Leland Wykoff

Like Beatrice snatched products from Wesson Oil to Samsonite Luggage?

The generally accepted rule for prudent theme park development calls for a major marketable capital investment (MCI) to occur on a three year cycle. Historically, a MCI was viewed as a major thrill ride, themed area installation, or addition of a major resort hotel property. In the two valley years between MCI smaller investments such as flat rides, theaters/entertainment venues, restaurants, retail, and place-making would be undertaken. This allocation of investment allowed parks to fully capture revenue values from major ride additions as the first year brought in new-to-park guests, second year those guests returned along with fallen-away guests, and third year the shine was still on the major investment and pulled in new and returning guests as the reputation of the investment continued to create and maintain guest demand. Valley years allowed parks to take a break from large capital intense investments while focusing primarily on direct revenue generation additions such as food and beverage, shops, parking, line-skip passes, and other new revenue streams. Example: Cedar Point invested heavily in the "new" Top Thrill 2 attraction for 2024. Prior to the discovery of the issues which have crippled the deployment of this ride, we could assume Cedar Point would go approximately three years before the announcement of another major new attraction. In the valley years we could have anticipated water park additions, flat rides, Camp Snoopy improvements, new food venues, shopping, and such. With the coming merger completion of Six Flags and Cedar Fair in the next week or so we can assume a much refined, and likely reduced from historical levels, MCI plan chain wide. Six Flags parks will require much cosmetic adjustment such as painting, deferred maintenance attention, place-making, food and beverage enhancements, and retail additions to improve on-park expenditures. Seasonal enhancements such as IP related Haunt product introductions as just announced will flesh out the capital expenditures budget. Major rides will likely be placed on the back burner for a couple of years as park potentials are evaluated, marketing studies are undertaken, and legacy Cedar Fair management works to establish and restore relationships with major ride manufacturers. Given the past bad blood between Cedar Fair and several ride manufacturers, and the effort to elevate Zamperla via TT2 has gone south, compounding Cedar Fair management failures to manage ride projects on-time and on-budget (think Knott's Berry Farm and its long idle Montezooma's Revenge and ongoing issues with Xcelerator), failure to successfully implement the Amusement Dark project introducing dark rides to each park, and apparent lack of follow thru on projects to expedite replacement ride part manufacturing in Ohio (rather than awaiting long delays on parts to be crafted by China and other Asian suppliers), management seems lacking in the skill sets necessary to engage in large complicated capital projects at this point in time. Watch for Cedar Fair/Six Flags managers to be picking up paint brushes, rather than erecting cutting edge rides for the foreseeable future. After all, management is still struggling to integrate an off-the-shelf mouse coaster at Cedar Point sourced from Zamperla. Tough engineering projects are likely on hold for the time being at Six Flags Entertainment.

Cedar Fair could have put the breaks on this IP expansion had they so desired. This is a clue the combined company will not run away from expanded IP as Cedar Fair historically has. Reports suggest additional Six Flags parks expect to announce additions of the stable of participating parks in adoption of the haunted house IP. As major streaming services expand efforts to monetize IP revenues watch for CF/SF to expand these branded experiences. Paramount and Warner Bro. Discovery are both desperately seeking to turn around losses in streaming. Neither of these entities have substantial theme park presence. Thus partnership opportunities exist which could be beneficial and profitable to both studios and the new Six Flags. Keep in mind these are rather low cost additions and enhancements to offerings already budgeted and planned for park operations. Large parts of each additional penny of revenue falls directly to the bottom line of operating profitability. Such deployment of capital investment has the potential of significant returns at low risks and low costs. Such enhanced haunted product will also be characterized by high mobility--haunt features and themes can be switched out and rotated among parks to provide constant annual refreshment of the product in various local markets. The potential exists for expanding relationships and partnerships with streaming services eager to expand product lines, awareness, merchandising opportunities, and unlock values from their vaults (note Saw is promoted as a 20th Anniversary product). The combined Cedar Fair/Six Flags provides a platform for showcasing exciting seasonal offerings and launching stages for a variety of IP products. These can potentially drive admissions, merchandise, and other on-park revenues. All at relatively low costs. The combined Six Flags Entertainment will be stretched thin as it deploys capital expenditures to upgrade both parks and park/company reputations. This will require an agile deployment of invested capital spends. FUN will be looking to maximize impacts and create bragging rights over competitors. FUN will not have adequate capital spend to simply add signature ride after ride to parks in the near future. Wow Factors must arrive at lower costs and risks. Seasonal and shoulder season revenue expansions are prime areas of exploitation to produce year round excitement and highly desirable new guest offerings.

