SeaWorld Entertainment announces gains in revenue, income and per capita spending despite decrease in attendance compared to 2019

Posted Tuesday, November 9, 2021 1:12 PM | Contributed by Jeff

From the press release:

SeaWorld Entertainment, Inc. (NYSE: SEAS), a leading theme park and entertainment company, today reported its financial results for the third quarter and first nine months of fiscal year 2021.

Third Quarter 2021 Highlights

  • Attendance was 7.2 million guests, an increase of 5.7 million guests from the third quarter of 2020. Compared to the third quarter of 2019, attendance declined by 0.9 million guests or 11.0%.
  • Total revenue was $521.2 million, an increase of $415.1 million from the third quarter of 2020. Compared to the third quarter of 2019, total revenue increased by $47.5 million or 10.0%.
  • Net income was $102.1 million, the second highest third quarter net income for the Company, an increase of $181.3 million from the third quarter of 2020. Compared to the third quarter of 2019, net income increased by $4.1 million or 4.2%.
  • Adjusted EBITDA was a record $265.3 million an increase of $276.5 million from the third quarter of 2020. Compared to the third quarter of 2019, Adjusted EBITDA increased by $58.4 million or 28.2%.
  • Total revenue per capita increased 6.2% to $72.13 from the third quarter of 2020. Admission per capita increased 1.7% to $41.06 while in-park per capita spending increased 12.8% to $31.07 from the third quarter of 2020. Compared to the third quarter of 2019, total revenue per capita increased 23.7%, admission per capita increased 24.4%, and in-park per capita spending increased 22.8%.

First Nine Months 2021 Highlights

  • Attendance was 15.2 million guests, an increase of 11.1 million guests from the first nine months of 2020. Compared to the first nine months of 2019, attendance declined by 2.7 million guests or 14.9%.
  • Total revenue was $1,132.9 million, an increase of $855.2 million from the first nine months of 2020. Compared to the first nine months of 2019, total revenue increased by $32.7 million or 3.0%.
  • Net income was a record $185.0 million, an increase of $451.8 million from the first nine months of 2020. Compared to the first nine months of 2019, net income increased by $71.3 million or 62.7%.
  • Adjusted EBITDA was a record $509.3 million, an increase of $605.2 million from the first nine months of 2020. Compared to the first nine months of 2019, Adjusted EBITDA increased by $136.3 million or 36.5%.
  • Total revenue per capita increased 11.1% to $74.29 from the first nine months of 2020. Admission per capita increased 6.0% to $41.69 while in-park per capita spending increased 18.5% to $32.61 from the first nine months of 2020. Compared to the first nine months of 2019, total revenue per capita increased 21.0%, admission per capita increased 19.6%, and in-park per capita spending increased 23.0%.

Other Highlights

  • As of September 30, 2021, the Company's total available liquidity was $918.1 million, including $553.6 million of cash and cash equivalents on its balance sheet and $364.5 million available on its revolving credit facility.
  • Cash flow from operations was $168.4 million and $416.4 million for the three and nine months ended September 30, 2021, respectively. Free Cash Flow[2] was $139.7 million and $342.8 million for the three and nine months ended September 30, 2021, respectively.
  • On July 14, 2021, the Company completed a partial redemption of $50.0 million of its Second-Priority Senior Secured Notes due 2025. On August 25, 2021, the Company completed a refinancing of its debt by issuing $725.0 million aggregate principal amount of 5.250% senior notes due 2029 and $1.2 billion in term loans and, using the proceeds of these issuances, along with cash on its balance sheet, redeemed $450.0 million aggregate principal amount of its then outstanding 9.500% Second-Priority Senior Secured Notes due 2025 and the Company's then existing term loan facility. In connection with the refinancing, the Company also refinanced and increased its revolving credit facility to $385.0 million.
  • The Company's current deferred revenue balance as of September 30, 2021, was $173.4 million, an increase of approximately 51.4% when compared to September 30, 2019.
  • The Company repurchased approximately 1.53 million shares of common stock at a total cost of approximately $82.7 million during the third quarter of 2021.
  • In the third quarter of 2021, the Company helped rescue almost 400 animals bringing total rescues over its history to over 39,500.

