Cedar Point's 2011 ride will target thrill seekers

Your mom is to fat to ride TTD. said:
No it was confirmed by the park. I don't have the thread that it is in, but its been confirmed.

Alright, thanks. I forgot if it was or not and searched on google and found this: http://pointbuzz.com/NewsStory.aspx?id=1059

I always thought it was for sale until I saw that... but that was 2006 haha.

Back then it wasn't for sale. That's changed:

http://pointbuzz.com/NewsStory.aspx?id=1350

djDaemon said:

Kyle2154 said:
It's funny there was all of the assurance from individuals that the high pop prices were gonna bite them and take their toll on Cedar Point. But when the results come out it may or may not be because of Cedar Point?

You are completely misrepresenting the argument, and you know it. No one claimed that by X quarter of year 2XXX there was going to be a noticeable change of X, or anything even remotely close to that.

What was said was that many of CF's business decisions - from concession pricing to employee treatment to their buyout, and so on - had/have the potential to do long-term financial harm to the company.

But whatever. If distorting an opposing view or opinion in order to "win" an argument brings you joy...

I watched people harp on all kinds of crap in the offseason and early season, how bad the park is for raisings prices on this or that, then when positive, real positive, numbers come out, we just discredit them.

First of all, it's one quarter. Secondly, you're touting percentage improvements over last season, which, by all accounts, was not a banner year. If you stood up in the boardroom to champion these improvements, you'd likely be laughed at.

Are the numbers an improvement? Clearly. But so what? The Cleveland Indians have so far improved over their '09 winning percentage by over 2%, and they still suck. ;)

All that said, there are some very good signs in the report. In addition to the referenced attendance gains, most trip reports seem to indicate, anecdotally at least, that attendance has improved over last year. That's great news. The overall economy seems to be bottoming out, and perhaps we're seeing the beginning stages of a resurgence.

On the flip side, per-cap continues to fall. I'm no expert, but it would seem to me that if my guests were spending less and less in my parks each year, something ain't right with what I'm offering. That problem seems even worse if attendance is indeed on the rise, as it indicates that the parks are entertaining more people, but at a lower rate per person.

This argument was mostly reconciled on Friday. Both sides admittedly use numbers only when favorable to their position. I still think with such a positive quarter it's going a little far out on the limb to blame Cedar Point.

Believe me, per cap being down bothers me as well. But I could say "who knows if it is Cedar Point", right? ;)

And per cap going down in the crap of the crap (detroit/cleveland area during one of the worst recessions in decades) shouldn't really shock anyone. I'll take an increase in attendance, increase in revenue, and huge bump in EBITDA (excluding merging and financing costs) as more pluses than minuses for the quarter.

You can't look at park numbers in a vacuum. Everything outside the park has consequences inside the park. Looking at guest spending alone tells you only that it is down. This may mean your park is having issues and it may not. Consumer spending has not bottomed out and continues to be a drag on the economy. The fact is consumer confidence is at an all-time low and people are not spending for fear of further issues. I would look at Cedar Point's numbers with a grain of salt in that regard.

However, to your point, we clearly all agree as lifelong guests of the park that over the past decade food qulity has slipped. Some of you in the know also speak of issues with employee satisfaction. These absolutely have the potential to hurt Cedar Point in the short and long-term and must be addressed. I am particulary concerned with the food. It has started to resemble the food at Geauga Lake when it was run by Six Flags. There is also an influx of "non-park" fast food chains. While this is not alltogether a bad thing, Cedar Point would be wise not to abandon fair-style food. They also need to make a concerted effort to make food stands far more clean.

In the end, Cedar Point has many issues even before examining financials.

Walt said:
Back then it wasn't for sale. That's changed:

http://pointbuzz.com/NewsStory.aspx?id=1350

Yea, I kinda figured that out..

Kyle2154 said:
And per cap going down in the crap of the crap (detroit/cleveland area during one of the worst recessions in decades) shouldn't really shock anyone.

Except that the foreboding indicators preceded the economic downturn.

I'll take an increase in attendance, increase in revenue, and huge bump in EBITDA (excluding merging and financing costs) as more pluses than minuses for the quarter.

I find it amusing that you find no problem in excluding the VERY substantial merger & financing costs. Those costs are a direct result of CF's poor business decisions. So yeah, obviously if we're to ignore their poor decisions, they've made great decisions. Hey, if you ignore all the money I've spent, I've been quite thrifty! Or something.

And keep in mind, as I mentioned above, that you're championing year-over-year increases, from a year where things were pretty bad. So yeah, they've improved over last year, but you seem to be ignoring the context of those improvements.

DJ, I've always said that Dick is a poor (and he admits it) finance guy. I would always give him a D, D- in that regard. The debt/interest issues, the unnecessary merging and refinancing costs are all because of his poor abilities in that area.

Operationally, however, I feel Dick has done an amazing job. And EBITDA, which is generally an operational figure, should extract the financing problems (like merging costs) to give people the true operational figure it is intended to provide.

Dick's job is CEO, and as such, he's responsible for high-level decisions on everything - operations and financing (among other things). If I were only good at one aspect of my job, I'd be among the millions collecting unemployment right now. But that's not really relevant to this discussion.

With regard to EBITDA, what you're basically saying is that it hides the things the company is having difficulty with, and that EBITDA indicates that things are great. OK, fine. Yes, if we ignore the things that aren't going well, things are going just swimmingly.