Cedar Fair announces and confirms the management leadership which will take the reins of the newly merged company. Six Flags Entertainment Corporation will be the name of the merger of Cedar Fair Entertainment and Six Flags. The merger is anticipated to close July 1, 2024. The new company will relocate corporate offices to Charlotte, North Carolina, whilst also maintaining some corporate functions and offices at Cedar Point in Sandusky, Ohio, at least initially. https://www.msn.com/en-us/money/companies/cedar-fair-six-flags-reveal-leadership-lineup-as-merger-finalizes/ar-BB1osAme

The Disney Shareholder vote for the Board of Directors is tonight 4/2/24 at 11:59 pm. This is your opportunity to vote, or change your vote, for the dissident Board of Directors slate comprised of Nelson Peltz and former Disney Executive Jay Rasulo (you must also vote "Withhold" on the following candidates: Michael B.G. Froman, Maria Elena Lagomasino, Craig Hatkoff Jessica Schell, and Leah Solivan) if your goal is to elect Peltz and Rasulo. Disney has lost its way. Disney seems to be doubling down on producing movies and entertainment for which no profitable market currently exists. Disney studios has lost more money in one year than any studio in history--and that's saying a lot. Disney Parks and Resorts have been neglected, under invested, and treated like cash cows to fund any manner of foolishness in other divisions of the company. The newest Disney Cruise Line ship has debuted to less than stellar reviews. Streaming services are a huge money draining mess. Who is Nelson Peltz? And why do shareholders believe Peltz/Rasulo is the catalyst need to effect positive change and get Disney back on track as the premier entertainment company? Because Peltz has pulled off such a task before: he lead the board turn around of Proctor and Gamble and improved the performance of the company to all time highs. Rasulo has been an insider at Disney and clearly sees the problems created by current leadership. After Nelson Peltz exited Proctor and Gamble he moved on the join the board of international consumer goods company Unilever. The turnaround is well underway, non-core product lines have been divested, board governance has improved, a sharp focus has been placed on the most promising, profitable, and consumer preferred brands, executive talent has been sharpened and adjusted to execute a plan of success. Below is a link to the Unilever Growth Action Plan which reports upon, updates, and provides clear details about the turnaround. This plan is miles ahead of anything Disney has crafted to outline a concise plan of attack upon their many issues. Read the Unilever Growth Action Plan and decide for yourself if this is the type of leadership Disney shareholders deserve. If you agree that it is, vote, or adjust your vote, tonight to support Peltz/Rasulo. For those who think they have to few shares to make a difference, you should know Peltz board vote was so close at Proctor and Gamble that initially the company announced he had lost the vote. In fact Nelson Peltz won the vote by an extremely thin margin of victory. It is not to late to quickly vote or adjust your vote tonight. Here is the promised link to the Unilever Growth Action Plan update: https://www.unilever.com/news/press-and-media/press-releases/2024/implementing-growth-action-plan-at-pace/

Oh, my. What does this announcement suggest we might look forward to under the proposed Six Flags Cedar Fair merger? Five plus year timelines to refresh, renew, and renovate rides? If Cedar Fair has had this much difficulty managing rather mundane roller coaster updates one must question the ability of current management to integrate an entire chain of parks composed of troubled assets. A season pass holder system in shambles, failing on-park revenue growth, vast areas lacking strong elements of 'place making,' rundown facilities screaming for serious and urgent maintenance, among a host of other issues. The capital investments necessary are a daunting task to grasp. Much less finance and execute. We are to believe an organization which lacked the necessary moving parts to repair two coasters in a timely manner at Knott's Berry Farm is the correct management team to take on Six Flags and its plethora of problems? Color me skeptical.

