Posted Tuesday, August 18, 2015 9:43 AM | Contributed by Jeff
SeaWorld Entertainment Inc. said it appointed two theme park industry veterans to leadership roles, in the latest management shifts at the amusement park operator. The company's board appointed Peter J. Crage as the theme-park operator's chief financial officer starting next month. Anthony Esparza also was selected as SeaWorld's chief creative officer. Crage most recently was chief financial officer at Extended Stay America Inc. His previous experience includes serving as finance chief at amusement-park operator Cedar Fair LP. Esparza most recently served as a senior vice president for guest experiences, design and development at family-owned theme park and entertainment company Herschend Enterprises.
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What role do CFO's have in an operational capacity? I ask because it's the one C-suite position that I never quite grasp to be more than "chief accountant." Crage served under Kinzel at Cedar Fair, right? During the time when some of the most questionable financial decisions were made? Does a CFO act as an adviser or can they say, "No, you can't do this, it's high risk."
Depends on the company. But a truly functioning CFO is more than just a chief accountant. Controller or treasurer would be more of that. CFO can be overruled just like a COO can be, each by the CEO.
Different companies give different responsibilities and titles to various positions. Not sure how Sea World views a CFO.Last edited by GoBucks89, Tuesday, August 18, 2015 1:08 PM
This is the guy that set up the deal that nearly sold CF to Apollo for virtually nothing, right?
Nothing to see here. Move along.
He ran Lehman Brothers sub prime mortgage business?
Details of Mr. Cage responsibilities at Cedar Fair, L.P., from SeaWorld Entertainment's release on PRNewswire.com:
"Crage, 53, most recently served as Chief Financial Officer of Extended Stay America, Inc. and ESH Hospitality, Inc. from , he served as Cedar Fair L.P.'s Corporate Vice President and Chief Financial Officer. Prior to that, he served as Treasurer for Cedar Fair L.P."
Yeah, that's in the article. We all knew where he came from, which is why perhaps I'm underhandedly questioning the appointment (and Rick is a lot less subtle).
Without the financial markets crisis (brought on in large part by the collapse of Lehman Brothers), Cedar Fair refinances its debt and the Apollo sale never goes to unit holders for a vote. Though that's a horse whipped well past death.
I think we can all largely agree on that, but overpaying for Paramount Parks and fumbling with Geauga Lake didn't win any fans in terms of risk exposure.
What I'd like to know though, did Crage give Kinzel bad advice or did Kinzel proceed with bad deals over the objection of Crage? Did Crage leave CF because Kinzel's leadership made it difficult for him to be effective at his job and he bailed on a sinking ship under Capt. Kinzel? The entire Jack Falfas debacle makes me think Crage was probably competent, but like Falfas, was a victim of Kinzel's management.
I'd rather be in my boat with a drink on the rocks, than in the drink with a boat on the rocks.
I never understood the Geauga Lake deal. Would be interesting to see what info they had and what they were thinking at the time. But on its face it looks to be a bad deal.
On what basis do you think they overpaid for the Paramount Parks?Last edited by GoBucks89, Wednesday, August 19, 2015 4:20 PM
Mostly analyst commentary at the time. Obviously it's hard or impossible to know as a part of CBS what it was really worth.
Crage left Cedar Fair about 3 days before Ouimet's hiring was announced. I think he was probably in the running for the CEO spot since Falfas left, and once he didn't get that, found greener pastures elsewhere.
Acquiring the Paramount Parks was a strategic necessity for CF to diversify their portfolio. So while they probably did overpay, I think they needed to to win the bid. If you look at CF's distribution of revenue and EBITDA now, Cedar Point's contribution is still about 25%; just imagine what that was prior to the acquisition.
Questioning the hiring of any executive just because they worked for Kinzel doesn't make a ton of sense. Look at the Cedar Fair of today. While Ouimet has brought in some new people, a lot (most) of the current executives were there under Kinzel, including Cedar Fair's current CFO. I think the best thing Ouimet did was recognize there was a lot of talent currently at CF when he arrived and simply empowered them to make decisions, changes etc.Last edited by Chicago07, Wednesday, August 19, 2015 4:29 PM
Which is exactly why I'm immediately skeptical of anyone who didn't make that cut.
You aren't skeptical because Crage "didn't make the cut" under Ouimet, since he left CF before Ouimet's hiring was even announced. You're skeptical because he worked for Kinzel.... as did about 90% of Cedar Fair's current executives.
I'm saying that isn't fair as there was obviously a lot of talent at CF that wasn't empowered under the Kinzel era. If the talent wasn't there, Ouimet wouldn't have kept the vast majority of Kinzel's executives.
I don't know Crage at all, but I wouldn't write him off b/c he worked for Kinzel. In different interviews I've listened to and articles I've read, it sounds like Manby and Ouimet have a friendly relationship. I'm guessing Manby would do some background on him before he pulled the lever on a big hire like this.Last edited by Chicago07, Wednesday, August 19, 2015 8:21 PM
Its not clear to me that they overpaid for Paramount. As noted, valuations of non regularly traded market are more art than science. Especially if you look at the long term. Cedar Fair was a strategic rather than a financial buyer and the former often pay what appear to be premiums.
