Leland Wykoff

News now claims extensive problems existed with WindSeekers prior to being placed in service, and the record of problems grew: http://www.newsnet5.com/dpp/news/local_news/investigations/Cedar-Point-temporarily-closes-popular-WindSeeker-ride-following-series-of-malfunctions-nationwide This is disturbing news.

A bit more details from California OSHA: "It’s not typical. It’s unusual, to see such a repetitiveness of issues with one type of ride," Dean Fryer, of Cal OSHA, told the NBC4 I-Team. Cal OSHA plans to investigate whether there is a design flaw in the WindSeeker ride, Fryer said. http://www.nbclosangeles.com/news/local/WindSeeker-Knotts-Berry-Farm-Cedar-Fair-Entertainment-170800256.html

Orange County Register reports state closes WindSeeker at Knotts. Video and more information concerning the recent failures are also covered. An excellent article worth the read: http://www.ocregister.com/news/ride-372262-knott-down.html

Cedar Fair announced healthy results from the FUNForward plan to increase revenues, visits, and profits: http://www.cedarfair.com/ir/press_releases/index.cfm Revenues up 5% or $40 million thru Labor Day. On track to meet revenue and profit projections. Plan to pay distributions of more than $2.00 per unit next year. Predicting record Holloween season.

Here is a link with consolidated information: http://www.knoxnews.com/news/2012/aug/22/ken-bell-retires-dollywood-president/

Dollywood seems to be borrowing a page from the play book of Cedar Fair by announcing, and promoting, an easy installment payment plan for season pass sales. The "New EASY-2-PLAY" plan breaks down the payments into six installments ranging from $20.83 to 26.83 depending upon type of pass purchased. The combo pass is for both Dollywood and Splash County waterparks. The installment plan pass can only be purchased online--no doubt to reduce costs of administering the program. The Easy-2-Play plan appears to have been inspired by the very successful plans offered for the first time this season by the Cedar Fair family of parks. The Dollywood begins next week and is promoted as ending on September 3. The offer is pitched to current season pass holders and is cross promoted utilizing the Wild Eagle roller-coaster. For more information please see http://dw.dollywood.com/easy2play/.

Carowinds has had an episode, Saturday, involving the sudden shutdown of WindSeeker and a two hour delay in getting people off the ride stuck at a height believed to have been 300 feet. Some other parks with WindSeekers have experienced similar issues. The Charlotte Observer has this story: http://www.charlotteobserver.com/2012/07/14/3382885/tallest-carowinds-ride-malfunctions.html

Operation questions simply did not have time to come up or be addressed. Comments and questions were limited to three minutes. Given only two unitholders attended it retarded the opportunity to seek more. While a strict time clock was not enforced it was clear the board had a tight time line. The Board departed rather quickly to conduct a meeting and one presumed they had afternoon flights out of nearby Charlotte Airport scheduled. The questions of ride cloning and enhanced food/cuisine developments simply did not have time to come up and be addressed. Unfortunately the new VP of foods did not attend the meeting so questions could not be addressed to him following the meeting closing. However, it is clear a new day has dawned at Cedar Fair and such questions could be addressed at a later date to management. The meeting and management teams are much more accessible and open.

Had the pleasure of attending the Annual Unitholders Meeting in Charlotte Wednesday. The three nominees were great candidates and reinforce the trend of the company moving to a much younger, more inclusive, diverse Board of Directors. The elected directors received 98 percent approval by unitholders. The leadership teams--both management and Board--continue to evolve, grow, and draw new strength from the broadened skill sets available. The Board fielded shareholder questions concerning change in control payments and agreed to consider looking into the request to eliminate payments to management when such changes in control occur. The Board was asked to consider emerging new best practices in the area of executive compensation where by measurement metrics used to trigger executive bonus payments back out the growth percentages of the industry comparison group. Example: Cedar Fair revenues increase 11% at the same time the industry comparison group average revenue increase is 10%. The executives would receive bonuses based upon the 1% gain rather than the current formula which would reward the 11% (and thus pays the executive twice for the same performance--once in base salary and again in an enhanced or overpaid bonus for achieving the average industry performance). The annual meeting was sparsely attended by unitholders. Other than company insiders, only two unitholders were in attendance. The meeting moved at a quick and efficient pace. The floor was opened to questions and management gladly addressed all issues presented. Following the meeting it was my pleasure to visit nearby Carowinds where park General Manager Bart Kinzel and VP Jerry Helms greeted us at the gate, answered questions about Carowinds, provided a history of the park, and pointed out improvements and enhancements before we enjoyed the park midway. My impressions of Carowinds were favorable. The park was sparkling clean. Most rides featured rather fresh coats of paint, and wooden coasters were being rebuilt and refreshed. WindSeeker was operating and provided excellent views of the park, skyline, and countryside. Food looked good and the fries were better than one generally expects in a park setting. Wednesday was not a heavy attendance day for Carowinds and lines moved quickly. Several coasters had just one train in operation and the wait times were a bit more in those cases. The service and park employees provided an excellent experience. Lots of smiles and happy faces. Staff appeared well trained and on task with jobs. Every employee was well groomed and polite. A superb experience. Great job employees! Cedar Fair earns an A+ for this years Annual Unitholder Meeting and the presentation at Carowinds.

