Theme parks cost cutting = lower quality experience

We have the makings of a great debating team here.

Gonch: I'll try that when i go out.

Yeah, except we're all a bunch of hard-headed idiots... myself included.

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All a few of us are doing is playing the other side of the coin, but instead of being considered to bring valid points to the table, you talk down to us like we're a bunch of idiots that can't see what you see.

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Again, my apologies if it feels that way. It's not my intention. With that said:

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So where is this data that says customers claimed they don't need as much time in amusement parks anymore? I doubt that any amusement park operator has ever talked to actual park guests, suggested cutting park hours and got a positive response.

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I think you underestimate what the park knows. It's not about talking to guests - it's about watching what they do. I'd be surprised if the parks don't have this data. In fact, I think it's pretty safe to say they do.

This isn't a crap shoot. They know how many people are in their park and they know how much revenue the parks makes and they know how much it costs to operate.

One you have that, it really is as simple as saying, "Man, we're open those last two hours of the day for practically no reason. Attendance drops to X% of the daily total, people spend less and it still costs us X number of dollars to stay open"

I really think you're underestimate the amount of data and analysis that goes into a decision like this.

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And no one has yet to provide me with any evidence that suggests the parks aren't making some kind of profit in those later hours.

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And no has provided any evidence that suggests they are beyond, "It looks to me like there's still enough people in the park to be making a profit" - and that doesn't count.

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Anyway, the point I have been trying to make is that many little things could lead to an erosion of attendence. Maybe cutting hours on certain days isn't going to make a huge difference but with ever-escalating prices, an increase in the number of extra perks available for people to buy to make their day better and a decrease in hours might serve as the breaking point for many. Why is that so difficult to comprehend?

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It's not. I just don't agree - on a couple of levels.

1. I don't see much evidence that these parks are losing guests because of these choices. (well, SF is, but I'm still not sure it's because of those reasons)

2. I still wholeheartedly believe that in certain cases (and lost customers from reduced hours isn't one of them, but other things you listed are) that a certain number of customers are expendable. It goes back to the stupid "high margin, lower volume" thing and even I'm starting to feel like a parrot at this point.

I understand what your argument is. Really, I do.

But every time one of these kinds of topics come up, the people who tend to agree with your train of thought seem to keep talking about how these decisions are killing the big parks and they'll lose money and business and other doom and gloom scenarios, but the real world shows otherwise. All the big parks still do the 3 million attendance numbers and each year we seem to lose more and more of those small parks that are cited as flying in the face of the big park mentality.

That's what I can't get past. If people really hated higher prices, long lines, concrete slabs, reduced hours and all the things that make these places so horrible, then these would be the parks hurting, but they're not.

Everyone's free to discuss, theorize, opine and whatever else lets them vent, but I'm much too left brained to look beyond what is actually happening. I like to think I'm not discounting or invalidating your opinion, just pointing out that even if you feel that way, it doesn't seem to be working out that way in the real world.

*** Edited 4/25/2007 6:20:54 PM UTC by Lord Gonchar***

Ever since parks came into existence in the Coney days, they have had late closings - mainly to see the lights. It could be said that this one feature of parks was one of the main reasons they became so popular in the first place. But there is one MAJOR difference between our world today and the world of the Coney days - cost of power. It's sad, but we may be in the final days of parks operating at night.

Cost of power might be one thing, but don't most rides that have lights run those lights during the normal operating modes during the day? Sure, you have to light a midway and parking lot and stuff, isn't calculated into the cost of running the park?

Does anyone have any data on the cost of electricity for a park. Granted, every park in every state is differant, which would hold true for what they pay for power, but it'd be a starting point.

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Rob Ascough said:
I don't think you've ever been sure of what I've been trying to argue. You talk like an extension of the corporate boardroom while ignoring what the people that disagree with you actually have to say.

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If I were ignoring, I wouldn't be responded. I've seen what you have to say, and I don't agree with your perception.

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That's an incredibly absurd question. It ignores three things that I find obvious:

1. The company is accountable to its owners. If my units of FUN decrease in value, or the distribution goes down, I'm going to be pissed.

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It's absurd to want to take the cautious route and protect the profit that's already being made? Remind me not to get into business with you.

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What did I say in the very next thing you quoted?

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I sayeth:
That's the part you don't seem to accept, that the cost of offering something "they've always offered them" does not, in fact, offset the cost of that offering.

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So where is this data that says customers claimed they don't need as much time in amusement parks anymore?

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I think Gonch covered this one. The data is everywhere. Why do food stands in the back of a park close first? Because they know, hour by hour, how much they make. Why does Busch Gardens Europe not open rides in the back of the park with the gate? Because they know, hour by hour, how many people ride them. It's pretty simple math at the gates too. If the entrance turnstile clicks 10,000 times from open to 7pm, and the close turnstile clicks 9,000 times in that same period, it's a pretty safe bet that there are only 1,000 people left in the park. They don't have to ask guests if they want the longer hours if they're not there!

