Leland Wykoff

Gilroy Gardens, managed by Cedar Fair for several decades, is seeking a new Development Partner to expand and utilize hundreds of aditional undeveloped acres with bike trails and other adventure and recreational uses. This could signal the impending end of Cedar Fair's management contract: https://patch.com/california/gilroy/gilroy-recreation-based-tourism-development-proposals-sought

Disney announces end of Season Passes as California Parks reopen following Covid interuptions. Look for other industry players to scrutinize Disneys move toward a membership type program and expect other chains to emulate the Magic Kingdoms lead. https://www.latimes.com/entertainment-arts/story/2021-01-14/disney-annual-pass-disneyland

https://www.ocregister.com/2020/12/29/imagineer-joe-rohde-reflects-on-40-years-of-dreaming-up-disney-theme-park-attractions

Lets try posting the link again. Sorry: https://sanduskyregister.com/news/293840/marous-announces-acquisition-of-battery-park/#:~:text=SANDUSKY — Battery Park Sandusky — an,commissioners agreed to the deal.

Interesting development involving management of a Sandusky marina. Given Sawmill Creek marina has a history of losses (see allegations from lawsuit in report above). Perhaps consolidation in Marina operations is coming to the lake front: https://sanduskyregister.com/live-content/subscribe/

The Sandusky Register reports on a lawsuit filed by former partners of Sawmill Creek Resort claiming they failed to receive profits from the sale. Of particular interest are alleged revenues and losses reviled in the filing. The suit claims the marina saw only about $330,000.00 in revenue in 2017. The golf course was operating at a loss most years acording to the court filing. The Resort was reportedly in debt. Cedar Fair acquired Sawmill for around $13.4 million dollars. Originally announcing a two year renovation and refreshment would be undertaken. Cedar Fair did an about face and announced a full closure of the Resort with all or most work to be completed over the winter and spring. Renovation efforts were reportedly suspended, stopped, or significantly pared back following the pandemic outbreak. https://sanduskyregister.com/news/293624/former-sawmill-investors-sue/

Here is an interesting story: https://www.postandcourier.com/business/carowinds-theme-park-on-the-sc-nc-line-to-reopen-this-year/article_15c4dc6c-1936-11eb-96c1-87ed1331f50a.html Carowinds is likely opening this season to position itself for opening for operations in Spring 2021. They may wish to develop a track record of success they can point out to justify the safety of a fuller reopening next season. Carowinds strattles two states thus requiring multiple jurisdictions approval of broad plans to reopen (possibly to limited operations) next year. The events planned for this season could, conceivably, take place in only one state. Thus it would be easier to utilize leverage to resume some operations now. Think of it as setting the table for next year.

Disney Cruise Line announces three neew ships, to be built in Germany, with a passenger capacity similar to current ships: https://dse.news/releases/2019/10/30/disney-cruise-line-announces-three-new-ships/