"I am pleased to report another quarter of strong financial results while continuing to operate in a highly challenging and COVID-19 impacted environment," said Marc Swanson, Chief Executive Officer of SeaWorld Entertainment, Inc. "In the third quarter, we generated among our highest revenue and net income ever reported and another quarter of record Adjusted EBITDA. Our pricing and product strategies, along with the strong consumer demand environment, continued to drive higher realized pricing and strong guest spending in the quarter. Our third quarter financial performance would have been even better if not for limited international guest and group-related attendance, an unfavorable calendar shift and a record number of weather impacted days for our parks during the third quarter. Our record-breaking financial performance through the first nine months of the year is a testament to the resiliency of our business and the relentless efforts and dedication of our ambassadors. While we have made good progress, we continue to believe there are significant additional opportunities to improve our execution and continue to drive meaningful growth in both revenue and Adjusted EBITDA."

"During the quarter, we took advantage of our improved financial performance and favorable market conditions to refinance our debt which allowed us to reduce our overall debt, meaningfully reduce our go forward interest expense, push out maturities and increase our access to liquidity from revolving commitments. We also resumed our share repurchase activities and opportunistically repurchased 1.53 million shares during the quarter."

"Last week we concluded another successful Halloween season at our parks featuring our award-winning Halloween events, which contributed to meaningfully positive attendance and revenue growth in October compared to October 2019. Later this week we will begin our popular Christmas events at our SeaWorld, Busch Gardens and Sesame parks. Our Christmas events feature exciting entertainment, unique food and beverage offerings and seasonal merchandise for guests young, old and everyone in between. Looking ahead to 2022, we have announced what we believe is our most significant and exciting line-up of new rides, attractions, events and upgrades, including, something new and meaningful in every one of our parks. This includes the Ice Breaker rollercoaster at SeaWorld Orlando, the Iron Gwazi rollercoaster at Busch Gardens Tampa Bay, the Pantheon rollercoaster at Busch Gardens Williamsburg, the Emperor rollercoaster at SeaWorld San Diego, the Big Bird's Tour Bus ride at Sesame Place Philadelphia, the Tidal Surge screaming swing at SeaWorld San Antonio, the Reef Plunge waterslide at Aquatica Orlando, the Rapids Racer and Wahoo Remix waterslides at Adventure Island Tampa, the Aquazoid Amped waterslide at Water Country USA, and the Riptide Race waterslide at Aquatica Texas. In addition, we are particularly excited to open our newest park – Sesame Place San Diego in March 2022. We look forward to bringing the education, fun and enchantment of Sesame Street to our guests in Southern California," concluded Swanson.

The Company's third quarter 2021 financial results continued to be impacted by the COVID-19 pandemic. While all 12 parks were open and operating without COVID-19 related-capacity limitations in the third quarter (compared to 10 of its 12 parks open at the end of the third quarter of 2020, all operating with capacity limitations), international travel restrictions for guests outside of the United States and limited group-related attendance adversely affected attendance and revenue for the quarter.

Given the disruption the Company experienced last year when it temporarily closed all its parks on March 16, 2020, the Company has provided a comparison of its financial results for the three and nine months ended September 30, 2021 to the three and nine months ended September 30, 2019.

Third Quarter 2021 Results Versus Third Quarter 2019 Results

In the third quarter of 2021, the Company hosted approximately 7.2 million guests, generated total revenues of $521.2 million, net income of $102.1 million and Adjusted EBITDA of $265.3 million. Attendance declined 0.9 million guests when compared to the third quarter of 2019 primarily due to reduced international visitation and group-related attendance. Attendance was also impacted by an unfavorable calendar shift and weather during the quarter. The increase in total revenue of $47.5 million compared to the third quarter of 2019 was primarily a result of increases in admission per capita (defined as admissions revenue divided by total attendance) and in-park per capita spending (defined as food, merchandise and other revenue divided by total attendance) partially offset by the decline in attendance. Admission per capita increased primarily due to the realization of higher prices in the Company's admission products resulting from its strategic pricing efforts, along with the net impact of the admissions product mix when compared to the third quarter of 2019. In-park per capita spending improved primarily due to increased guest spending, an improved product mix, higher realized prices and fees, new or enhanced and expanded in-park offerings and a strong consumer demand environment during the quarter compared to 2019.