Perhaps the problem is that you're looking at one sliver of the company's recent track record (EBITDA), while others (including me) are looking at things from a more macro level.

EBITDA is a companywide, macro, number. It will encompass everything from the refund being issued to the guy who bitches about the nasty cheese on his nachos, to putting new trim brakes on I305. It will leave out interest and things that aren't relevant to the "formula" on the ground.

Yes, Dick has dropped the ball running the company into so much debt, and hitting $10M in refinancing and wasted merger costs. But his price policy certainly isn't the problem, and EBITDA reflects that.

For what it's worth, I think Dick is suited better for COO than a CEO.

Kyle2154 said:
But his price policy certainly isn't the problem, and EBITDA reflects that.

See, I just don't get how you can make such a definitive statement like that, when you don't have all the relevant information. Not to mention that you're basing your "things are good" position on a metric that ignores a significant aspect of the business that is absolutely not good - finance management.

For example, perhaps if the food value proposition weren't so out-of-whack, the company would not have needed to refinance in the first place. That is, if the company were doing better operationally, perhaps such pesky details like making sure they have money wouldn't be so problematic.

I guess I just don't see how it's rational to exclude certain significant aspects of the company's health when building a case for demonstrating how well things are going. Aside from this pesky sticky pedal problem, my Toyota runs just fine! ;)

why don't you guys make your own thread for that argument as this has nothing to do with the 2011 ride.

djDaemon said:
Aside from this pesky sticky pedal problem, my Toyota runs just fine! ;)

Well, even with the sticky pedal problem it ran just fine.

Stopping on the other hand.....

djDaemon said:
See, I just don't get how you can make such a definitive statement like that, when you don't have all the relevant information...

All relevant information is encompassed in ebitda.

For example, perhaps if the food value proposition weren't so out-of-whack, the company would not have needed to refinance in the first place. That is, if the company were doing better operationally, perhaps such pesky details like making sure they have money wouldn't be so problematic.

Um... what? EBITDA can be used to evaluate how the company is doing now, operationally, and in the past. It's percentage is usually even higher than that of Disney.

I guess I just don't see how it's rational to exclude certain significant aspects of the company's health when building a case for demonstrating how well things are going. Aside from this pesky sticky pedal problem, my Toyota runs just fine! ;)

I'm going to ignore weird strawman/hyperbole statements that aren't productive in any way.

Perhaps you should get a better understanding of EBITDA before bashing it. For your sake.

I'm not bashing EBITDA, but I'm also not clinging to it as if it's the only metric that matters, as you seem intent on repeating over and over again, no matter how often it's pointed out that EBITDA hides a lot of potential issues.

And I can link to opinion pieces on EBITDA as well. :)

Using EBITDA can overstate the company's interest coverage ability. For instance, if it has $12 million in operating profit, but $14 million in interest payments, things look a lot better if you can add back in $8 million in D&A expenses, so that it shows $20 million to cover the $14 million in interest.

source

Factoring out interest, taxes, depreciation and amortization can make even completely unprofitable firms appear to be fiscally healthy. A look back at the dotcoms provides countless examples of firms that had no hope, no future and certainly no earnings, but became the darlings of the investment world. The use of EBITDA as measure of financial health made these firms look attractive.

Likewise, EBITDA numbers are easy to manipulate. If fraudulent accounting techniques are used to inflate revenues and interest, taxes, depreciation and amortization are factored out of the equation, almost any company will look great. Of course, when the truth comes out about the sales figures, the house of cards will tumble and investors will be in trouble.

source

Can someone explain why all these people are using big words to make themselves seem smart, when the words are not even on topic about what the new ride may be? Please stay on topic and stop pretending that you have any idea what Cedar Fair's economic outlook is.

Using EBITDA can overstate the company's interest coverage ability. For instance, if it has $12 million in operating profit, but $14 million in interest payments, things look a lot better if you can add back in $8 million in D&A expenses, so that it shows $20 million to cover the $14 million in interest.

I'm actually glad you referenced that. It is the interest/depreciation that muck up the view of the "formula" on the ground though.

Let's say you and I have the same idea. We need $80 million and we can make $3.5 million a year with this idea. You have $80 million on hand, cash...you get started. I need a loan with 5% interest from a bank to get my $80M.

At the end of the year you made $3.5 million, I lost $500,000 because of INTEREST. Was your idea better? No. Were you doing it better? No. Which company is worth more? Neither.

Kyle2154 said:
Were you doing it better?

Well, if you consider "better" as more profitable, then yes, I did do it better.

Which company is worth more?

The one without debt.

djDaemon said:
The one without debt.

Ah Ha...and that is the real question, isn't it? You will need your $80 million back and my bank will need it's $80 million in principal back...

And we will both need the future earnings potential of our "companies" back too, won't we?

Without EBITDA some may say my company is worth nothing, maybe even negative, but a smart investor would realize it has every bit of value as yours.

the ffej man said:
Can someone explain why all these people are using big words to make themselves seem smart, when the words are not even on topic about what the new ride may be? Please stay on topic and stop pretending that you have any idea what Cedar Fair's economic outlook is.

I agree 100% with this guy.

Kyle2154 said:
You will need your $80 million back and my bank will need it's $80 million in principal back...

Your original description was misleading. I thought the company had $80 million on hand.

And I have no idea why you're resorting to story problems to try and prove your point. I get what you're saying - EBITDA is the only number that matters. I simply do not agree.