Big Dipper to CP?

Buying GL essentially gave the company a monopoly on the northeastern Ohio market. So if they can count on x percent of revenue from that captive market, wouldn't it make more sense to consolidate their costs from two parks down to one?

If I own a Pizza Hut that takes in 60% of my town's pizza business and Papa John's two blocks down the street is pulling in the other 40%, buying
my competitor out ensures me of 100% of my town's business. Now, I can keep the other unit open, or I can close it and reduce my costs while still selling all the pizza in town. Or maybe if the local Papa Johns is much beloved by a small segment of my potential pizza-buyers, I might let the restaurant stay open for a season or two, then close it while mournfully pretending that we gave it the best shot we could.

So if by "tanking a business", you mean the intentional shuttering and redistribution of assets, then call me out all you want.

No, it wouldn't make sense. If Cedar Point does 3 million guests and GL was doing 700,000, we don't suddenly get 3.7 million at Cedar Point. Furthermore, if a business is profitable, meaning you can make money on it, you aren't "saving cost," you're eliminating profit.

And frankly, the assertion that GL was ever drawing people away from CP or hurting it is absolutely ludicrous. It never happened.

So nobody anywhere at any time ever chose between going to Cedar Point or Geauga Lake? Wow, I must have been hallucinating all those times . . .

We'll see what the attendance tally for 2008 is after the season ends. Anecdotal evidence from trip reports suggests that it's up this year. If head count increases significantly (say 200,000 or more) in a recession year when gasoline costs $4.00 a gallon, that sure ain't the work of the tooth fairy.

Of course they may choose to go to one or the other. So what? Again, show me how it had a material effect on attendance at Cedar Point, especially to the extent that it's worth taking a bath on losses for years and a firesale of your assets.

Attendance at CP is not up so far, that's for sure. It sure won't be up by 700,000 either.

You have the most bizarre perception of business reality I've ever seen.

Jeff said:
And frankly, the assertion that GL was ever drawing people away from CP or hurting it is absolutely ludicrous. It never happened.

Actually its not as ludicrous as you think. There were many times when I chose between going to Geauga Lake and Cedar Point. Many times I ended up going to Cedar Point, but there were quite a few times I chose to go to Geauga Lake instead.

Now I understand your point of "what's the difference, Cedar Fair is making the money either way". The thing I think you are overlooking is that they aren't making as much money with Geauga Lake as they are with Cedar Point. Consider this: I, a normal non-season pass holder, go to Geauga Lake for a day. First I pay to park, less than Cedar Point; then I pay to get in, less than Cedar Point; then I go into the park. Since it's much closer to home I don't spend a dime in the park. Plus there is less to do there, so you are in the park less time total, so there really is no need to buy food, drinks, etc in the park. Also considering how small the park is (was), it was absolutely no hassle to run back to the car to get something.

Now consider me taking a trip to Cedar Point. I pay to park, more than Geauga Lake; pay to get in; much more than Geauga Lake, and then go into the park. It's a much longer day at Cedar Point and I'm much further from home. I will now spend money on a few drinks throughout the day, go to a restaurant for lunch, and buy some desert on my way out. It's also a lot longer hike to the car so I decide to get a locker for all my stuff. I leave the park really late, and after seeing the mess in the parking lot, decide that next time I come to Cedar Point I will get a room at Sandcastle Suites.

The point is I just spent a heck of a lot more money at Cedar Point than I did at Geauga Lake, and Cedar Fair knows this. They have said numerous times what a good park Cedar Point is in terms of revenue. And I know that I'm not the only person whose visit plays out like the scenario above...

I completely agree with Ensign Smith's earlier post about how the Paramount Parks killed Geauga Lake. Ultimately, I don't think Geauga Lake was a big money loser, and I think the park could have worked as a nice family amusement park. The problem was after their acquisition of the Paramount Parks, they got in over their head, had a lot of debt, and due to the market overlap in Ohio (Geauga Lake and Cedar Point), Geauga Lake suddenly looks much more attractive as debt reduction than as a functioning park. I think that Cedar Fair knew what they were doing well prior to the announced closure, and I was very unhappy with many of the things they did regarding the closure. I understand that not everyone is going to agree with all of that, but franky, as someone who visited the park countless times throughout the year, there is evidence to support some of that. The fact is the only thing I can really remember Cedar Fair saying about the park is that "attendance was disappointing". So no matter how schrewd your perception of business reality is, I really don't see how anyone is in a position to rule out a theory on what really happened with Geauga Lake no matter how "ludicrous" or "bizzare" it seems to them.

Thanks for the backup, Top Thrill. Many of my observations on this topic have proven fairly unpopular around here, so it's nice to hear I'm not alone.