Net income and Adjusted EBITDA were positively impacted by an increase in total revenue and a decrease in selling, general and administrative expenses partially offset by an increase in operating expenses (including certain non-recurring operating expenses). The decrease in selling, general and administrative expenses primarily relate to a targeted reduction in marketing related costs and the impact of cost savings and efficiency initiatives partially offset by an increase in non-cash equity compensation. Operating expenses for the third quarter of 2021 includes approximately $9.2 million of nonrecurring contractual liabilities and legal costs resulting from the temporary COVID-19 park closures. Operating expenses also increased due to incremental operating days and events, an increase in non-cash equity compensation expense and the timing of certain maintenance projects, partially offset by a net reduction in labor-related costs and other operating costs primarily resulting from structural cost savings initiatives.

First Nine Months 2021 Results Versus First Nine Months 2019

In the first nine months of 2021, the Company hosted approximately 15.2 million guests and generated total revenues of $1,132.9 million, record net income of $185.0 million and record Adjusted EBITDA of $509.3 million. Attendance declined 2.7 million guests when compared to the first nine months of 2019 primarily due to COVID-19 related impacts including capacity limitations and/or modified/limited operations at the Company's parks for most of the first nine months of 2021. The increase in total revenue of $32.7 million compared to the first nine months of 2019 was primarily a result of increases in admission per capita and in-park per capita spending partially offset by the decline in attendance. Admission per capita increased primarily due to the realization of higher prices in the Company's admission products resulting from its strategic pricing efforts, along with the net impact of the admissions product mix when compared to the first nine months of 2019. In-park per capita spending improved primarily due to increased guest spending, an improved product mix, higher realized prices and fees, new, enhanced or expanded in-park offerings and a strong consumer demand environment when compared to the first nine months of 2019.

Net income and Adjusted EBITDA were positively impacted by an increase in total revenue along with a decrease in operating expenses and selling, general and administrative expenses. The decrease in operating expenses is primarily due to a net reduction in labor-related costs and other operating costs primarily resulting from structural cost savings initiatives and the impact of modified/limited operations due to COVID-19, partially offset by certain nonrecurring contractual liabilities and legal costs impacted by the temporary COVID-19 park closures, operating costs associated with incremental operating days and events added in 2021 and an increase in non-cash equity compensation expense. The decrease in selling, general and administrative expenses is primarily due to a targeted reduction in marketing related costs and the impact of cost savings and efficiency initiatives, partially offset by an increase in non-cash equity compensation expense.

Share Repurchases

During the third quarter of 2021, the Company repurchased approximately 1.53 million shares of common stock at a total cost of approximately $82.7 million. As of September 30, 2021, the Company had approximately $154.9 million available for future repurchases under a previously authorized repurchase program.

Other

On July 14, 2021, the Company completed a partial redemption of $50.0 million of its Second-Priority Senior Secured Notes due 2025. On August 25, 2021, the Company completed a refinancing of its debt by issuing $725.0 million aggregate principal amount of 5.250% senior notes due 2029 and $1.2 billion in term loans and, using the proceeds of these issuances, along with cash on its balance sheet, redeemed $450.0 million aggregate principal amount of its then outstanding 9.500% Second-Priority Senior Secured Notes due 2025 and the Company's then existing term loan facility. In connection with the refinancing, the Company also refinanced and increased its revolving credit facility to $385.0 million.

As of September 30, 2021, the Company's total liquidity including available capacity under the Company's revolving credit facility was $918.1 million.

