SeaWorld Entertainment makes unsolicited $3.4 billion bid to buy Cedar Fair

Jeff said:

Again, it's an in-spite-of story, and not about his balls.

Ten years after he retired and we're talking about Dick's balls.

What has happened to Coasterbuzz?

Jeff said:

When you're still requiring your initials on room comps, and arbitrarily applying sales models to different markets and sizes, you're doing it wrong. I remember the higher per capita, lower attendance slide especially in the new parks, year after year. That wasn't sustainable. Again, it's an in-spite-of story, and not about his balls.

You can't have it both ways with Kinzel... saying the "only thing that saved Kinzel's ass was the rebound from the recession" ...... without acknowledging the recession in the first place which put CF in the financial position appx 2 years after the deal closed. There were a lot of mistakes made - starting with Kinzel postponing his retirement from 2007 to 2011 (but a very positive unintended consequence was that got the company Ouimet as his successor rather than Falfas) but the Paramount acquisition was absolutely the right thing for the company long-term and I am not sure everyone in Kinzel's position would have had the balls/courage to do it.

Also, I am confused on your philosophy on attendance vs per-caps. You rag on Zimmerman and team for doing it wrong focused on driving volume/attendance at the expense of per-caps (when actually in 2021 they were able to drive increases in attendance AND per-caps)..... but then you rag on Kinzel for a lower attendance/higher per cap model - and trying to force the pricing integrity, lower attendance higher per cap model onto the Paramount parks (and rightly so as that was a disaster for KI in particular in 2007).

Did Kinzel force pricing integrity? His model was to build a new roller coaster that would bring in people that gotta eat while they're there. Not exactly a visionary.

Kinzel believed that you could move the balance toward single-day tickets in urban markets where there were bus lines. He pushed up pass prices too far in those markets and it hurt attendance, and the per cap didn't make up for it. Kings Island was a disaster. He also wanted higher prices on group spends at Geauga Lake, which that market could not sustain (ironic because he thought GL was not as good as CP, but wanted to price it the same). So yes, these are opposite extremes, and there is a balance to be had between gate integrity and per capita spending integrity.

I never said the Paramount acquisition was the wrong thing, I said it was handled poorly.

Agreed was handled poorly. Textbook for what not to do in some cases especially as it relates to the talent drain of the Paramount people.

But to declare the economic rebound from the recession was the thing that saved CF/Kinzel's ass without acknowledging the economic recession caused CF to be in the position it was 2 years after the Paramount acquisition, is a disingenuous position.

I don't agree. Other entertainment businesses weathered the recession just fine. Heck, Universal doubled down and started investing in new attractions and came out swinging. By 2009, their Potter moves doubled attendance over those years.

True, but around 2009 Harry Potter was far and away the most massive IP at the time and would've drawn in guests even if the rest of Florida was in nuclear fallout.

So Harry Potter was the only thing in the world that could help an entertainment business mitigate the effects of the recession?

Obviously not. However, owning the Harry Potter IP is a massive relative advantage for driving business compared to having..... Peanuts.

Cedar Fair also more than doubled their size and took on significant debt 24 months before the largest and most dramatic economic recession since the Great Depression.

Did the economic rebound help save them financially? Yes. Were they in that position largely because of the economic recession? Yes. But again, to declare the economic rebound saved their ass - without recognizing the economic recession that got them into that financial position - is incomplete at best, disingenuous at worst.

Back to the topic at hand, investors throw cold water on this happening as $60/unit is WAY too low for CF and would need to be closer to $82-89/unit.

https://seekingalpha.com/news/3794900-cedar-fair-stock-gains-after-...as-too-low

If FUN were worth $82 a unit it would already be priced that way ;-)

This indicates deal is too favorable to SeaWorld at offered price. Indicates that $70-80/unit before the deal becomes less valuable.

https://www.cnbc.com/2022/02/02/seaworlds-bid-for-cedar-fair-makes-...-more.html

Rick thinks it's a good idea. If the analysts think the target price is much higher, they're probably not wrong. If CF follows through an restores its distribution, I would be even less inclined to want this deal, because you know SEAS isn't going to pay a dividend.

I don't think Rick's right. The deal would appear to me to do more for SEAS than FUN, but reasonable minds can differ about that. The real issue to my mind is that SEAS has about $500MM cash on the books, so to get to a $3.4B all-cash offer they're going to have to borrow $3 billion on top of the $2 billion debt they already have (and the debt they would be acquiring along with Cedar Point and Knotts). I personally would not want to buy those bonds. And I don't know what that would leave for building out hotels and sports parks.

I also tend to think there aren't huge synergies in the regional parks business. The savings from managing two websites instead of one can't significantly outweigh the integration costs; I wouldn't think the volume discounts the combined chain would get from SYSCO would be noticeable. And while being able to put additional pins in the map might be important for CEOs' egos, I don't think it's meaningful to customers.*

Maybe there's a benefit to combining year-round tourist destinations with seasonal local properties, in terms of smoothing recession impacts, etc., but again I would think that benefits SEAS more than FUN.

*Members of this website possibly excepted.

For a while, it made a difference in terms of which parks my pass would get me admission to, but even that benefit seems to have been removed from (some?) Six Flags passes. And I never spring for a CF Platinum because the odds that I'll make use of that benefit in any given year is about 10%.

Wonder what percentage of people who walk through the gate of any CF park know (1) that CF owns other parks and (2) what those parks are. SeaWorld has multiple parks with common names so I would expect more people understand that.

I'm surprised by the number of people here in Central Florida that don't know SeaWorld and Busch Gardens are the same company.

I'm surprised how many people think Universal Orlando is Disney.

I’m just surprised.