Posted Friday, February 19, 2010 12:17 PM | Contributed by Jeff
Highly leveraged heading into the credit crisis, some of the biggest players are finding saviours in private equity investors.
Read more from The Globe and Mail.
This is a good snapshot of the industry as it stands today. Good read. Although I think the suggestion that the industry is "high risk" is complete nonsense. Few businesses get to operate at the margins that amusement parks typically do. You just have to not be stupid when you decide to grow (i.e., don't be Burke in the old Six Flags regime, or Dick in the stupid acquisition phase).
My only quibble is the statement that three of the four biggest players are likely to have different ownership by this summer. This presumes Apollo succeeds in its buyout of Cedar Fair, which ain't ever gonna happen.
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^^I tend to disagree *somewhat*, Jeff. Was thinking about this last night, and that the target attendance figure for so many seasonal parks is "hovering" between 3M and 4M for over a decade and closer to two...yet the population of the cities supporting these parks has increased drastically...
I am actually beginning to think that the "stagnant growth" of the industry is in some ways a decline on the horizon. I hope that's a pessimistic viewpoint that will be disproved....but I'm somewhat fearful there might be a basis for that belief. Someone talk me down off this ledge... ;)
I am not sure that there has been drastic population growth in the areas supporting at least the midwest parks. I saw a graphic a week or so ago which had the growth rates for Ohio, Michigan, Indiana, West Virginia, Kentucky and Illinois being pretty modest over the last 10 years or so. If I recall correctly, Kentucky and Illinois were slightly higher than the other states but not by much.
That Cedar Point can roughly maintain attendance despite being stuck between two awful economies and tanking population counts to me says that the stagnation in attendance has zero to do with whether or not there's any real risk involved. In Cedar Fair's case, it's not that they aren't profitable, it's that they voluntarily engaged in stupid risk.
I think the bottleneck to growth is park size, at least when it comes to the major days like summer Saturdays. No matter how large your population draw is, if you can only get a certain number of people on your rides a day (and through your midways and food services and parking lot), it really won't matter how big your pool is.
Yet another reason that I can't understand the uniform pricing across days of the week and parts of the season.
Hobbes: "What's the point of attaching a number to everything you do?"
Calvin: "If your numbers go up, it means you're having more fun."
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