Herschend Family Entertainment planning a new resort hotel near the existing DreamMore Resort. Local station WATE reports some salient facts: https://www.wate.com/news/local-news/plans-hint-at-dollywood-addition/?utm_medium=social&utm_source=facebook_WATE_6_On_Your_Side We can extrapolate from the WATE report and reach a few likely conclusions amd educated guesses as to the scope and direction of this project: This will be the long delayed follow-up to the DreamMore Resort. One clue is the street name leading to this area--Dollywood Resorts Way. Resorts, plural. Not singular. This Resort will be of similar size to the DreamMore which hosts 300 plus rooms and suites. Parking for 100 employees suggests a total workforce similar to DreamMore. Dollywood has experienced a bit of a rough patch in opening and operating the DreamMore. A management company, Gemstone Hotels & Resorts, opened the property and immediately was challenged by tough labor force issues. Wages offered for many key positions were far below par for similar positioned upscale hotels. Virtually the entire housekeeping staff has walked off, reportedly, on more than one occasion. Guest rooms are small, furnishings and design are at least a decade behind modern benchmarks, and food and beverage operations consistently have received poor reviews. In this challenging climate further Resort openings were delayed. Now catch-up time seems to have arrived. Perhaps the new offering will improve the collection of accomodations. Generally theme park resorts opt for a "good, better, best" strategy to capture the low, middle, high rate categories. Thus it is likely this hotel will be positioned as more, or less, luxurious than the DreamMore. Being located literally on higher ground we can bet it will be a more upscale property. Views and elevated location likely will comand higher rates. The 100 employee parking spots also offers clues to the level of service and luxury. Three star hotels generally employ eight staff per every ten guest rooms. Four star properties employ twelve staff per ten rooms. Thus employment would run 248 to 372 people. Divide the 100 employee parking spots across three shifts and we can guess employment at approximately 250 to 275 total workforce. About a three star plus property. Look for Dollywood parent company Herschend Family Entertainment to learn from mistakes in the design of DreamMore in areas such as furnishings, guest room size, handicap accessibality, guest room amenities, internet connectivity, improved corridor and public space ambience, and more efficient guest baggage handling and bell hop services. Or so it would seem.

https://www.bizjournals.com/kansascity/news/2019/10/30/cedar-fair-schlitterbahn-kck-park-option-expires.html

https://www.knoxnews.com/story/entertainment/2019/10/21/dollywood-pigeon-forge-2020-season-new-festival/4052754002/

Cedar Fair's refusal to comment suggests there is *something* to the Reuters report. If this were a totally false rumor and completely incorrect report Cedar Fair could rightly set the record straight. Now, today. Cedar Fair has chosen to refuse to comment. Thus we can be reasonably sure something is afoot. What we cannot know at this moment is *what* is afoot. The fact Cedar Fair has declined to repudiate the report unequivocally is telling. Perhaps, Cedar Fair has not yet received an offer, but expects to receive one soon. Perhaps, Cedar Fair plans to make an offer for Six Flags and is playing the beat the clock game. Reports of Six Flags personnel having been sighted at King's Island have surfaced online (the veracity of such reports are unknown). Six Flags is soon to be without a CEO as the current executive is scheduled to soon retire. Meanwhile, over at SeaWorld, turmoil continues in the executive suite. The former Carnival Cruise Line executive hired as Sea's CEO abruptly quit after less than a year. A revolving door seems to have been installed on the CEO's office. Cedar Fair spent nearly a decade without a significant acquisition--despite having always having driven growth via acquiring accretive properties. Rather, over the past decade Cedar Fair has disposed of three waterparks, closed a park, and demolished hundreds of hotel rooms. Suddenly, within two years, FUN has purchased two major waterparks, has an option to purchase a third Schlitterbahn property, acquired the Saw Mill Resort including a marina and golf course, are building two new hotels, an indoor sports facility is due to soon open, and other sports complexes are on the drawing board. FUN has reduced debt along the way but has also increased debt by fully financing recent acquisitions and, presumably, renovation and refreshment costs as well. Debt levels remain relatively high--possibly limiting exploiting some opportunities over the past eight years. The direction of Cedar Fair is difficult to predict. Recall, Matt Ouimet is still onboard, filling the role of growth and stregic executive. FUN stood still for near a decade. Perhaps they now plan to rollover. A partial combination could make sense for both chains--take small or underperforming parks from both chains and create a third company. Or FUN may be looking to shed some properties, or acquire some SIX parks. Understand that Thomas Cook Bankruptcy has placed several hotel/resort properties on the block. Merlin Entertainment is also under a merger deal, partially involving private equity, and they operate resort properties along with amusement parks and second gates. Additionally, private equity is making a move on Great Wolf Resorts, again. Lots of changes and a general shuffling seems to be underway in the entertainment business. Complex deals could be around the corner.