Jeff, you're the one being ludicrous. In one post, you deny that Geauga Lake ever drew people away from Cedar Point. In the next, you admit it did but deny it made any difference. Stick to a position, man.

As I have posted multiple times before, Dick Kinzel said it himself. In the spring of 2007 in a Plain Dealer interview, he stated that GL was going to be more of a waterpark, and that the coaster fans could come to Cedar Point. His words perfectly encapsulated my argument. One park for the coaster fans. When you achieve a monopoly in your market, consolidation logically follows.

Ensign Smith said: Unless someone else has some new piece of evidence to inject into the discussion, I'm going to bow out of this debate now.

I'm just curious as to where the new piece of evidence was? Seems to me we're talking about the same things that have already been beaten about the head and shoulders for entirely too long, hence why I have not continued.

Ensign Smith said:

If I own a Pizza Hut that takes in 60% of my town's pizza business and Papa John's two blocks down the street is pulling in the other 40%, buying
my competitor out ensures me of 100% of my town's business. Now, I can keep the other unit open, or I can close it and reduce my costs while still selling all the pizza in town. Or maybe if the local Papa Johns is much beloved by a small segment of my potential pizza-buyers, I might let the restaurant stay open for a season or two, then close it while mournfully pretending that we gave it the best shot we could.

Lets say I don't like Pizza Hut. When Papa Johns closes I'm not going to eat pizza anymore. Some times people don't want to go to Cedar Point. Geauga Lake had a different atmosphere and sometimes people want something different.

News flash... Geauga Lake was "more of a water park" for decades, long before Six Flags ever bought it. It was Six Flags and Cedar Fair after that trying to make it more than that.

Wait... why am I even arguing that? It still isn't any kind of "evidence" that they wanted to tank GL on purpose.

When did I say GL drew people away from CP? And because a few people here said "I chose one over the other" makes not a trend. In 2000, GL temporarily saw a dramatic increase in attendance with the new coasters. Guess what... so did CP with Millennium Force. It's not a one or the other kind of deal.

All the more reason it is absurd and irrational (and expensive) to tank the business on purpose.

The Paramount Parks did not have as much to do with it as people think. I can't quote sources on that, unfortunately, so you'll just have to trust that I know what I'm talking about. The loss that GL was causing on an individual basis was a drain on the company. The property taxes made it worse.

Cedar Fair had an epic failure on their hands, that we can agree on. But to suggest it was on purpose is absolutely silly when there is zero demonstrable benefit to doing so, and plenty of carnage.

Geauga Lake, as SFWoA, would have failed under Six Flags ownership as well. The expense of the sea life park combined with the ride park and the poor attendance made it an even greater loosing proposition than when Cedar Fair owned it.

For some reason it's more controversial that it was closed under Cedar Fair because fans of the park can't get these conspiracy theories out of their heads. I think if the park closed under Six Flags people would have been more accepting that the park was closed because it was a money loser.

The only park I actually miss is Sea World. SFWoA never operated the animal side with the same quality that Sea World did, it was a disappointment.

I hope Wild Water Kingdom makes it. I have heard that attendance is pretty good when the weather is good, something that we have not have a lot of this summer. That, combined with the much lower cost of running a water park, makes me hopeful that the facility will make it.

It'd be the same emotional response, only with Shaprio as the target.

Jeff said:

Cedar Fair had an epic failure on their hands, that we can agree on.

Epic failure? Ummm, no. Enron was an epic failure. Custer's Last Stand was an epic failure. Geauga Lake was a business decision that didn't achieve the goals CF set for it.

In the CoasterBuzz podcast Kinzel says they expect GL attendance to be between 1 and 1.2m per year. Worlds of Fun and Valley Fair operate profitably at that level--with 6 and 8 coasters, respectivly. Michigan's Adventure (6 coasters not counting Thunderhawk) was profitable at under 500,000. (In fact, wasn't it around 350,000 when CF bought it?) The question is could GL have gotten attendance up to 1m without canibalizing CP or costs down to levels between MiA and WOF.

Clearly, CF bought GL for defensive reasons--just as they did MiA. (How many parks with under 500,000 annual attendance well removed from major metropolitan areas is CF interested in buying?) They didn't want any competitor moving into CP's territory. If you doubt this, why does Kinzel always talk lovingly about KI and barely mentions the other Paramount parks? (And look at his statements as the sale was announced.)

I don't know if CF could have boosted GL to 1m per year. Clearly, moving the waterpark was a boneheaded move. Selling the Sea World side would have made more sense. But they did not spend $140m to buy GL because they saw a great business opportunity--they declined to buy GL AND Darien Lake for $60m in the mid 90's, remember. After Six Flags decided to compete with CP, CF became much more defensive about Ohio & Michigan.

