Extended Closure

2020TpForSale:

But after viewing and analyzing this post from beginning to the end, line by line, word by word, letter by letter

Please don't overlook every jot & tittle.

My question was rhetorical. This is not going to materially change the financial performance of the park, let alone the company.

^ I can't help but refute that statement...if a new attraction didn't impact financial performance, why build one in the first place? A basic observation would lead you to conclude Capex spend in new attractions have a direct correlation to financials. That is the pattern in the industry -- continuous high dollar investment in new experiences.

From my perspective, I don't think it affected attendance or revenue. This year at least. The resorts have been full most of the year (I stay at Breakers often and check availability quite a bit) and both parks have had pretty good crowds. Again, just my perspective. I don't have numbers to back it up or anything.

Read Hildebrant's book. The attendance record is still from the year Raptor opened. The biggest roller coasters of every type since have not been able to replicate that year. There are plenty of other reasons to keep building rides, like replacing those reaching the end of their useful service life, keeping a certain level of global capacity, and keeping things fresh over the long haul. They don't need to build something awe inspiring every year to keep repeat visitors coming back.

Weather will have a greater impact on financial performance than the availability of any one ride.

Yeah I remember that 1994 year. Wasn't it something like 3.6 million? I think now they're lucky to break 3 but as you said, there are many more reasons beyond attendance for new attractions. And as far as revenue goes, I think they've learned to make more money with less in attendance anyway (resorts, fastlane, much more prevalent alcohol sales, much better food options, etc.).

Yes, you invest $20m-$25 million in a ride (plus marketing costs) because you DON'T expect a decent return of investment in terms of its most tangible measures, like attendance and season pass purchases, and, correspondingly, in-park spending, particularly during its initial year.

And, obviously, no one other than the 10 crazed enthusiasts even pay attention to that marketing and the new ride expenditures, much less change their attendance behavior based this mega ride and whether or not it's operational.

Thus, it's completely irrelevant whether or not your $20m+ ride is a gigantic paperweight during its premier season. It has zero economic impact on the park.

Of course, if any of that were true (or even made any economic sense), why in the world would a park make these investments if they had no economic return? Why even spend advertising money or get press if it makes zero difference to the general public if your big new ride even exists, much less if it's open.

The answer, of course, is they do it for fun -- everyone knows that. (Oh, and to increase global capacity...)

Someone should tell Cedar Point they are idiots -- stop spending all this money on big new rides that have no impact on people's spend.

Expected ROI is going to be based off the overall impact of the investment over the lifetime of the purchased ride, not year one.

If you think a park is expecting to recoup the investment in one singular year, you are delusional.

If Cedar Fair (sorry, I can't call it Six Flags yet) agrees that the Top Thrill 2 situation is no big deal, I really need to get a job there, because the companies I've worked for have made very big deals about much smaller issues.

CoasterLine:

Expected ROI is going to be based off the overall impact of the investment over the lifetime of the purchased ride, not year one.

If you think a park is expecting to recoup the investment in one singular year, you are delusional.

What's delusional is to pretend the opening year is not important -- as in the most important year.

Again, if it weren't, then why do so many parks continue to open new rides yearly....

For a typical run-of-the-mill ride, yes the first year is extremely important.

Is the downtime desired? No.

Has it created a negative revenue impact for the park with it being down? Minimal at most.

Has it created disappointment? Absolutely.

A ride like TT2 is on the upper tier of experiences that will continue to draw people year over year the same as it would year one. It's in a relatively rare sects of rides that people will continuously come back to experience for many years to come.

The ride isn't a standard experience that people can find at X, Y or Z other parks.

Had Cedar Point been trying to open a Tilt-a-Whirl and it had been down nearly the entirely of it's first year, yes, you'd be correct.

veritas55:

Thus, it's completely irrelevant whether or not your $20m+ ride is a gigantic paperweight during its premier season. It has zero economic impact on the park.

Cool, you got it!

No one says it's not a bummer, or that the company wouldn't prefer that it was actually operating. But as others have also pointed out, big cap ex ROI is measured in years, if not decades. It's also been pointed out over and over that it will not likely materially affect attendance, let alone financial performance, because there are decades of history that demonstrate this.

Thank God you guys aren't running amusement parks, much less publicly traded companies (as best as I can tell).

They'd all be bankrupt as you jabber about Cap Ex amortized over years (and yet ignore Year One as the critical year of evaluation ....) and how your expenditures have zero material impact on attendance, "let alone financial performance...."

Somehow, I doubt the CF/CP financial folks are just shrugging off this "financial non-event."

Look, it's not going to have a giant effect upon this year's numbers. I agree with that in principle.

I also agree that it is a big deal on a number of different levels to have a much-hyped marquee new attraction fail so spectacularly 8 days after its inauguration.

Now, if the thing never gets right and $25 mil capital expenditure is written off and wasted, then I agree, shareholders would and should be quite displeased. $25 mil is a lot of $$ even for an $8 billion company.

For a little perspective on that, CF sold Knott's soak city to fund the Breakers renovation, as opposed to financing it via debt or equity and keeping the waterpark, ostensibly because tens of miilions of dollars is a lot of money to have on the right side of your books.

But I don't expect TT2 to be a paperweight or a total write off. I expect that they'll solve the issues and end up with a reliable ride that provides decades of service, even if that maybe doesn't happen until next year.

veritas55:

They'd all be bankrupt as you jabber about Cap Ex amortized over years (and yet ignore Year One as the critical year of evaluation ....) and how your expenditures have zero material impact on attendance, "let alone financial performance...."

I and others have explained to you why this isn't the case, with evidence. Attendance and guest spending are the business, and these are not affected by one ride, as attendance trends show.

Will Top Thrill 2 be the new ride for 2025? Or will it be Top Thrill 3?

Jeff:

Read Hildebrant's book. The attendance record is still from the year Raptor opened.

Update your operating software. 1994 is no longer the most attended year. If building new coasters did not drive attendance and Revenue they wouldn't build the big coasters. Turns out the best year for attendance was the year they built their best coaster.

1994: 3.617 Million

2019: 3.731 Million

I get why you wouldn't understand that though seeing as it wasn't in Hildebrant's Book.

CoasterLine:

Expected ROI is going to be based off the overall impact of the investment over the lifetime of the purchased ride, not year one.

If you think a park is expecting to recoup the investment in one singular year, you are delusional.

In that case, Im sure TT1 was a huge success! Wouldn't you agree? I mean, Im sure they man ROI over the lifespan of the coaster.

I'm not sure what sarcastic point you're trying to make but no, TTD likely never have ever saw ROI.

$25 million dollar investment with frequent downtime, required $1+ million a year in maintenance, and had an accident which lead to horrible press, multiple millions in settlement costs and shortened the life of the product to further generate any additional revenue for the park (in it's initial form).

I doubt Cedar Point saw a directly attributable revenue gain to TTD of $50+ million dollars.