That being said the sale process was competitive with multiple bidders. Prices will tend to be higher in those situations so the risk of overpaying is there. Acquisition was also when the economy was strong and the great recession was a couple of years later. Had the sale occurred during the great recession, the price would have been less. Though had Cedar Fair not purchased when it did, the parks likely are not available for purchase at all during the great recession.
Didn't Ouimet say that he doesn't think any more regional parks will be built in the US? If so, unless you can grow your existing parks (pre-Paramount parks were largely in areas with low/no population growth making it tougher to grow them) you must buy other existing parks. What other parks would Cedar Fair have purchased?
I viewed the Paramount acquisition as a way to extend the footprint of Cedar Fair. Became a national company with parks in markets with more population growth. With that in mind, I think they were willing to pay a premium if necessary. So either they didn't overpay or they did so knowingly on a strategic basis.
According to the presentation that CF made to lenders in connection with the Paramount acquisition, Cedar Point represented 37% of pre-acquisition revenues (KBF was 32.8%). Had the parks been combined in 2005, Cedar Point would have represented 21.7% of total revenues (KBF 19.3%). That presentation shows that Cedar Fair viewed the Paramount acquisition as a strategic acquisition rather than a financial one.
Did Crage leave CF when he learned that Ouimet was being hired? If so, he may have left because Ouimet's hiring meant Crage wouldn't become CF CEO. May not have been a matter of making the cut. Ouimet may have kept him had he stayed. I don't remember how that went down.
Yeah, the timing isn't interesting to me. A lot of people went through the transition, and some people were in fact able to thrive once they were empowered. Matt isn't shy about saying that there was so much talent already there. A lot of others were canned, still others were encouraged to retire or move on, in large part because they were not capable of operating autonomously or making decisions. With the clear way that many fell on one side or the other of that spectrum, yeah, I'm going to be skeptical. Maybe that's too inside baseball, but I'd like to think I have a somewhat informed opinion. And as far as how that fits at SEAS, well, I'm pretty sure I'm qualified to have an opinion about that even if I can't explain it at parties.
I totally agree that strategically the company needed to diversify. I also get the relatively small number of opportunities to grow by acquisition. (Sidebar: Growth for the sake of stroking the market annoys the piss out of me, and it's exactly the reason I would never be in any hurry to go public if I didn't have to.) Still, there has been a lot of selling and buying in that time of smaller parks, and admittedly none of them had the size and potential of CW, Carowinds, KI or KD.
What bothers me is probably less the acquisition, even if it was something of an ego play, and more the changes that came immediately after. The executive team tried to apply Cedar Point as a template on everything, and it was a total disaster. They even tried to duplicate the damn logos. There was a massive purge of anyone who wouldn't fall in line or wanted to make their own decisions, though that was a massive win for Six Flags, Herschend and others. If that arrogance was not present, would it have led to a different outcome? It's hard to say, because ultimately they didn't have to sell to Apollo anyway. $1.2 billion still seemed like a lot for the parks, especially in the context of the conversations among senior managers that insisted there was a lot more revenue to squeeze out of the parks, and costs to reduce. Remember 2008 and 2009? Those gains and savings never happened.
I don't think anyone would argue that the post-acquisition integration by Cedar Fair was an absolute cluster. Remember them pushing out the Cedar Point pricing model, particularly with season passes to all the PP parks- and it totally flopped that first year? And obviously the talent purge was extraordinarily short-sighted.
But that wasn't part of your reasoning.... you were only arguing about allegedly "overpaying" for the PP, when it's pretty obvious they needed that acquisition to diversify their portfolio and for the health of the organization as GoBucks laid out.
I'm still not sure where you are trying to go with the Crage thing at CF or where your skepticism is coming from. I just looked it up... he resigned 10 days before Ouimet's hiring was ever even announced. They never worked together.... they may have never even met unless Crage's last few days overlapped Ouimet's start... there' s nothing there....
As GoBucks suggested, Crage probably got pissed he didn't get the CEO spot and found "greener pastures." Nothing to do with Ouimet wanting Crage gone since the guy never even worked for him. If Ouimet thought the financial organization was that poorly run when he arrived, I don't think he would have promoted Crage/Kinzel's #1 and #2 guys to be the new CFO and CAO.
I think you're splitting hairs about what my argument is supposed to be. I know what I meant, regardless of whether or not I articulated it. :) That they may have overpaid and thought they could squeeze more out of the parks and sucked at the execution all seem like related problems to me.
And I don't know why it's hard to understand my skepticism around a guy who came from a really messed up C-suite. As I said, the timing of his departure is irrelevant to me in the context of what was going on prior to the transition. I never said Ouimet wanted him out, I said he didn't make the cut, which I thought by now I made clear that I'm talking about the entire transitional period, which started long before they named anyone to the top spot.
As far as the Geauga Lake acquisition, it's been reported in the past that Kinzel regretted not buying it the first time it came on the market. When the property came on the market again, the rumour mill had it that Kennywood Entertainment was seriously looking into buying it. The last thing that Kinzel wanted was the Henningers in Cedar Points back yard. Thus he pushed very hard to buy the park at essentially whatever Six Flags was asking.
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