The longer ride at the Cedar Point B&M winged coaster will allow for much better capacity than Dollywood's Wild Eagle. Wild Eagle, while most impressive, has only two trains and the turn around time is so compressed I see no way they could add a third train to effect a capacity gain. They simply do not have time to board and dispatch another train in time. The prior departing train is already awaiting reentry into the station prior to the second train departing. No doubt Cedar Point will have a larger station, possibly larger trains with more seats per train, as well as more than two trains. A larger station and platform could allow for boarding to be more efficient and thus departures quickened. The boarding time necessary on Wild Eagle is excessive. While training could quicken the process a bit the real time fault lies in the structure of the ride. A double station would address much of those issues.

The Orange County Register has an interesting story charting five years of lawsuits filed against Cedar Fair's Knott's Berry Farm and Disney's Disneyland. It is an interesting read. The history shows the parks generally prevail and win or settle suits. Only two significant losses and they seem to be in the category of reasonable. Here is the story: http://www.ocregister.com/news/disney-356898-knott-court.html

Interesting news out concerning Gaylord Entertainment, operator of large convention and meeting destination resort hotels, and Marriott: http://www.washingtonpost.com/business/economy/marriott-gaylord-deal-to-boost-dominance-in-washington-convention-hotel-market/2012/05/31/gJQA8gBP5U_story.html?wpisrc=nl_headlines_Fri In a nutshell Gaylord Entertainment is transitioning to become a REIT and Marriott will contract to administer specific Gaylord Hotels. Much of this change has been driven by activist shareholders demanding better returns from Gaylord Entertainment. Gaylord Entertainment will retain the joint venture with Dollywood Productions to develop an indoor snow and water park adjacent to the Gaylord Opryland Hotel. That ventures scope was widened by statements Dolly Parton made this year at Dollywood upon the occasion of the grand opening of Wild Eagle. Entrepreneur Parton described the water and snow components as only the first phase in a much larger amusement park development. This morning the CEO of Gaylord Entertainment, Colin Reed, confirmed for me Gaylord will retain the JV with Dollywood to develop the new park and will continue, with its committed investment of 50% of the costs, and those funds will come from the REIT.

Cedar Fair has sited the Annual Shareholders Meeting elsewhere previously. But like many companies they tended to do so when they wish to shield management from retail shareholder questions. This new direction probably signifies a desire to rotate the annual meeting to reach-out to more Unitholders and further develop a broader base of retail Unitholders beyond the current Ohio headquarters. If they rotate meetings they are getting away from the Cedar Point as the center of the universe thought process. This is most likely good news. Note the meeting is being held at a park still overseen by a former CEO Kinzel kid.

Insiders continue to make purchases of Cedar Fair units as well: http://www.istockanalyst.com/article/viewsecfiling/articleid/5853708 Perhaps an institutional unit-holder is re-balancing a portfolio. Could be an institutional holder is reducing a position or taking profits. I doubt such volume is driven by sales by retail investors.

Today the New York Times publishes an interesting article looking at the competition between Comcast/Universal Parks and Disney Parks. The story delves into issues of industry growth, specific growth at the big resort parks, the tie-in's with products and intellectual properties. Here is the link to the excellent story: http://www.nytimes.com/2012/05/21/business/universal-armed-with-cash-from-comcast-takes-aim-at-disney.html?_r=1&nl=todaysheadlines&emc=edit_th_20120521 Reading between the lines we can see hidden values in Cedar Fair Resorts and Parks, Six Flags, and independent parks.

Perhaps next time LegoLand could snap together a power plant?

Thank you, TheLip2, for your posts. I am most grateful for your detailed reports, your analysis and interpretation of the nuances of the conversation including tone of voice, body language, and sincerity, fleshes out the interaction. Your reaction and judgements add considerable weight to your words. Again, thank you. Many of us appreciate thoughtful commentators.

Great Wolf Resorts is now a property in the Apollo stables. The announcement was made today that adequate numbers of shares were tendered by the Friday deadline. See story here: http://host.madison.com/wsj/business/sale-of-great-wolf-resorts-to-apollo-approved/article_78db6060-9635-11e1-9cc4-001a4bcf887a.html The entire board, except the CEO, has resigned, and they have filed to stop trading of shares on NASDAQ. The shareholders worked very hard to improve the offer from $5.00 to $7.85 per share. Not bad for a months work.

