Big Dipper to CP?

Jeff said:
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.

First off, I still don't understand how everyone is able to say without a doubt that Geauga Lake was a failed business? The only thing I recall Cedar Fair ever saying about Geauga Lake is how they "were disappointed with attendance figures" or "attendance was disappointing", etc. Never do I recall them saying "Geauga Lake was losing money" or "the park wasn't profitable" or anything to that effect. And please if I'm wrong someone correct me on that. And there are tons of companies out there that sell or close something thats profitable. Sometimes its for debt reduction, sometimes its because they simply have no interest in it, sometimes its benefits aren't worth the hassle, etc.

Second, if you were to poll the people that actually VISITED Geauga Lake on a regular basis from 2004 to 2007, I'd venture to say you are going to be in the minority of the "conspiracy theories offer no evidence" camp. There was quite a bit of evidence, much of it staring you in the face, that Cedar Fair quickly withdrew interest in Geauga Lake after 2005, and planned its closure after 2006. Geauga Lake was treated differently than other Cedar Fair parks, especially in 2007. The fact that they left the old water park to rot when guests could still walk in and around it and see its unsightliness, and left rides to sit closed for the season after any type of problem (Raging Wolf Bobs, Steel Venom, Skyscraper, Monorail, etc, are two of the biggest examples (I could list many others as I'm sure others could). And did anyone else visit the park one of the closing weekends and see how bad the place looked? Lights out all over the place and portable lighting set up, ride maintenence had noticeably worsened (log ride in particular), and the platinum pass being advertised but not a Geauga Lake pass. Also remember how Screamscape and other sites had the countless rumors about becoming a water park only, and how a company had been contacted to remove Dominator and Thunderhawk? All those rumors were spot on, including the specific company removing Dominator and Thunderhawk, which, were the first two rides to leave. Coincidence? I think not...

Cedar Fair did make a lot of effort the first two years, but frankly, after that I don't see how anyone can say they made great strides with the place because they didn't do anything. If someone has an example please share it, but I really can't think of a thing. I understand it was a business decision, and ultimately for the better good of the company. I'm not denying that. Sure its upsetting and hard to come to grips with, but I understand its a business. What I wish is that they were more transparent and honest about the whole thing, and made a greater effort to ease the pain of the closure on the park's patrons. They could have done lots to fufill both of those things.

http://blog.cleveland.com/business/2008/02/cedar_fair_posts_loss_thanks_t.html

That's a start. What a price tag to move the rides....

And there you have it. If Witherow said it was losing money, it was losing money. Besides, all of the hurt feelings in the world don't make it logical to shut down a profitable business, let alone one that's losing money.

And don't talk to me about what you think you saw. I worked right near the park, and went a couple of times a summer. Opening week last year, I ran into Bill Spehn who walked me around and pointed out some of the things they did for the season. Yeah, they were mostly infrastructure things and a whole lot of paint, but just because it's not a shiny new roller coaster and you didn't notice didn't mean they weren't spending money on the place. And maybe you've heard, that when you have a non-profitable business, you try to reduce expenses, not spend more.

Face it, your conspiracy theories come out of hurt feelings, not the reality of the business.

I have to agree with Jeff. I was very hurt by the closing of Geauga Lake, but I know it was a business decision that had to be tough for them to make. They had to know there would be some backlash from this. In the long run this will all be forgotten just like Idora Park, Euclid Beach, Chippewa Lake and Meyers Lake have faded into the recesses of hostory. These parks remain alive and well in the memories of those who visited them. Geuaga Lake will always be in my heart and mind even though the park will not be here anymore. I think it is time for everyone to stop with conspiracy theories and conjecture about what happened and get over it. We still have some great small parks around to visit, so show your support to them that way they don't become just memories.

Getting off the soap box now.

Seriously, is this topic even viable anymore?

No, the horse was turned to glue a long time ago.

I think it is time to lock all threads dealing with Geauga Lake and anything relating to it.

Why?

The discussion of what is happening to Big Dipper (where its going, who actually bought it, does ACE even care) is still a very valid one.

Actually, that article tends to DISPROVE Jeff's thesis.

Remember, due to the nature of the amusement/theme park business Cedar Fair claims that EBITDA is the only important measure.

And Geauga Lake's impact on CF's EBITDA?

"Peter Crage, chief financial officer of Cedar Fair, said during a conference call with investment analysts that the company's investment loss on Geauga Lake has had no effect on the company's cash flow."

No Effect

Yes, CF overpaid for the park, hence the investment loss. However, operating the park was apparently not costing CF more than it brought in--hence the "no effect on the company's cash flow."