A new Zipline Coaster has opened at Paula Deen's Lumberjack Feud. Reported to be the first such combination zipline/coaster in the world: https://www.wbir.com/article/news/local/new-zipline-roller-coaster-opens-in-pigeon-forge/51-a09d7a83-4d0f-4cd4-96e7-1263eea5f075?fbclid=IwAR2sq7Iz8VUjPI9eR_EiVKRkuo9br9B3ZK_6SPQM0ueWfUldyxwuGeh0rNg

Clearer financial reporting and increased transparency removes obscurity and cloudiness surrounding performance of legacy parks. Reported growth is reported on a comparable basis, along with the overall increases due to the inclusion of the results of the Schlitterbahn acquisition. The news is good and offers clarity of improved performance by the legacy parks: "...(on a same park basis, excluding the Schlitterbahn parks) year-to-date preliminary net revenues totaled a record $1.08 billion, up $48 million, or 5%, on a 2%, or 465,000-visit, increase in attendance; a 2%, or $1.08, increase in in-park per capita spending; and a 5%, or $6 million, increase in out-of-park revenues." The overall results, including the Schlittrbahn revenues, improve the results further. Cedar Fair claims the Schlitterbahn Water Parks are contributing results ahead of forecasts. Presumably FUN has already taken steps to reduce costs and improve revenues at Schlitterbahn Resorts: "The year-over-year growth was driven by a 1.1 million-visit, or 6%, increase in attendance to 21.0 million guests; a 3%, or $1.24, increase in in-park per capita spending to $48.79; and a $10 million, or 9%, increase in out-of-park revenues to $130 million." All these results are to be tempered by the knowledge a significant number of operating days shifted into the reporting period. While FUN has improved the transparency of the reporting the company failed to provide guidance or a reminder in the release of the impacts of shifted operating days into this period. Perhaps next reporting period we shall enjoy more clarity on these issues. Cedar Fair has more room for improvement in reporting of revenues and attendance trends by fully accounting for such anomalies in the calendar. CEO Richard Zimmerman indicated a strong start to the season pass sales for next year, introduction of new PassPerks rewards program, and strong acceptance of special events is driving sales in a positive direction. https://ir.cedarfair.com/news/news-details/2019/Cedar-Fair-Reports-Record-Revenues-Through-Labor-Day-Weekend/default.aspx

SeaWorld Orlando and regional parks from the Six Flags and Cedar Fair chains seen as surrendering customers to provide the three million new visitors to Epic: http://www.ocregister.com/universals-new-theme-park-is-an-epic-challenge-for-disney-and-seaworld

Cedar Fair purchase option on Kansas City Schlitterbahn water park property sees activity: https://www.bizjournals.com/kansascity/news/2019/08/01/schlitterbahn-epr-properties-mortgage-repaid.html

News out of Corpus Christi Texas: https://www.kristv.com/news/local-news/free-admission-to-schiltterbahn-on-select-days

