The Announcemnt You've been waiting for

TTD is sinking too! said:
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.

No, it's not at all. They issued more units, yes. Despite this, the unit price is still higher than it was a year ago, as is the distribution. So how is that a drain? The park is taking a hit, yes, and the rest of the company is picking up the slack. Are you saying that if they didn't buy GL that both would be higher? On what basis? If you want to talk about a drain this year, talk about the water parks. Shall they sell them all off?

GL's numbers will obviously improve every year. The ONLY HAD THREE MONTH'S. Cut them a break, they will improve the park, and its income tremendously in another year or two.

Jeff, here's the impact to FUN as a (direct) result of GL:

• They now have to pay $4.3M more in distributions (assuming they keep the per-unit distribution the same) every year from now to eternity.
• Last quarter GL lost $5.8M. It will probably lose money this quarter as well.

You asked "how is that a drain?" I hope the above two points answer your question. FUN has to pay more in distributions, and they have less money to pay it with, both the direct result of the GL acquisition.

P.S. The day before the GL announcement (3/9), FUN traded at $34.75 per unit. The day before the GL financing announcement (7/14), FUN traded at $30.88 per unit. Today, it's trading at $28.90 per unit. I'm obviously not the only investor who thinks FUN made a mistake...

And it's still higher than it was a year ago, before the deal was even a twinkle in Kinzel's eye. FUN's pricing has been inline with the market in general, with every major index.

It would have been a disservice to Cedar Fair unitholders if Kinzel didn't pursue the deal with Six Flags.

Someone would have acquired that property. Maybe Paramount, the Kennywood folks...heck..even Disney could have been a potential player. So, then someone who might actually prove to be real competition would have been a stone's throw away. THAT would have been a bad business decision.

Other's are right, Cedar Fair had mere weeks to get the park operational before the season hit. It is obvious that they have now had time to formulate a strategy and I expect we will hear some of that strategy in the coming weeks.

There was big concern from Knott's lovers when Cedar Fair went in and those fears have been diminished. They are doing a great job with that gem of a park.

Anyone who rights off that Aurora property is being short-sighted.

FUN's pricing has been inline with the market in general, with every major index.

Here's the performance since the GL acquisition announcement on 3/10:

• S&P 500: down 3.9%
• Dow: down 6.5%
• NASDAQ: down 3.8%
• FUN: down 16.8%

You may call that "in-line", but I don't.

Investors obviously didn't like the announcement, and (due to the severity of the drop) my opinion here may actually be the majority, not the minority. I am, however, apparently the only one willing to publicly state the obvious, and voice some displeasure over it.

Let it go, already.

MrScott

I've never been one interested in the short term when it comes to investing. As I age I am sure that will change. But, love Kinzel or not, the company has performed exceptionally under his tenure and he has it set up to continue performing well beyond his retirement.

TTD, if you aren't happy then sell. But, I wouldn't recommend it.

Thanks for your suggestion, MrScott, but when someone says "FUN's pricing has been inline with the market in general," I just can't let that pass. The reality is that it's not "in-line", it's more than 4x worse since the GL announcement (vs. S&P500, the most appropriate market to compare FUN with.)

I love Cedar Point. However, I'm realistic enough to know that the "Geauga Lake drag" WILL eventually impact my favorite park, if it hasn't already -- which is why I hate seeing them throwing even more money down the rat hole ("the announcement we've all been waiting for".)

Maybe a major attraction WAS planned for Cedar Point for 2005 and is now delayed because of the drain GL has put on the company. We'll never know. I'm disappointed, and so are a number of large investors, apparently -- 16.8% drops in 7 months are more than "blips."

You should let it pass, because you're talking about one instance in time. Look at the 12-month average. No individual stock follows the indexes exactly. But go to any investment site and graph the indexes and FUN over the last 12 months. Not surprisingly, it's like looking at the same curve. In fact, FUN has out-performed every index since 2001. They all went south, FUN went higher.

Look around the chain... the parks have all had meaningful and common sense cap ex over the last few years. Dorney's growth in particular has been stunning, and Hydra will no doubt drive attendance higher. I'm betting that if the weather cooperates, they'll beat the year Talon opened.

Furthermore, there is no "drag" from other parks. The company doesn't operate like Six Flags. Each park is a discreet business unit. They don't build a big coaster at one park with the idea that the entire company can pay for it, they build a ride because they think that park can generate enough business on it to get a quick return on investment.

There is a fairly major attraction planned for CP, and the various things in the works for GL shows just how well the two parks will be positioned against each other.

And speaking of investment, I bought my first units when the price was in the teens, circa 1999. It continued trading there into 2001. I have no intention of selling any time soon. It's the only thing I own that's worth more than it was before the bust.

And, to prove my point:

Over the past 5 years Cedar Fair units are up approximately 50% while the S&P is down about 10%.

Over the past 2 years Cedar Fair is up about 28% while the S&P is up about 22%.

So, once again, if you are in to Cedar Fair for a short term investment then get out. But, over the long term (and I've had units since 1995) I've been very pleased with the results and I have no reason to believe I won't continue to be pleased.

......so yeah, about the announcement we have been waiting for, has anyone noticed something that could point to a major change. Or is the announcement going to be the expansion of the in park Taco Bell menu.

Joseph White said:
Especially unsupervised black kids.
That's how racist your post appears.

It sounds nothing of the sort. You read it that way because you wanted to.

It is a practice that holds true at both Knott's and Disneyland to set prices a little higher to discourage unruely folks from just stopping by for the heck of it. It works.

Get your head out of your ass and stop being an idiot.

Adernaline said:
Or is the announcement going to be the expansion of the in park Taco Bell menu.

I wouldn't mind that Taco Bell or that SUbway expanding their menus's.;)

What GL most likley meant by "the anouncement youv been waiting for" Isnt trying to say weve been waiting for what there gonna add. It meant that there finnaly goining to give the anouncement of what they plan to do with the park, which is what everybodys been waiting to hear. We have been speculating forever on what there going to do with the park now that they have time to do it, and we've been dieing to know, and waiting for them to tell us, and now they are. So its the anouncement we've been waiting for. I think people just read into it too much.

That's what I took "The Announcement You've Been Waiting For" to mean. Not any particular attraction, coaster or otherwise. Rather, I think it will show the direction Cedar Fair plans to take Geauga Lake, though I'm sure the announcement will also be about new attractions.

And, I think that's important. After three name changes, three concept changes and just general confusion about what the park is, a clear direction and path toward future stability will be very welcome.

Great point. Couldn't of said it better myself.

From what I take on the "Announcement You've Been Waiting For", it sounds to me like they've come up with a plan for the Wildlife Side finally. That's what a lot of people have asked all season, and that may be what "they" have been waiting for.

Heh, a "plan". I really wonder what they're going to do. I'm sure it's something pretty big. It would be very cool if CP was to re-create their own animal park. Perhaps they will be two seperate parks. This would make GL a 2-3 day event.

However, the possibility of CP getting an animal park up and running (with animals) by the spring isn't too likely. That's a lot of animal acquiring to do in only a matter of 5 months.

Well i am done guessing what the announcement could be, but all I know is that The Villian better get new trains for next year. It could be an amazing ride but its too rough because of the trains. And its not just The Villian that needs some care.