two- or three years out, given the offering price and the historical performance of the partnership units, the deal doesn't look quite so good.

Jeff, is it really that they have to sell the company because they can't manage their finances? Apollo came calling because they thought they had an opportunity to buy. So far as Kinzel & Co are concerned, selling the company is one of many methods for managing finances. The reality is, from everything I have read, that Cedar Fair doesn't *have to* sell, but selling is the "easy way out".

--Dave Althoff, Jr.

They're presenting it as the only way out. That's what they've been saying.

Jeff said:
If this isn't the biggest example of how non-qualified he is, I don't know what is:

"I'm an operations person. I'm not really a finance person."

WTF? You're a CEO! If you can't do both, you don't belong in that job.

The more he talks to the press, the more pissed off people are going to be at him.

How very Biden of him...

That's not at all how they're presenting it in this article. Though admittedly, it's getting harder and harder to hear what they are saying over the noise of several threads on the topic.

Here, at least, Kinzel says it's "a way" out of the debt they took on with the Paramount acquisition and would give him the opportunity to get back to focusing on running the parks. It doesn't at all sound like a dire situation.

It sounds more like Apollo approached them out of the blue and they remained open to the possibilities. That's a far cry from seeking the only way out of a failing situation.

Again, no one has ever been able to demonstrate how the chain is failing. I'm guessing that's why so many have hung on to the units they have instead of selling long ago.

Because as GoBucks89 mentioned, you'd have to ask yourself, if anyone really thought the chain could only fail under the terrible leadership of Kinzel, why would anyone continue to hold stock in him and the company? He's shown no signs of leaving and even if he did, he's already established a legacy by positioning his son (someone said to be even worse than his dad) into leadership. It just doesn't add up.

Amnesiac said:
Wow. Just wow. Why in the world would he say that? He's giving all of his haters free ammunition.

I couldn't agree more.

""I'm an operations person. I'm not really a finance person.""

Now I can honestly say I really have seen a cold day in hell...

I would say he was an excellent finance person from what I have read, personal finance that is. That skill however does not provide beneficial to running a publicly traded company and the stock holders. He has shown his ignorance there time and time again...

It will be interesting to see how the vote goes. I wonder if he ever thought that there was a realistic chance that it would not go through or has a plan to try to stay if it does not. I wonder how much of running his mouth with stupid statements will kill his cause even more. If he were smart he would disappear for awhile prior to the vote.

Carrie M. said:
Again, no one has ever been able to demonstrate how the chain is failing. I'm guessing that's why so many have hung on to the units they have instead of selling long ago.

You keep saying that, and I don't understand why. If you over leverage the company and put it at great risk because you can't meet your debt obligation, that's a pretty serious failure. When it harms your stockholders, that's a double failure. That's the bigger picture, but there a hundred stories of poor decisions that might have at least compensated for the big failure if he had a clue.

Because there is no evidence of two very important factors: 1) The company cannot go on unless it is sold and 2) That anything other than the poor market has caused the financial risk you mention.

These claims of total financial failure weren't being made prior to this offer from Apollo. And if this offer was merely an unsolicited opportunity presented that management deemed worthy of consideration as an easy way out, then it doesn't mean the company is in dire straits.

If you or anyone else believes that the company has failed financially and the company must be sold as a result, how could you possibly vote no to this offer? Shouldn't you be trying to salvage whatever you can out of the sinking ship?

I think that 1) Kinzel would never give up the kind of control and discretion he has unless the situation was dire, nor would you cause investors to lose this way if you didn't think it was necessary, and 2) I think we've gone over why it wasn't just the poor market many, many times, starting with over-paying for PP, buying GL, etc.

The claims of financial failure weren't being made before because we didn't know. Actually, that's not entirely true, as GoBucks, Pete and others who actually read the reports felt that there was impending doom around loan covenants coming due. I suppose wanting to sell two parks was a pretty good indicator too. Plus the layoffs, extreme budget cuts, etc.

Your last question, yeah, voting no is not the rational thing to do. But again, there's a part of me and others who strongly believe that perhaps it wouldn't be a lost cause under different leadership.

I don't think Kinzel has given anything up as of yet. From what I could tell he is still expecting to run things should the acquisition go through. And yeah, I've heard all kinds of opinions about the decisions that have been made, but from what I've seen the numbers suggest the chain is doing well. If the market were better, I don't see any evidence that suggests things would not have been fine with some refinancing.

What makes you think there is any hope of different leadership in the future?

I totally disagree. He no longer will answer to a board that does whatever he says, he'll answer to the mothership, who will gladly fire him if he doesn't do what they ask.

When you say, "I don't see any evidence that suggests things would not have been fine with some refinancing," I don't follow how that's a satisfactory way to run the business, where the unitholders are losing big time. Sure, the company isn't going anywhere, and is in no danger of disappearing, but its owners most certainly are taking a bath. That sure sounds like failure to me.

It means I think things would have turned around for the unitholders in the long run. The same thing you are hoping will still happen after this sale is turned down. I mean isn't it fair to say you thought the same thing which is why you hung on to the units even though you've known for a long time you didn't agree with the decisions Kinzel makes?

I hung on to the units because time after time we kept hearing about Kinzel's alleged retirement. That and I'm an idiot for having that much in a specific company to begin with. My inability to manage my investments is not an indicator of the success or failure of Cedar Fair.

Fair enough. But neither are yours or anyone else's opinions. I just want to see something tangible that suggests that the parks are doing poorly. That's really the only point I have.

And I fail to see how the data given to you isn't tangible enough.

You know, it wouldn't surprise me at all if Walt Disney himself had said the same words about operations vs finances as Kinzel did. The problem is, though, that Walt had someone who would challenge him on a regular basis (Roy) and, by all accounts, Dick doesn't.

I agree with Jeff. Dick would not risk this sale to Apollo (even with assurances that his job was secure) if things were just dandy. For as much as we "know" about what is going on...does anyone have any idea what we "don't" know about circumstances?

I saw it coming during the Paramount buy. When you go back and look at the numbers they published, they were looking at getting an additional 10% profit out of Paramount to make it work. I traveled to all 5 parks (plus BonFante) at least once a year, and I never saw anything that showed another 10% was out there.

They saw all of the technology that Paramount had as waste, but it was the technology investment that made all of the season pass magic and other things work. Managers (as we discussed in another thread) could go home, but be in constant contact with the park. Paramount had made a large investment in technology over the 10 years or so leading up to the sale (under Al) and rather than reaping the benefits, CF stopped feeding the machine, and gave up the benefits. But it's not like that capital investment could be sold to get the money back. Most of it was pretty specifically developed for an amusement park.

Paramount also spent a lot of time on finance. They were constantly running reprojections, and budgets and marketing changed monthly, depending on performance. They Finance VPs had some pretty models that they used to look at where the performance was, where it needed to be, and what they needed to do to get there. Sometimes it was a wow card, and sometimes it was budget cuts, but it was constantly monitored. CF sets a budget at the start of the year, and runs it till the end.

I won't try to claim that Paramount management was perfect, but they weren't running the same formula they had run since 1972, and they were a little more far-sighted than the Dick and Jack show.

So without the savings that weren't really there, the numbers didn't work. I was amazed they were able to keep it going this long, which shows that they were smarter than I gave them credit for.