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Anyway, the point I have been trying to make is that many little things could lead to an erosion of attendence. Maybe cutting hours on certain days isn't going to make a huge difference but with ever-escalating prices, an increase in the number of extra perks available for people to buy to make their day better and a decrease in hours might serve as the breaking point for many. Why is that so difficult to comprehend?

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All of what you say is possible, but again, "could" and "maybe." No one is talking down to you or finding anything "difficult to comprehend," we just get the impression that you think these decisions are made in a vacuum without any regard to the outcome. We're arguing that it's quite the opposite situation. See data examples above.

Wow did this thead spiral down quickly today, I just wanted to add to the "No one asked me what I want" crowd about a little incident we had a few months ago, it was about shirts, actually the lack of them. Just because you and a small group of friends want something doesnt mean a majority of the paying public wants it too.

Also think about it, what is half the reason you love the night at parks: the small lines. Obviously you cant argue that there isnt a significant decrease in the crowds when you have near walk ons on 95% of the rides during the last hours of operations.

Did I miss someone mentioning Kennywood's closing hours here? ;)

Near the middle of page 2. Shhhh. :)

Sorry, my eyes lost focus after the first page. ;)

But yah...it works for them. Although I must say, we suddenly found ourselves being ushered out without having bought our obligatory shot glass and refrigerator magnet. Fortunately I spotted these things quickly and had cash. They almost lost out on $7.62 from us. :)

*** Edited 4/25/2007 7:59:12 PM UTC by janfrederick***

Man! you guys make some good points.

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Touchdown said:
Wow did this thead spiral down quickly today, I just wanted to add to the "No one asked me what I want" crowd about a little incident we had a few months ago, it was about shirts, actually the lack of them. Just because you and a small group of friends want something doesnt mean a majority of the paying public wants it too.

Also think about it, what is half the reason you love the night at parks: the small lines. Obviously you cant argue that there isnt a significant decrease in the crowds when you have near walk ons on 95% of the rides during the last hours of operations.

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I'm all about bottom lines, and this post gets it right!

For all the talk of data/bottom-line nobody seems to care about the only data that matters. On this day where the stock market has reached all-time highs…the FUN stock is going for about $29. My exclusive contented Scottrade research has the FUN stock listed as neutral. This publicly available link

link

allows you to set up a time frame to see how FUN has performed. You could have got the $29 purchase price back in 1998 or paid up to $34 in 2004. Extremely average stock performance for a decade plus...worthy of a neutral rating.

Seems all you guys so firmly arguing your position are missing the bigger picture. This is an average performing company with an average performing management (the stock price is what they should be judged on). They are neither extremely smart, nor are they dumb…though I might argue that stagnant stock pricing and distributions in light of historical market highs is rather disappointing.

My guess is that this average company with average decision-makers is taking a gamble that they can cut costs without pissing off the masses. This may prove brilliant OR it could prove short-sighted. Using the hard DATA available…I would guess that this decision will have ZERO effect on the bottom line. We are, after all, talking about a stagnant business model as compared to the market in general. Their past decisions have proved neither brilliant or catastrophic…instead they are just floating in the wind.

Since everything is about the bottom line, it should be noted that every single invested dollar in this company would have been spent wiser on a market index fund. Not one park/ride/employee/etc expense needed be wasted. A simple index fund would have out-performed FUN. When looked STRICTLY from a business perspective the question begs…why have amusement parks at all? There are just so many better ways to churn profit with so much less invested time, effort and risk. Which begs another question…how far are you guys who see EVERYTHING as strict dollars and cents (I include myself in this group) willing to expand the argument? For example, the financially prudent decision might be to sell off all the rides and land...leave the amusement business and invest the profit in that index fund. I could give you even better returns on investment...but I hope this gets to the point. This simply CANNOT be only about dollars and cents. If it were...then there would be no amusement parks in Cedar Fair's (FUN) holdings.

The real pertinent question is why us geek coaster types would get so worked up arguing minute details of data we will never see while simultaneously ignoring the only data that truly reflects the health of this company and the brilliance of their decisions. That would be the stagnant $29 stock price.

*** Edited 4/25/2007 8:46:02 PM UTC by Jeffrey R Smith*** *** Edited 4/25/2007 8:51:26 PM UTC by Jeffrey R Smith*** [shortened link -J] *** Edited 4/25/2007 10:06:18 PM UTC by Jeff***

Better watch who you're calling a geek coaster type in this debate, Jeffrey. :)

I don't recall anyone arguing that Cedar Fair is a growth stock. I don't remember it being rated as buy either. It is, however, an income stock, and it has been delivering for a very long time. Trading at $29.01 with a $1.90 per unit distribution means it has a 6.5% return. That's not aggressive or huge (index funds tend to have annual jumps in the teens), but it's predictable and steady. Depending on your risk tolerance, it's a nice component of an overall portfolio.