The Company generated record cash flow from operations of $416.4 million in the nine months ended September 30, 2021 compared to $313.7 million in the same period of 2019, an increase of $102.8 million. The Company generated record Free Cash Flow of $342.8 million in the nine months ended September 30, 2021 compared to $160.8 million in the same period of 2019, an increase of $182.0 million.

As of September 30, 2021, the Company's current deferred revenue balance was $173.4 million, an increase of approximately 51.4% when compared to September 30, 2019.

Read the entire press release on PR Newswire.

Tuesday, November 16, 2021 12:36 PM

It will also be interesting to see if they can hold the per cap at this level. Or will people not renew it now that the initial excitement of the gold pass is over and they realize that while it seemed like a great deal they only made 1 or 2 visits.

Or maybe the price point is so low that they just renew it anyway.

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Tuesday, November 16, 2021 2:40 PM

GoBucks89 said:

... 10-Q.

Got it. And yes, that was the post I was looking for, but now I've read the numbers for myself. There is clearly something I'm not seeing, or maybe just that I'm not believing. Or 2021 is anomalous, not as much as 2020, but enough that it's hard to judge a trend from it.

Last edited by hambone, Tuesday, November 16, 2021 3:45 PM
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Tuesday, November 16, 2021 5:20 PM
Jeff's avatar

Brian Noble said:

It does seem odd that per-capita admission for 2021 is so much higher than 2019, despite the gold pass thing. I wonder if we are vastly over-estimating the median/average number of admissions for the CF gold pass cohort.

I think that's a very valid question, because it's also key to the concern that at least I'm expressing. It could be argued that if the cheap cohort balances the high, then are they leaving money on the table and/or creating a crowding situation that isn't good for anyone.

Again, this is the partial application of an online "freemium" model, and not very many businesses make that work, especially those with physical product and massive capital assets.

Any by the way, the increases over 2019 underpace inflation. That's not winning.


Jeff - Editor - CoasterBuzz.com - My Blog - Phrazy

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Tuesday, November 16, 2021 6:06 PM
Fun's avatar

Incorrect. Admission per cap was up 24% from 2019 to 2021, inflation 4.87%.

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Tuesday, November 16, 2021 7:31 PM

There is a golden nugget here:

Compared to the third quarter of 2019 [for SeaWorld], total revenue per capita increased 23.7%, admission per capita increased 24.4%, and in-park per capita spending increased 22.8%.

But this didn't keep up with inflation:

Compared to 2019 [for Cedar Fair], total revenue per capita increased 30.8%, admission per capital increased 20.1% and in-park per capita spending increased 27.8%.

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Tuesday, November 16, 2021 8:06 PM

They break down the revenue streams by quarter, but not the attendance, so I had to do a little arithmetic - for the first 9 months of the year:

2019
Admission Revenue $646MM
Admissions 22.9MM
Avg per cap $28.21

2021
Admission Revenue $481MM
Admissions 14.2MM
Avg per cap $33.87

So that is indeed a solid gain, but for the year the average admission price is well below what they are reporting for the quarter. I am speculating that the 3Q number is high because a lot of season pass revenue got pushed into the third quarter because people didn't use their passes earlier in the year, and/or bought their passes later in the year (Knott's visitors particularly).

I am still puzzled by the apparent contradiction of deeper discounting and a higher average gate. I am wondering what we will see in year-end numbers.

Last edited by hambone, Tuesday, November 16, 2021 8:09 PM
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Tuesday, November 16, 2021 8:25 PM

From their earnings release for third quarter 2021:

Attendance for the third quarter of 2021 totaled 10.8 million guests, or approximately 82% of third quarter 2019 levels, driven by general admission and season pass attendance, offset in part by an expected slower recovery in group sales attendance and capacity limitations at certain parks, including Canada’s Wonderland.

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Tuesday, November 16, 2021 8:38 PM
Jeff's avatar

Fun said:

Incorrect. Admission per cap was up 24% from 2019 to 2021, inflation 4.87%.

I wasn't talking about admission, I was talking about revenue. Talking about something different doesn't make me incorrect.