Thank you BoddaH1994 and CoastersRZ for your followup comments. Here are additional observations and information to consider. A Platinum Season Pass to the Texas Schlitterbahn water parks is listed at $275.00. A Platinum Season Pass to all Cedar Fair parks is listed at $222.00. Thus we can see Schlitterbahn has excessive season pass pricing power of $53.00 annually over Cedar Fair's legacy park system. This is quite a wide gap when one considers the CF system is composed of almost three times the number of parks as Schlitterbahn. The absence of Schlitterbahn parks from the CF website--and vice versa--suggests season passes are not being cross honored at legacy parks this year. Which would make sense. But what of next year? Pricing must change or Schlitterbahn pass holders could save a bundle of money by purchasing a cheaper CF Platinum Pass rather than a Schlitterbahn pass. This, of course, assumes the Schlitterbahn Parks join the unified CF Platinum Pass benefits next year. Thus revenue is at risk. Will Schlitterbahn pass costs be reduced to bring it line with the legacy parks pass? Or will CF pass prices take the substantial jump of over $53.00? Will such a steep price price jump be accepted by the legacy CF pass holders? Given the distance of the Schlitterbahn parks from other CF properties does it even make sense to include them in the legacy Platinum Pass product? And are they even the same type of product? Schlitterbahn is a water park. CF legacy properties are amusement parks with water parks attached (only a few of which are operated as seperate gates). If Cedar Fair believes it can entice a significant number of Schlitterbahn guests to travel the thousand or so miles to legacy CF parks season pass revenues could see positive impacts. Likewise if CF believes legacy giests will travel to Texas for a water park experience they could maintain the premium pricing power of Schlitterbahn's superior Platinum Pass. However, this seems like a stretch to me. Why pay hundreds of dollars more across a family purchase of CF season passes simply because it includes Texas waterparks you are unlikely to visit? The report by CF of revenues thru the holiday period likely include a weeks operation of the two acquired Schlitterbahn parks rather than just two to three days. This uptick in attendance is masking falling attendance at legacy parks. The gain is offsetting a loss. Recall CF exited the stand alone water park business some years ago when it sold off properties not attached or adjacent to amusement parks. Specific business reasons were clearly outlined by CEO Matt Ouimett for eliminating non-core operations. Cedar Fair's dive back into stand alone water parks is puzzling from this perspective. It suggests FUN sees limited growth opportunities elsewhere. CF has suffered a decade long acquisions drought. Let us hope the Schlitterbahn purchase is not a wet move.

The Washington Post has an article exploring the downsides of amusement parks. It is an interesting read. It makes one wonder how the industry could change to improve and manage the guest experiences better: https://www.washingtonpost.com/lifestyle/amusement-parks-are-an-expensive-way-to-stand-in-line-while-roasting-in-the-sun/2019/07/22/ad309e06-a966-11e9-a3a6-ab670962db05_story.html

The reported "flat attendance" must be questioned. Since Cedar Fair added a weeks worth of attendance over the Fourth of July holiday weekend at the two new Schlitterbahn Water Parks and Resort in Texas, attendance should have shown a jump. Rather flat is reported. Unless Cedar Fair was including the previous years attendance figures from Schlitterbahns in the year over year comparison (FUN made no indication in the press release they had adjusted the comparison to reflect past attendance at the newly acquired parks) attendance across the legacy parks has actually fallen. This raises the troubling prospect Cedar Fair is not effectively converting marketable capital investments in rides, attractions, place making, cuisine, and guest services into significantly sufficient increased revenues, earnings, or attendance. The increase in Out-Of-Park, and On-Park, revenues is certainly seems to be a bright spot. However, we need an better understanding of where the increases are coming from and how the accounting is working. Schlitterbahn includes a resort hotel. If those hotel revenues are lumped into the OOP and OP revenues then it is possible this additional revenue is masking poor performance at other Cedar Fair accommodations. Likewise, locker, cabana rents, food and beverage, towel rentals, etc. at the newly acquired Schlitterbahn parks may be contributing significant enough revenues to mask deeper problems or sluggish revenue being generated by legacy parks. Cedar Fair may be looking at a period of slower growth in traditional revenues as hotel and resort revenues increase. Those revenues may not necessarily enjoy as high margins as the legacy parks and operations. Additionally Cedar Fair may have some revenue leakage or loss if the Schlitterbahn parks are brought into the season pass system of the legacy parks. Schlitterbahn season passes are currently reported to be more expensive than a Cedar Fair all-park access season pass. Maintaining the premium Schlitterbahn gate and season pass pricing my present difficult challenges. Knowledge as to the cross-over use of legacy Cedar Fair Parks by Schlitterbahn customers would be analysis which could predict the possible revenue leakages or opportunities. We simply do not know. As the summer season moves along time will tell if FUN is experiencing broad based issues with sluggish attendance. The next quarterly conference call should provide more guidance. With careful analyst questions the source of increasing OOP and OP revenues should become more transparent. Expanding seasonal events and attractions has a risk of negative impacts from sever weather issues. The increasing sale of season passes can provide some cushion as revenues are pre-collected whether the guest actually makes a wintertime or springtime visit to the parks. But if actual attendance falls, so does the OP revenues. Historically marketable capital investments in signature rides has resulted in observable, measurable, obvious revenue increases. It is troubling he last few years have exhibited a decoupling of healthy revenues from park investments. Watch for more possible issues with revenue generation at Cedar Fair. Otherwise it may not all be FUN and games.

