The Announcemnt You've been waiting for

Yes, Jeff, the announcement could have nothing to do with rides or attractions. What I'm struggling with is finding anything other than a major ride/coaster that would have the typical amusement park customer excited about paying 41-72% more to walk through the gate.

Allow me to make this observation: when Geauga Lake puts a big banner up on their home page, almost "encouraging" everyone to believe something "big" is coming, and they lead you on further by raising their season pass price a whopping 41-72%, they better deliver... Ride or not.

People have long memories. They remember when someone misleads them. They remember when someone takes advantage.

Maybe the news is they're acknowledging their mistake & selling GL before it drags the whole company down. That would have nothing to do with rides/attractions, and could be the "big announcement" the unit holders have been waiting to hear...

You lost me a bit on the increase in the Season Pass price. How much was a season pass last year?

Some of that increase, and correct me if I'm wrong, is only if you choose to add Cedar Point to the mix.

What am I missing?

Last year, a GL season pass was $49. For 2005 GL is $69. That's a 41% increase.

Last year, they honored the "four-pack" of passes, which could be purchased for $40 each. That's an increase of 72.5%.

Those prices are for "just" Geauga Lake. BTW, I think parking went up too vs. last year, which would only rub salt in the wound.

Those were the "early" prices, so we're comparing "apples to apples".

*** Edited 10/22/2004 7:51:28 PM UTC by TTD is sinking too!***

Well, that makes a little more sense but of everything I have read about Geauga Lake the past several years my guess is that people might be willing to pay more if the service was better. More staffing to allow for full operation of coasters is just one example.

Back when I was at GL, it was basically an unsupervised location for babysitting. When summer camp programs can cost at least $100 per week, $69 for the season looks like a pretty good price to me.

For the caliber of park that Geauga Lake is, particularly with an included waterpark, $49 was way too cheap. Now, if they do spit the waterpark then there might be room for an argument but even then, as a parent, $69 sounds like a good deal to me.

That would pay itself off in about 5 or 6 visits wouldn't it?

What unit holders think it was a mistake? As best I can tell, the park didn't meet expectations this year, but the quarterly distribution didn't fall. When they actually have an entire off-season (and a season of planning) to actually make something happen, instead of rushing to get the thing open in less than three months, there's no doubt in my mind that the park will be on the right track.

The season pass price thing was a Six Flags legacy. The new pricing makes a hell of a lot more sense, especially for those of us that have CP passes.

There's still something else at play here, and I don't know if it'll be announced that day or not. I think it probably will be, and when it is, I'm sure it will ease a lot of minds.

The new pricing makes a hell of a lot more sense

I'll let the 2005 GL attendance numbers speak for themselves. We'll see if it does or doesn't.

How will the "locals" react to the option of (a) paying 72% more for Geauga Lake or (b) paying 260% more & getting Cedar Point? My guess is that neither option will thrill them, regardless of the "big announcement we're all waiting for" or whether the cost was Six Flags legacy or not.

P.S. I'm one unit holder who thinks GL was a mistake and I'm not afraid to say so, nor was I at the time of the announcement. They should have let Six Flags run it into the ground, which they were doing a fine job of themselves, if they wanted to eliminate the competition... Cedar Fair is now running up a fine tally: $145 million to buy it, plus the $10-$15 million (est?) loss in 2004, plus whatever money they're going to dump into it for 2005. How many years until it's "break even" again? What COULD have they spent that $150-$175 million on? (Hey, I got my wish list right here.) What would have the return been from THAT investment?

GL is a money pit IMO.

People called Jefferson's Louisanna and Sewerd's Alaska stupid too. I think both of those purchases have been okay.

The people at Cedar Fair are much smarter than us when it comes to amusement parks. They would not have baught GL if they werent going to make a profit off of it. They know what their doing and I hate when people criticize them and act like they know what their talking about. Let CF do it's job. Their good at it.

They would not have baught (sic) GL if they werent (sic) going to make a profit off of it.

I'm happy to learn executives of Cedar Fair are immune from (ever) making mistakes. Thanks for setting the record straight. I stand corrected.

*** Edited 10/23/2004 8:20:32 PM UTC by TTD is sinking too!***

You're saying that unless they put in a big new ride, they're doomed. There's more to making big news and bringing in customers than a supercoaster. You have no idea what they're planning on doing and you're jumping to conclusions based on what you think might happen. How do you even know the "news" is even one thing? Wait until next month and then we can have a conversation on if what they're doing is right or wrong.

Sure they make mistakes. Dick Kinzel himself said he regretted not buying GL years ago. It's not that hard to see that they didn't buy the park to eliminate competition, as you implied above. When was SFWoA ever competition?

*** Edited 10/23/2004 9:14:48 PM UTC by Walt***

You're saying that unless they put in a big new ride, they're doomed.

No, I'm saying they raised pass prices a lot and are making an unusually big deal out of their "announcement" (front page, month-long baiting.) They're creating an expectation, intentionally or not, that people will expect them to deliver on. What I have said is that I can't imagine an announcement short of a "major attraction" that would satisfy those expectations & justify the cost increases. I'll wait to see the announcement and we can discuss whether it's worth 72% more to last year's "four-pack" buyer to get another set of passes.

Regardless, I feel they could have spent the money more wisely (and that can still be true even if GL turns profitable.) If they didn't buy GL to eliminate competition, then you must be assuming they're going to change into something it currently isn't -- I don't think anyone believes it will compete with Cedar Point as an "amusement park". And, if that's the plan, then let's hear (now) what expected monies and timeline are required for such an extensive transformation. How many hundreds of millions do you want to spend on this? What possible return can you expect out of the Aurora area, with Cedar Point (and other resort areas) so close?