"The decision to close the park was "aimed at improving cash flow over the long term," he said."

If GL was hemorraging money there should be an immediate improvement in cash flow--yet CF does not predict this.

As to, "We believe the assets that we're moving have more economic value at some of our other parks than they did at Geauga Lake, where they were costing us more to run than they were making." he's right. Rides don't make money--they cost money. Food, gifts, etc make money. Can those rides draw in more people at KI, Dorney & Carowinds? Probably. Was it costing CF money to operate them at GL, once they made the decision to buy the park? "Peter Crage, chief financial officer of Cedar Fair, said during a conference call with investment analysts that the company's investment loss on Geauga Lake has had no effect on the company's cash flow."

You had me until "do". ;)

In addition to reiterating Captain Hawkeye's comments, I'd like to point out that there are a number of ambiguities in that article that really matter in the article's argument. The purchase price of $145 million included the now Wildwater Kingdom property. So obviously since that is still operating and not being sold you aren't going to recoop the entire investment. Also, are they accounting for the coasters they moved, or just the stuff that has been sold? Yes I realize it costs money to move a ride, but its still going to be cheaper than buying a new one. I'd have to say that goes to support what many people, including me, are trying to argue. Geauga Lake wasn't making enough money for the company to outweigh the more lucrative option of shutting it down to reduce some debt,and giving other parks some cheap big ticket rides. There is no question that to CF Geauga Lake was more hassle than it was worth.

And Jeff I am going to talk about what I saw. To me, the park looked worse in 2007 than it did in earlier seasons. I'm not saying that everyone else has to agree with that, even though many do, but just because Bill Spehn said they made improvements doesn't make it so no one else can disagree. Even if they did make improvements, if no one can notice it - what's the point? I always disagreed with the GL needs a new coaster argument, because it didn't make sense. They were trying to cut costs. But still you need to spend money to make money. Thats a common business philosophy. And they tried painting in 2004, 2005, and 2006,so if thats not working maybe its time to try something new and make other types of improvements.

Now regardless of why GL was closed, they did close it. I understand that there is no going back. But I said at this point there were two things CF could do to ease the pain of the closure, which I don't think is too much to ask. One is more honesty and transparency. And frankly I doubt that will happen, and it depends on whether you think they've been honest up until now. Second I wanted them to work harder to do nice things to preserve. Obviously it would be nice if the Big Dipper were saved, but the problem is - does CF really have anything to do with it anymore? Or is this just up to the APEX guy?

Don't know what the problem is with the above post but I'm not going to take the time to read it. Sorry TT.

Six Flags did not anicipate the problems associated with Sea World leaving and the two gates being combined.

Cedar Fair did not anticipate the problems with the market of Cleveland and the serious distaste Six Flags left in the mouths of the community. They further didn't understand that moving rides out while making only token improvements wasn't going to amount to people returning.

Two of the world's premier amusement park operators couldn't make it work...and the world's premier sea life park operator threw in the towel on the Cleveland/Akron area too. Does that say more about the park operators or about the market?

EBITDA and profitability aren't the same thing. The term is largely used to say, "Hey, we can pay our bills," not, "Hey, we're profitable. It's a fact that the company took a loss last year. That's not imaginary. Sorry, Hawkeye, you don't understand what the terms mean.

And this, by the way, is why I think EBITDA is largely a B.S. metric in the first place. I've had positive EBITDA in my personal finances for my entire life, but it didn't make the loads of credit card debt I used to carry and smarter.

Isn't EBITDA Earnings BEFORE Interest Taxes Depreciation Amortization?

So yeah, GLP may very well have made money, but not enough to cover the ITDA portion of the equation.

GL did not make money. How do you guys keep arriving at that? The controller said, "Geauga Lake did not make Cedar Fair money." You can't make it anymore clear than that.

Jeff said:

EBITDA and profitability aren't the same thing. The term is largely used to say, "Hey, we can pay our bills," not, "Hey, we're profitable. It's a fact that the company took a loss last year. That's not imaginary. Sorry, Hawkeye, you don't understand what the terms mean.

And this, by the way, is why I think EBITDA is largely a B.S. metric in the first place. I've had positive EBITDA in my personal finances for my entire life, but it didn't make the loads of credit card debt I used to carry and smarter.

Jeff, my degrees are in finance & econ, so, yes, I do know what the terms mean.

Cedar Fair emphasises EBITDA because of the nature of their business, not to "say, "Hey, we can pay our bills.""