I always thought it was just me that hated SFWoA. The summer after I fell in love with CP I would not stop talking about it. So my parents decided for our family vacay that summer we would go to SFWoA, and then Cedar Point for Halloweekends.

The first day we were at SFWoA was spent at Sea World. I was there when I was younger, but I can't really compare it to Six Flags pre-ownership because I was too young to really remember. We had a blast that day. All of the shows, exhibits, and employees were really nice.

The next day we headed over to the amusment park side. It was so crowded. More crowded than I have ever seen CP. The guests were very pushy. There were a lot of rude little kids. And the employees were much less friendly than Sea World's employees.

By the middle of the day we were talking about just going back to Sea World. We stuck it out though, because we found some water rides that we all enjoyed. But the whole day was a bust.

I know that Six Flags itself has nothing to do with unpleasant guests. But an unpleasant atmosphere makes unpleasant guests.

You're not seeing the reality... Geauga Lake did not impact Cedar Point, regardless of the owner. When Six Flags bought the park in 1996 (yes, I'm aware the company was still called Premier Parks at the time), CP was at the peak of its attendance, and Cedar Fair as a company was not under any particular pressure to grow.

Fast forward to 2004, and the company's stock price is starting to stall in the 30's, with the last acquisition being Michigan's Adventure in 2001. It's time to buy something that will have stronger impact to the bottom line. What's available? The attempt at buying Visionland two years before fails for reasons they never disclose. There's no indication that Six Flags will begin divesting property. Kinzel and Burke meet at IAAPA and begin to talk. Kinzel arrogantly thinks he can apply the Cedar Fair formula to the park, Burke snickers under his breath and sees an out, an expensive out, for the albatross around his neck. For less than the price of the SeaWorld acquisition and 2000 additions, Cedar Fair gets a deal.

Before that went down, Anheuser-Busch ditches SeaWorld in 2001, despite aggressive discounting programs, like the single day ticket that can be used all season. They can't make it work. Six Flags takes that one step dumber and combines the gates. The giant, over-built park begins its death spiral.

The irony is that Wall Street just about choked in 2004, and the unit price took a dive when the deal was announced. Apparently investors felt that if Six Flags couldn't make it work, how would Cedar Fair do it?

At the close of 2007, despite reduced operating cost after shedding a couple of coasters, the park still can't make it. The property is huge, the taxes are crushing, parks are competing more than ever with video games, recreation centers, movies and the Internet. Cedar Fair has to act because it can't continue to have this drag on the bottom line.

So what opportunity does the market offer? All of the area water parks are essentially gone, and their own numbers show that's where their strength is. There was no other logical move given the investment in the water park.

In an ideal world, where they were less arrogant about a turn around, they would have ditched a few of the coasters the first year, probably the three nearest 43, and expanded the water park out in that direction, and sold the Aurora property. Hind sight, right?

The fact is, none of this history shows any intention to close the park in the first place. They made great strides to make the park more appealing, and it didn't help.

Loopy said:

Ensign Smith said: Unless someone else has some new piece of evidence to inject into the discussion, I'm going to bow out of this debate now.

I'm just curious as to where the new piece of evidence was? Seems to me we're talking about the same things that have already been beaten about the head and shoulders for entirely too long, hence why I have not continued.

You're right, you're right . . . Guess it's hard to leave an altercation at a bar when they're yelling stuff at your back. But I hereby bow out.

Because you have no argument to make?

Yes, that must be it.

^^because no matter what he says, you're just going to quote unnamed but reliable sources and tell us to take your word for it that you know what you're talking about.

No, I'm just willing to accept the most obvious and probable scenario: That a series of bad decisions led to the failure of the business. That's a lot more plausible than conspiracy theories that offer no evidence. It makes a lot more sense to go with what is staring you in the face. See post at the top of this page.

Jeff gives a lot of sound reasons why he thinks the GL purchase was not on bad faith. I only need one:

Ego.

I know Kinzel enough to know that his ego is a driving factor in just about everything he does. If I had to bet money I would bet that Kinzel was probably the last person to hold out from the ultimate decision to close GL. I think he considered it a personal failure that he couldn't turn the park around. I mean, let's face it...point to any other failure of his company under his tenure.

There are a lot of things I think you can criticize him for (the housing situation at Cedar Point, his handling of his own family members in the company, his handling of full time employees in the parks he purchased, etc). But, none of those could really be called a gross failure. Geauga Lake certainly can.

My guess is that the pressure was on from the institutional investors to do something about Geauga Lake. I remarked a couple of years ago that I was surprised by the pointed questions he was getting in the conference calls. I think the Paramount purchase gave him some cover to close down Geauga Lake without losing face. If Paramount doesn't happen I suspect GL is still open but struggling anyway because no matter what they did with the park the economy of Ohio is what would have likely been the anchor around the park's neck.