And while there are different ways to project the final inflation for 2021, it's gonna be over 5%. It was 1.4% in 2020.


Jeff - Editor - CoasterBuzz.com - My Blog - Phrazy

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Tuesday, November 16, 2021 10:09 PM

Net revenues at Cedar Fair for the third quarter of 2021 were up 5% compared to third quarter 2019. But at the same time, operating days in third quarter 2021 were 4.5% fewer than third quarter 2019. So they grew revenues even though days to generate revenues were down. With the same number of operating days, think net revenues would have increased by more than inflation?

hambone--This from CF earnings release may be an indication of revenue recognized from people who didn't use passes much:

For the five-week period ended Oct. 31, 2021, net revenues totaled approximately $219 million, an increase of $65 million, or 42%, from the comparable period in 2019.

Would expect CF would recognize any remaining deferred revenue for Cedar Point gold passes on October 31st for that year because those passes can no longer be used. That wouldn't apply to passes purchased in 2021 for 2022 season.

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Saturday, November 20, 2021 12:06 AM

hambone said:

Chicago07 said:

Admissions per cap is up double digits over 2019 at Cedar Fair.

I don't think we know that. Cedar Fair, if I understand their earnings announcement, reports the per cap gate + concessions, etc., as a single number. So the total may be up, because more people are buying soda pop and Fast Lane passes (which: is that properly admissions or not?) but the average admission price may be down.*

From earnings release:

Record in-park per capita spending of $64.26, representing a 29% increase over 2019 third quarter spending levels, with double-digit increases across all key revenue categories.... the key revenue categories would be admissions, F&B and merch/games.

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Saturday, November 20, 2021 12:18 AM

Jeff said:

Fun said:

Incorrect. Admission per cap was up 24% from 2019 to 2021, inflation 4.87%.

I wasn't talking about admission, I was talking about revenue. Talking about something different doesn't make me incorrect.

And while there are different ways to project the final inflation for 2021, it's gonna be over 5%. It was 1.4% in 2020.

You've been commenting specifically about your opinion that CF has been giving away the gate. And the post you were responding to was specifically talking about per cap.... there wasn't a single mention of revenue in the post you were responding to or your post.

CF drove admissions per cap up 24% (despite all the hand-wringing here about the season pass price at 1 park). CF drove overall revenue for Q3 up 5% - despite major capacity limitations at their #1 attended park and 2 days/week closed at multiple parks across the chain. And in October when they were running at full capacity, CF drove revenue up 42% (well above the inflation of 5%).

I am not sure Ouimet ever delivered a year of overall revenue increase in the double digits.

Lastly, I am a CPA - I have never, ever heard talking about inflation as it relates to revenue - it's almost like you are trying to negate revenue gains based on inflation. Obviously inflation affects industries and states/markets dramatically differently so unable to do. In any event, I've never heard a business leader talk about inflation in the context of revenue.

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Saturday, November 20, 2021 9:55 AM
Jeff's avatar

If inflation doesn't matter, would you be content to make the same salary the rest of your life? Do you think my HOA budget can be the same every year?


Jeff - Editor - CoasterBuzz.com - My Blog - Phrazy

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Sunday, November 21, 2021 11:50 AM

I never said inflation "doesn't matter" - I said in being a CPA and working with many, many business leaders - I've never heard them talk about inflation as it relates to YOY comparisons on revenue - particularly in an industry where pricing is generally set months, if not a year in advance, for most of their products/services.

But my point was most so your position on admissions per cap and Cedar Fair allegedly going down the SF route, for months. Yet, Cedar Fair delivered double digit increases in admissions per cap. You then change to say you're arguing about overall revenue (which the word "revenue" was never even mentioned in the post you were responding to or your response - it was all admissions per cap) - but even if talking about revenue, Cedar Fair delivered a 5% increase in revenue for Q3 compared to Q3 2019 even with significant capacity limitations at their most highly attended seasonal park (Canada), 5 day/week operation at several smaller parks (WOF, VF, MIAdv), limited hours at other properties and 1 of their resorts closed for renovation (Castaway Bay). Further, CF delivered a 42% increase in revenue for the month of October compared to October 2019.