Let's say you own a McDonalds. The building has a cost and that cost will never change no matter how much or how little food you sell. If you go out of business that cost is still there. However, most of your cost is employee saleries, utilities to refrigerate & cook the food and the food itself. Those costs do change based on hom much/how little food you sell. Key Point: The fixed costs are a smaller % of total costs.

With CF most of it's costs are fixed. If you buy a $145m park that are expected to last 40 years you have $3.625m a year in D & A costs even if you close the park. If your attendance goes up 50% your D & A cost is still $3.625m per year. If your attendance goes down 50%, your D & A cost is $3.625m per year.

Now, if this park brings in $26m per year (as CF claimed GL did in 2005) and spends $25m it has an operating profit of $1m. Add in D & A of $3.625m and they are $2.625m in the red. So, you say, close the park and eliminate the loss. Except now your revenue is $0, you expenses are $0 and your D & A is $3.625m, leaving you $3.625m in the red.

(This, by the way, is why CF had to claim a $54m loss last year: Since the Sea World side is open what CF spent aquiring & improving it is still being depriciated year by year. But all of the Geauga Lake side's D & A had to written off at once when they closed it.)

CF views EBITDA as more important because their FIXED costs are such a huge percentage of their total costs. Once they buy a park or a $20m coaster or a Sky Hawk or whatever that money is gone. They can't alter their D & A except by selling the item or closing it down and taking a one time gain/loss.

Yes "It's a fact that the company took a loss last year" and you are right "That's not imaginary." But a loss means their overall exzpenses (including the D & A of the purchase price) exceeded revenue--not that operating the park cost them money. And, please note, closing the park did not make D & A go away. In fact, they had to bring $54m of it on to their financial statements. If they had not closed GL, CF says their profit would have been $50m last year. Closing GL cost CF $54m.

Will the closing save CF more than $54m over the next 36 years--or whatever their depriciation period is? Obviously they think so. But selling the land under many of their parks and investing the money would probably bring in more money than operating them in this financial environment.

JuggaLotus said:

Isn't EBITDA Earnings BEFORE Interest Taxes Depreciation Amortization?

So yeah, GLP may very well have made money, but not enough to cover the ITDA portion of the equation.

Yes. And that is my--and others' point. But closing GL did not make the IDA portion go away. (If they were losing money there would be no income tax.)

Jeff said:

GL did not make money. How do you guys keep arriving at that? The controller said, "Geauga Lake did not make Cedar Fair money." You can't make it anymore clear than that.

He's right. The D & A of a $145m purchase pushed them into losses. Of course, closing the park did not make the D & A go away--it merely moved the GL part of it all onto 1 year's financial statements instead of leaving it trickle in over the entire depriciation period.

What he doesn't make clear is whether or not GL was cash flow positive or cash flow negative. And THAT is the metric CF uses to judge everything by.

And CF's own statement on how GL affected their EBITDA: "Peter Crage, chief financial officer of Cedar Fair, said during a conference call with investment analysts that the company's investment loss on Geauga Lake has had no effect on the company's cash flow."

Operating GL neither made nor lost CF much money. Buying it is what cost them. Shutting GL down, by Crage's on words, didn't improve (or hurt) CF's cash flow

Jeff said:

And this, by the way, is why I think EBITDA is largely a B.S. metric in the first place. I've had positive EBITDA in my personal finances for my entire life, but it didn't make the loads of credit card debt I used to carry and smarter.

True. But I doubt you have much depriciation & amortazation in your personal finances.

Captain Hawkeye said:
Actually, that article tends to DISPROVE Jeff's thesis...

And Geauga Lake's impact on CF's EBITDA?

"Peter Crage, chief financial officer of Cedar Fair, said during a conference call with investment analysts that the company's investment loss on Geauga Lake has had no effect on the company's cash flow."

Dude, what are you even talking about? What is my "thesis?" You just explained depreciation... yeah, we get that. And the quote above indicates that the investment loss did not affect the cash flow. So you've differentiated between investment loss and operating loss. Where is the part that says there was an operating profit on the park? There isn't, because as Witherow the controller said, the park was not making the company money. The only thing that you've established is that buying the park isn't what was hurting. So what? If it can't generate enough revenue to cover its operating costs, that's not a business you want to be in.

I know this has been a heated topic, but I was wondering if anybody heard anything as to what's happening with Big Dipper? Is it still standing? Is it going to be taken down soon; What? The last I heard was it was Sold for $5k, but I haven't heard anything since.

This is like two kids playing little league baseball and thinking they're in the World Series!

^ - there's a whole bunch of kids right now playing Little League AND in the World Series.