We have another telling interview with CEO Matt Ouimet. Some very interesting observations and clarifications: http://www.ceocfointerviews.com/interviews/FUN-CedarFair12.htm

The awareness and management of park aesthetics by Matt Ouimet is refreshing. The new open views along the Cedar Point midway is an example of making the built environment work to your advantage. The rides and what not will provide excellent backgrounds for the Luminosity events. Mr. Ouimet's focus on employees and leadership from all corners of the park are a welcome departure from the past. Ouimet knows everyone has something positive to contribute--if you let and lead them to contribute. It is a leadership climate situation. Agree the beach at Cedar Point needs to be more of an active part of the resort. It is an attraction requiring little capital outlay but offering huge potential gains. The expansion of camping and cabins is a reasonable and productive move. The refreshment of hotels as an ongoing process suggests Ouimet sees much work which must be accomplished. Stretching out the capital expenditures to accomplish the renovations speaks to the great level of need. But in this we can see Ouimet is looking to the future and a more rational application of capital expenditure allocations. He knows ongoing refreshment of the hospitality areas is necessary for the long term health of the company. Look to see more CapEx money regularly directed to these maintenance and improvement of product projects. The FastLane revenues will likely supply the additional capital necessary to address ride capacity issues. With the extra revenue they can add more trains and improve capacity. Which will make the FastLane customers not be such a drag upon the ride times--they essentially will pay for extra capacity which will benefit all guests. Good to see Ouimet is working to address capacity and delay issues. The FUNforward plan also hinted at these plans. He knows to improve the experience requires guests to spend less time on ride lines and more time doing. It is also helpful to acknowledge people standing on line for hours do not spend more money on park. Each minute Cedar Fair can give back to the guest is another revenue opportunity. FUNforward presentation also alluded to the replacement of rides with high maintenance or operating costs. Ouimet has spoken of the need to reduce the cost of acquiring rides--possibly by working with manufactures to improve design and lower development costs by ordering multiple rides. Wind Seeker may serve as a model of such a strategy. While the interview was Cedar Point centric, being shot at the Point and all, we extrapolate and know the good vibes are resonating at each park in the Cedar Fair system. It will be interesting to continue following the Kings Island board to read of the improvements and new directions as they reach KI and are integrated. Congratulations are in order to Jeff, at CoasterBuzz, for the excellent video and interview.

Now Motley Fool weighs in on the Apollo Great Wolf Deal. They predict Apollo will sell off resorts and move to licensing and management fees as the revenue streams. The also predict growth by bringing other properties into the Great Wolf fold--a strategy management has abandoned in the review and recent evaluation of the company. They also forecast debt refinancing and promotional spending to increase occupancy rates and daily revenues per room. This has all been predicted--right here on this very board--weeks ago. For the complete article please see: http://beta.fool.com/buffettbeater/2012/04/25/wolf-lodge-or-sheep-shack/3939/?ticker=SIX&source=eogyholnk0000001

Today a most interesting analysis of how the Management, Board, and advisory bank DB got the valuation all wrong in the Great Wolf offer. To over simplify the board and DB assumed the fair offer price was the price which was offered. Hum. To read the complete article, please see here: http://blogs.wsj.com/deals/2012/04/22/dealpolitik-great-wolf-shows-shortcomings-of-banker-valuation-opinions/?mod=google_news_blog

At the Dollywood/Wild Eagle VIP opening Dolly Parton shared more details than had previously been publicly announced. She indicated a much larger development than had been suggested--indicating a $50 million initial investment over two years and an ongoing opening of new sections for several years into the future--should business warrant.

The Wisconsin State Journal is reporting KSL Capital Partners have bowed out of the bidding for Great Wolf Resorts. That leaves the offer on table at $7.85 from Apollo. Note less than 10% of the shares have been tendered (and many of those are management/board shares required to be tendered under Apollo's deal) thus leaving management the task of picking up roughly 42% more tenders in the next 14 days: http://host.madison.com/wsj/business/great-wolf-free-for-all-continues-board-approves-apollo-s/article_2f535e20-8aff-11e1-a892-001a4bcf887a.html It will be interesting to see if shareholders and mortgage debt holders join in the buy-in of this deal and tender or agree to new change in control provisions. Again it is worth considering the new climate WOLF may enjoy operating in. Credit has loosened, thus making debt refinancing more available and on much more attractive terms. Occupancy rates for hotels and attendance at amusement parks is expected to have big gains this summer and fall. Given the opportunity to sort the company out, almost on auto-pilot, shareholders may question the need to be sold out. New leadership is needed at Great Wolf. Not new ownership.

The continuing escalation of the break-up fee should trouble all shareholders. Essentially Apollo is collecting interest on the delays caused by the low-ball offer they made. Note Apollo blocks shareholders from collecting interest for delays in the payment and closing of the deal once shares are tendered [or taken]. One thing we can be certain of--the company has not yet reached full valuation. We know this as Apollo requires a profit premium expectation when doing a deal. So even at the "inflated" price of $7.85 per share the true value of the company is not necessarily exposed. That management and the board have no accurate measure, or sense, of the company value is, to say the least, troubling. Perhaps Apollo intends to divvy up the company upon acquisition. That could account for the rather odd mortgage change in control provisions being sought. Perhaps a WOLF is at the door. The division of the parts might be worth more than the whole. Again, I shall say, it could all be academic soon. Should shareholders or mortgage debt holders simply decide not to tender shares and rights at the current price the deal would be destine for failure. Then shareholders would have a FUN new job--reforming the board and management.