The amusement industry is not a growth industry. Why do you think Viacom and then CBS were so anxious to shed the Paramount Parks? Why do you think Time-Warner wanted to shed Six Flags? That said, stock price is not a measure of a company's success. If you buy FUN expecting the price to skyrocket, it's not going to happen.

OK, you know what, something didn't smell right about Smith's post, and sure enough, I was right.

Here's the FUN chart with several major indicies from the past five years. Notice anything interesting? FUN has pretty much fallen in line with the market in general. It was a little soft in the last year, but I'd expect that given the giant purchase they made. The fact that it's up 20% since last summer certainly says something about the confidence in that purchase.

LOL Rob, sorry for calling you a cheapskate. I just felt like calling Lord Gonchar a corporate butt kisser and I felt that insulting both sides was the polite way to do it. ;) I just find it funny that random topics that discuss how parks spend money always devolve into the same debate with the same people. Line jumping for a fee, decreased hours, paying for parking, increased admission, less new rides, paying for pop...they are all the same fricken debate here. And usually I love debates like this but recently I have been too busy to keep up with a thread like this.

And no offense to Lord Gonchar either. You're a cool guy and I think it is funny the way you always rush to kiss corporate butt. Hell, I consider myself a lasi faire capitalist and you put me to shame. ;) *** Edited 4/25/2007 10:41:51 PM UTC by RavenTTD***

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Jeff said:I don't recall anyone arguing that Cedar Fair is a growth stock. I don't remember it being rated as buy either. It is, however, an income stock, and it has been delivering for a very long time. Trading at $29.01 with a $1.90 per unit distribution means it has a 6.5% return. That's not aggressive or huge (index funds tend to have annual jumps in the teens), but it's predictable and steady. Depending on your risk tolerance, it's a nice component of an overall portfolio.

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I think this pretty much spells out the corporate philosophy of CF...and it works like....well, clockwork. ;)

I'm still getting over them taking that "risky" venture of assuming the PPs. Not really risky, but outside of their normal comfort zone/business model.

But they got a good deal on some really solid parks (and PGA) ;). And it was a good business decision that will keep their percentages in line while more than doubling the overall volume.

"That said, stock price is not a measure of a company's success."

What is then? Seems to me like this would be the closest objective measurement we have for this company. A 6.5 % return is a neutral return for a neutral rated company.

I merely post to point out the rigidity shown on both sides of this debate. Those of you who idolize Cedar Fair as all-knowing speak of the ever-illusive data that the all-wise executives possess as some sort of Holy Grail. I merely point out that whatever data these guys have been using…it has lead to average results. You can debate whether it is slightly above or below average as you wish. The fact is…the performance of this company is neutral. No matter ones closeness to said company or never-ending urge to defend the company at all costs…the market does not lie. FUN is simply a neutral company to hold for those who dabble in the market. There certainly is no compelling reason to rush out there and buy it. Their decision-makers have not done a good enough job at producing market-beating returns. If you want market mirroring…there are thousands of other vehicles to get the same results as FUN. As such…I think it fair to say that their decision makers and product model are merely average.

If those of you who have consistently argued this debate as a “bottom-line” issue…the previous paragraph gives you the REAL bottom-line. I’m not saying it is good or bad…just average. I also HOPE you might see that no matter how fun and easy it is to argue “bottom-line” finances as a basis for any company decision…the reality is not so black and white. There indeed is an emotional attachment to the amusement industry by somebody in Cedar Fair that trumps the almighty dollar…otherwise they would be in a more profitable business.

On the opposite side of the debate we have the emotional component. It simply boils down to the gut reaction that cutting hours sucks. Deep in the stone hearts of you “bottom-line” defenders (of whom I more closely agree with by the way) there must be a small twinge of disdain for the reduced availability of this hobby we all like enough to post on here. The emotional guys believe…or dare I better say HOPE that this heartless numbers-game reduction leads to tangible profit reduction and a return to better days. I doubt this happens.

I also doubt that this decision to reduce hours has ANY major effect on the company’s profits…good or bad. I just point to the history and evidence of their market performance…which shows ground-breaking decisions and market-beating results are not their norm. They are an average/neutral company and business model. They’ll be wrong as much as they are right.

Well, I work at knotts and closing time couldent come any sooner at time because I know people who have to stay there cleaning up after 3-4-5 AM before they can go home (I work at Mrs Knotts chicken restraunt) but closing a park (or the restraunt right infront of the park) is a nightmare...