As an investor, I want a company to spend their money wisely. I can't see how a big "fixer-upper" like GL made it to the top of the list, and at such a hefty price tag.

TTD is sinking too! said:
I'll let the 2005 GL attendance numbers speak for themselves. We'll see if it does or doesn't.

How will the "locals" react to the option of (a) paying 72% more for Geauga Lake or (b) paying 260% more & getting Cedar Point?

The decrease in attendance had nothing to do with season pass prices.

The problem is that you're missing a key bit of information because they haven't announced it yet, and until they announce that, you won't see how they've made a decision that goes to quite an opposite extreme.

And like I said, distribution has not decreased, so to say that GL is a drain on the company is not accurate.

And like I said, distribution has not decreased, so to say that GL is a drain on the company is not accurate.

It is accurate to say it's a drain on the company.

First, let's clarify the distribution. Distribution per unit is the same, but aggregate distribution has increased (due to the dilution incurred with the GL financing.)

So, here's my math: pay out more in total distributions (due to GL dilution) + make less money (due to GL losses) = drain on the company.

FWIW, investors would consider a lower distribution an "admission of defeat," so I expect it will be the last thing they'll do. That doesn't mean it isn't a drain on the company in the meantime. They'll have to borrow (or divert, from other efforts) the funds to continue paying the current distribution for as long as Geauga Lake is losing money (or not making enough to cover the cost of distributions for the additional units).

Wow, watch it be something huge, absolutley awsome....but then again according to GL would could all be waiting for another snoopy world or something....

TTD is sinking too! said:
First, let's clarify the distribution. Distribution per unit is the same, but aggregate distribution has increased (due to the dilution incurred with the GL financing.)

So, here's my math: pay out more in total distributions (due to GL dilution) + make less money (due to GL losses) = drain on the company.

That's some pretty screwed up math. If they didn't buy GL, that doesn't mean that the distribution would magically be higher. They borrowed money to purchase the park. They wouldn't otherwise borrow money to give it to unit holders! Furthermore, the "drain" was all of $4 million by GL. Drop in the bucket.

Even if the distribution stagnates for a year or two, so what? That's what happens when you slowly and carefully grow a company with new product. GL is new product, and the only thing they did "wrong" was purchase the park one month before they had to open it. Still, it's not like Six Flags was going to hold on to it and wait until after the season to sell it.

With proper marketing and cap ex, the park will be a winner. Just wait and see how they're positioning the park... you'll see.

Jeff, you're either missing my point, or confusing the issue of a "drain on the company" vs. "a drain on unit holders".

FUN issued 2.4 million units to finance the GL acquisition. They will pay $1.80 distribution on each of those newly created units, this year and forever (hopefully). This "drain" on FUN -- directly attributable to GL -- is $4.3M annually. That point is inarguable.

Another drain is the financial performance of GL. According to the recent 10-Q, GL lost $5.8M (GAAP) in the second quarter alone. I'm estimating a $10M loss for the year, and that might be conservative. That's another drain on the company, directly impacting the bottom line, separate from the $4.3M above.

A third drain is the money they dumped into the park so far, not all of which is expensed (so doesn't fully show up in the above numbers). Re-theming, capital improvements, etc. Only the 2004 depreciable/"amortizable" amount is in the $5.8M - the rest will hit over time, but is nonetheless a real expense that came out of their pockets in 2004. That may be another couple million for all I know. Regardless, it's another drain.

A fourth drain is much less measurable - it's the "opportunity cost" of diverting key employees to GL, when they would have been working on something (undoubtedly) more profitable and productive. We can debate how much this sets other projects back, increases the training costs, etc., but it's certainly not "zero".

Contending GL hasn't been a drain on Cedar Fair (or has only been a "drop in the bucket") makes no sense. It's the type of "spin" I'd expect from one for Cedar Fair PR folks, not you. You generally strike me as pretty fair and objective.

Rest assured, I'm NOT saying GL will ALWAYS be a drain on FUN. I'm simply stating the obvious - that it has been so far, and will likely continue for at least 2005, and maybe even 2006. Turning what they have around will be EXPENSIVE, and will take TIME. The money could have been more wisely spent IMO.

And now I'll drop the subject. We can take it over to the Raging Bull stock market chat board if you'd like to discuss further....

Well, I am about to be accused of some ugly things but I will say it anyway:

I don't think locals will be that upset about the increase in prices because I don't think locals have been going to the park for a few years now anyway. I think the lower price was inviting a certain demographic that made attending the park uncomfortable for a lot of people.

Now, if I hear anyone calling me a racist we are going to have issues because that isn't my point at all. I think unsupervised teens...regardless of race...are a real deterrent to families.

Walt Disney wanted his park to be a family park so he set his prices in such a way so as to discourage some folks from coming. That practice continues today and it seems to have worked all these years.

In any event, the increase in prices with what I am guessing will be a separation of the waterpark from the main park will lead to a change in the demographics of the average park visitor...a change that will likely be welcomed by families and, yes...locals.

Especially unsupervised black kids.
That's how racist your post appears.

Well, that didn't take long at all. Thanks for the benefit of the doubt Mr. White.

Since you didn't read my entire post:

"I think unsupervised teens...regardless of race...are a real deterrent to families."

I've been posting here a long time and I've never been accused of being racist. There is no other way to address what I did without it sounding suspect but I am comfortable with my comments.

Let me crerify. That's how it appears. I am not of the "PC" crowd. I believe in calling things as they are. I have no idea if you are a racist. I just know todays "PC" climate.