I don't know how they do it either and I certainly didn't expect it. I do think we probably put way too much weight towards the season pass price of one park (which historically has had one of the smaller season pass bases of the chain) on overall company results. I don't think the daily admission (online discount) dropped below $45 all year at CP and Knott's was charging $89 for 7 hours of their Haunt on a Saturday night - passholders excluded. Sometimes it's OK to say hey, I got this one wrong, and tip of the cap.

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Sunday, November 21, 2021 12:03 PM

The only park we’ve been questioning their NEW pricing strategy is Cedar Point with the Gold Pass. The other parks have all kinda held the line on their gate. Unfortunately for everyone’s argument, you can’t extrapolate whether Cedar POINT is doing the right thing based on financials from all of Cedar FAIR.

Without a park-by-park breakdown and explanation of how they account for season passes in per-cap admission and all-season add-ons in in-park spending, it’s all assumptions and conjecture…


But then again, what do I know?

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Sunday, November 21, 2021 12:14 PM
Jeff's avatar

Where are you seeing average admission being broken out? Is it by park? To Shane's point, the scene at Cedar Point wasn't great this year.

My argument has always been about the mix, which has shifted to emphasize the in-park spending, which is a failed strategy in this industry. What does it tell you when a 29% increase in in-park spending results in only a 5% increase in revenue? It isn't sustainable. Not only that, but it isn't even necessary. I talked to an independent operator last week at IAAPA, and even with very soft group sales, they raised their gate and killed it in spending, especially with food.


Jeff - Editor - CoasterBuzz.com - My Blog - Phrazy

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Sunday, November 21, 2021 1:02 PM

The 29% increase from 3rd quarter 2019 to 2021 for in-park spend was on a per cap basis. In-park revenues themselves were up about 5%. Which makes sense given their revenues are about 85-90% derived from in-park spend. But comparing the 29% to 5% doesn't make any sense.

Cedar Fair breaks out admission revenue. You can find it in their SEC filings (10-Q for third quarter). Just search "admissions." Friom there you can calculate per cap admissions. Note that is chain wide; not broken out by park.

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Sunday, November 21, 2021 1:23 PM

Echo what GoBucks said above.

The first paragraph of the press release noted "Record in-park per capita spending of $64.26, representing a 29% increase over 2019 third quarter spending levels, with double-digit increases across all key revenue categories".... all "key revenue categories" for in-park per capita spend include admissions, F&B, merch & games.

What do you mean a "shift in mix" - Cedar Fair is literally raising all in-park revenue categories by double digits (admissions, F&B, merch & games, extra charge products, parking) - and out of park revenues by 9% (Q3 which is through 9/30). They also drove an overall revenue increase of 42% of October 2019 (which October 2019 was a record month in company history). As outstanding as Matt Ouimet was, and frankly a savior of the company, he never delivered results like that.

If there are any questions about Zimmerman and team, it should be around driving EBITDA, margins and controlling cost.... not the revenue, per-caps and attendance.

Last edited by Chicago07, Sunday, November 21, 2021 1:24 PM
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Sunday, November 21, 2021 1:57 PM
Fun's avatar

The complete decimation of group sales across all operators (Six, FUN, SEAS) is probably one of the bigger unsung drivers of increases per capita spending. It would seem that they are converting those single-day, discounted group tickets with a catered meal, into multi-day/season pass tickets with all day food & drink.

Think about all the school groups that typically pack the parks in the spring- those just did not exist in 2021. No doubt many of those kids still got tickets or season passes from mom & dad and still attended their local parks.

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Sunday, November 21, 2021 8:14 PM
Jeff's avatar

Does anyone look at the bottom line? Or even the EBITDA, which used to be to gold metric? They're both down.


Jeff - Editor - CoasterBuzz.com - My Blog - Phrazy

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Sunday, November 21, 2021 8:53 PM

Right. Like I’ve said a bunch of times, attendance does not equal profit.


But then again, what do I know?

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