Cedar Fair recently completed a $500 million bond offering at 5.250% due in 2029. Bond proceeds have thus far been used to purchase the land upon which California's Great America sits for $150 million, the Schlitterbahn Waterparks and Resort acquisition for $261 million, assuming Cedar Fair exercises its option to purchase the Kansas City Schlitterbahn property (currently shuttered and non operating on an approximately 40 acre site) for $6 million, that brings us to a total of $417 million expended. This leaves a balance $83 million available for acquisitions or "other corporate purposes" to be utilized. Given the tax value of Sawmill Creek is reported to be in the $8 million range (actual purchase price will likely exceed tax valuation) Cedar Fair will still have a chunk of change to continue acquiring properties. Or developing aditional hotel/resort products. I fully expect Cedar Fair to excercise the option on the Kansas City Schlitterbahn property. The option purchase price values the land and improvements at approximately $150,000.00 per acre--a bargain for a prime location--and with the opportunity to block competitors. Of course, we may see Cedar Fair utilize some portion of the bond proceeds to fund improvements and/or enhancements to the recent acquisitions. However, I feel it is likely Cedar Fair is still gunning for additional operations to acquire. It sure is FUN to watch. Unit price (share price) has fallen and thus pushed the unit payout (dividend) yield to over 8%. That's lots of FUN.

The cost of the CGA land was a bargain when considering the lease payments were very close to the bond debt payments on the purchase price. Essentially Cedar Fair has converted lease payments to actually acquiring a valuable asset. The sale issue were propelled by a change in California law. No longer are Economic Development entities allowed to own land mortgaged/bonded on the public dime (this is a shortened explination of a more complex issue--but it suffices to assist in understanding the sale and purchase). California agencies had to sell the land. Fortunately FUN stepped up and acquired the property for approximately a million three hundred fourty thousand dollars per acre. Cedar Fair did quite well in this deal. They secure the future of the site along with the future value of improvements they may make. Cedar Fair has also eliminated much political uncertainty involving the site. Cedar Fair funded the purchase price by rolling it into the corporate bonds recently sold which also funded the Texas water park and resort purchases.

Merlin entertainment is combining with the Lego family and Blackstone as the exhibition and entertainment field continue to consolidate. This will likely push further mergers in the theme park industry. https://www.cnbc.com/2019/06/28/lego-familys-kirkbi-and-blackstone-to-buy-madame-tussauds-owner-merlin.html

Here is a good article with an overview of improvements and progress at Dollywood for the new season: https://www.knoxnews.com/story/entertainment/2019/03/15/dolly-parton-talks-dollywood-wildwood-grove-opening-netflix-series-9-to-5-christmas-in-the-square/3080580002/?utm_source=knoxnews-Daily Briefing&utm_medium=email&utm_campaign=daily_briefing&utm_term=list_article_thumb

This is a wise move as it improves three areas of revenue. 1) Yield management of resort and hotel properties are improved as otherwise empty rooms produce lucrative marginal revenues. Given a hotel room is perhaps the most perishable item sold--if a room goes empty tonight that revenue can never be recovered yet the high fixed costs of room inventory were expended nonetheless--almost all of the marginal room revenue enhancements fall to the bottom line. 2) On park revenues have the potential for incremental growth as guests visit Cedar Point and purchase food, beverages, locker spaces, water park admissions, gifts and souvenirs, photos, and possibly additional hotel nights. 3) Admission revenues increase as the guests purchase the Wild Card option with the hospitality stay. Think of it as a limited season pass which shifts visits to the slower shoulder season. Such a strategy also creates space at Cedar Point for potentially higher revenue guests as crowds are thinned via revenue leveling from peak periods.