Cedar Fair settles with two employees for $50,000.00 in housing age discrimination issue. Cedar Fair also agrees to modify housing requirements and procedures. https://www.cleveland.com/court-justice/2024/02/cedar-points-parent-company-agrees-to-reforms-pay-50000-in-eeoc-age-discrimination-case.html

The Cedar Fair board has began the process of awarding executives bonuses for arranging the proposed Six Flags merger. No doubt other payouts will be announced as time marches on. It is telling former CEO, board member, and man charged with acquisitions, Matt Ouimett is no longer onboard and seems to be left out of the bonus gravy train. Things to think about. https://www.tipranks.com/news/company-announcements/cedar-fair-grants-special-award-to-executive-pre-merger

Today local newspaper the Sandusky Register reports on regional investors questioning the proposed merger between Cedar Fair and Six Flags. Quite interesting reportage: https://sanduskyregister.com/news/503820/rotten-merger-deal-raise-red-flags/

Once upon a time Cedar Fair planned to open a modest mass market hotel at Canada's Wonderland. Announcing the project way back in August 2018 plans called for a co-branded Hyatt Place and Hyatt House 203 room facility to welcome guests by 2020. The hotel was regularly mentioned and highlighted in analyst conference calls--until it suddenly wasn't. Cedar Fair confirmed the project had been abandoned when questioned by a shareholder seeking progress reports. Cedar Fair spokesperson indicated the lengthy government permitting and approval process would have to start over fresh if a project was later initiated. Oddly, Cedar Fair spent a good deal of time and money on a project that would not come to fruition. Now it appears a new project may well be underway up North. A trademark application has reportedly been filed for a hospitality development which suggests a project much beyond the scope of a cobbled together Hyatt may be in the works: Here is a link to the Hyatt Hotel announcement from August 27, 2018: https://newsroom.hyatt.com/082718-Cedar-Fair-to-Open-New-Hyatt-Place-and-Hyatt-House-Hotels-at-Canadas-Wonderland-near-Toronto Given the proposed merger with Six Flags it is not clear if this hotel project, and other expansions, may be abandoned as austerity budgeting could be ushered in and grip the combined SIX/FUN company. In any event, hats off to UrbanToronto.ca for reporting on these developments.

Here is a quick review of the "dirty dozen" crimes Disney allegedly committed in relation to Reedy Creek Improvement District:

Link to 72 page audit report: https://dw-wp-production.imgix.net/2023/12/CFTOD.pdf

Disney benefited for decades as a result of the Florida special Reedy Creek Improvement District. An audit of the district has turned up devastating allegations and examples of abuses of power including property tax issues, failure to deliver promised developments, bond and securities issues, evading Florida Sunshine Laws governing open government meetings and records, gifts funneled to politicians, operating ghost cities, bribes, and a host of other violations. A good overview of the issues are in the video link below:

A big elephant is in the proposed merger room. Expansive press releases from both Six Flags and Cedar Fair fail to address the possible negative tax implications of this transaction. Cedar Fair trades as a Master Limited Partnership which carries with it special tax benefits to Unit Holders. Should this merger result in conversion to a regular corporation, such as the mentioned C Corporation buried in paragraph 14 of the press release, tax implications for both profitability, unit holder payouts/dividends, and other issues are not directly addressed, or in fact, acknowledged: "Upon closing of the transaction, the combined company will operate under the name Six Flags and trade under the ticker symbol FUN on the NYSE and will be structured as a C Corporation." This is quite the omission.