Tuesday, July 10, 2007

This Cedar Fair Buyout Business

I find this topic important enough that I won't even use an image here to attract anyones attention.

I waited until today to post any thoughts on the Cedar Fair buyout business because I wanted to wrap my head around the issue before blabbering on about it on here.

I'm sure that if Cedar Fair ever goes public with this stuff, whether it happens or not, it'll be presented like this:

We are having problems managing the debt we took on to buy Paramount, the parks are not seeing attendance growth, per caps are tough to raise, we can't cut the distributions, weather, blah blah. We want a private firm to buy us so we can operate our parks with more freedom and have the financial backing to manage the debt properly. Our current management will stay in place and the parks will only benefit from this buyout.

This seems silly to me. How is it that so soon into the adjustment period (which was stated at a few years at the least) of merging the old parks with the new that things have gotten this bad?

I suppose the gains in operating costs and operating synergies that were so important a year ago no longer apply.

I hate to say it but, I feel like Cedar Fair failed us all on this one. Why is it that Six Flags can step up and use a rush of modern, different techniques to pull in ten of millions in advertising and partnership deals, but Cedar Fair can't?

Was buying stuffed animals and frozen pizzas in bulk really going to save that much money? Designing brochures for all the parks in one office not save as much as planned? I don't run these parks and I do not pretend to. But I do visit them. I've been to these places and seen how things work. And just from that I can say that Cedar Fair's pattern of running parks works, but only to a degree and only in certain market conditions.

If everything is status quo, then all will be well. But having $1.8 Billion worth of debt is not status quo for this company. Any company that does a billion a year in revenues needs to have the confidence that they can try something new now and again, and I honestly feel that Cedar Fair has lacked this quality for a while.

I'm not talking about new big coasters, or a new indoor water park. I'm talking new revenue strategies, basically the track that Six Flags placed itself on.

I'd rather have to endure a GEICO banner on the side of Thunderhawk than have the park be squeezed so tight in coming years that it isn't worth visiting.

I know that marketing alliances alone would not fix the problem at hand, my general point is that I'm not sure enough of the opportunity that the Paramount purchase generated was utilized in any way. And now, as it seems, those opportunities have been lost and what generated them in the first place is killing the company.

Just my two cents, anyway.