Eight Balance Sheet Accidents Waiting to Happen

[The Interpreter]

.....The theme-park business is tough – Six Flags (SIX) looks like it may not survive. Cedar Fair (FUN) is down, but not nearly as much as it could fall if business doesn’t pick up soon. Oh, and that dividend sure doesn’t look very secure....

Note that FUN is the charted stock and one of the balance sheet accidents looking to happen. As for SIX, the writer obviously thinks it is even worse...and, as he said, "may not survive...."

http://seekingalpha.com/article/58599-8-ba...iting-to-happen

[Guest kwindshawne]

.....The theme-park business is tough – Six Flags (SIX) looks like it may not survive. Cedar Fair (FUN) is down, but not nearly as much as it could fall if business doesn’t pick up soon. Oh, and that dividend sure doesn’t look very secure....

Note that FUN is the charted stock and one of the balance sheet accidents looking to happen. As for SIX, the writer obviously thinks it is even worse...and, as he said, "may not survive...."

http://seekingalpha.com/article/58599-8-ba...iting-to-happen

I am an idiot when it comes to stocks...but I didn't realize Cedar Fairs' had had such a dramatic drop.....

[The Interpreter]

It most certainly has, most of it since July/August of this year. . .

I honestly think the Six Flags Kentucky Kingdom incident had more of an impact on Cedar Fair and Six Flags in the stock market and at Six Flags, in attendance, than most realize....

I would think long and hard before I ever put the same corporate branding name on each park in any chain of parks...

There are of course other factors, but I think the very unfortunate incident at Kentucky Kingdom adversely affected all regional USA operators....

[Browntggrr]

It's just not CF or SF that is not doing well, it is the entire industry worldwide.

People are just spending more money in different areas, there is not much left for parks anymore.

And the money that they do have is being spent differently than 20 years ago because there are more things to do now.

It is hard to justify spending big money on gas, lodging, food for an outside park that has been around for 30+ years when they can spend that same money on an indoor waterpark that is virtually still new.

[WooferBearATL]

It most certainly has, most of it since July/August of this year. . .

I honestly think the Six Flags Kentucky Kingdom incident had more of an impact on Cedar Fair and Six Flags in the stock market and at Six Flags, in attendance, than most realize....

I would think long and hard before I ever put the same corporate branding name on each park in any chain of parks...

There are of course other factors, but I think the very unfortunate incident at Kentucky Kingdom adversely affected all regional USA operators....

It's odd that branding works for Disney and the Busch Family of parks.

Six Flags it makes the park seem to be the McDonald's of amusement parks.

Good thing CF has not branded the parks but seems that this is the direction they are going with the park logos.

[The Interpreter]

When there is a major accident at Disney:

* The media does not seem to trump it up so much as they do when it is at Six Flags or Cedar Fair.

* There is not a local Disney park near most people, so they quickly forget it.

* There are not as many Disney or Busch parks, and most people don't live near one.

To the some extent, the same is true of Busch.

When people hear there was a major accident at Six Flags over, say, Hoboken, they immediately think they heard Kentucky Kingdom in this area, for example....When they hear there was an accident at Disneyworld or at Disney Sea somewhere, they usually don't remember it for long.

[WooferBearATL]

Well that's for the most park any park.

I'd venture to say that if you asked anyone on the street in Georgia about an accident at SFKK or even in general they would not know what you're talking about.

People have a very short memory.

[ragerunner]

I would say this is not good news for these park chains, since 2008 is already shaping up as a very difficult year for the economy and housing (again). I still think CP is going to unload a few parks, with a very good chance a foreign company will be the buyer since the dollar is so weak. The US is for sale right now.

[The Interpreter]

Add in to all this that many analysts are projecting $3.75 gasoline, or more, by spring. And that's assuming there is no major cataclysmic event that changes things.

[WooferBearATL]

Add in to all this that many analysts are projecting $3.75 gasoline, or more, by spring. And that's assuming there is no major cataclysmic event that changes things.

It's an election year.

The chances of gas prices going that high are next to nill.

As much as people like to harp that these things are "market driven" it simply does not stand up by example.

I predict that you'll see quite a bit of financial stability until after the elections.

[The Interpreter]

Back in the days of strong dollars, a strong Federal Reserve that had a handle on long term as well as short term interest rates, and an administration that wanted to ensure the re-election of his own party (and not a lame duck more concerned with history's perspective of his term as opposed to the party), I'd be inclined to agree with you. And none of that even takes into account the competing demand for oil from China and other advancing countries.

I suspect the days when American governments and American corporations could control oil prices are long gone.

[WooferBearATL]

Back in the days of strong dollars, a strong Federal Reserve that had a handle on long term as well as short term interest rates, and an administration that wanted to ensure the re-election of his own party (and not a lame duck more concerned with history's perspective of his term as opposed to the party), I'd be inclined to agree with you. And none of that even takes into account the competing demand for oil from China and other advancing countries.

I suspect the days when American governments and American corporations could control oil prices are long gone.

I would not bet on that too strongly.

Much of what goes on still goes on in back rooms.

The Democrats are as manipulative of such things as the Republicans are.

The simple fact that the US basically protects every oil producing country outside of Russia, Venezuela and Iran are pretty telling.

[JacksonPKI]

.....The theme-park business is tough – Six Flags (SIX) looks like it may not survive. Cedar Fair (FUN) is down, but not nearly as much as it could fall if business doesn’t pick up soon. Oh, and that dividend sure doesn’t look very secure....

Note that FUN is the charted stock and one of the balance sheet accidents looking to happen. As for SIX, the writer obviously thinks it is even worse...and, as he said, "may not survive...."

http://seekingalpha.com/article/58599-8-ba...iting-to-happen

Is Six Flags in posistion to go out of buissnes? Maybe CF could buy the parks and I could get to more parks free!

Seriously, though, If Cedar Fair goes out of buissnes, (hypotheticly), does that mean KI does to, or our we privately owned then?

[WooferBearATL]

.....The theme-park business is tough – Six Flags (SIX) looks like it may not survive. Cedar Fair (FUN) is down, but not nearly as much as it could fall if business doesn’t pick up soon. Oh, and that dividend sure doesn’t look very secure....

Note that FUN is the charted stock and one of the balance sheet accidents looking to happen. As for SIX, the writer obviously thinks it is even worse...and, as he said, "may not survive...."

http://seekingalpha.com/article/58599-8-ba...iting-to-happen

Is Six Flags in position to go out of business? Maybe CF could buy the parks and I could get to more parks free!

Seriously, though, If Cedar Fair goes out of business, (hypothetically), does that mean KI does to, or our we privately owned then?

If either of the chains go out of business many of the parks would be in a position to be acquired by another entity or to have their rides and structures liquidated to other parks. I think that you logistically see a chance of both chains being deeply cut back in order to survive.

I could certainly see both CF or SF within the next few years jettisoning all but a few individual parks.

Now which parks those may be are very debatable.

I think that you could ensure that CF would never discard Cedar Point or Knotts.

I'm not certain that any parks in the SF chain would be on the "not a chance" list.

[The Interpreter]

It is worth noting that Cedar Fair has already closed Geauga Lake's ride side and the property and many of the rides are for sale. Six Flags had disposed of the same park (to Cedar Fair as part of Six Flags Worlds of Adventure) previously. Six Flags has already disposed of its European parks, Darien Lake in Buffalo, NY; Elitch Gardens in Denver, CO; Frontier City and the White Water Bay water park in Oklahoma City, OK; SplashTown in Houston, TX; Waterworld USA in Concord, CA; and Wild Waves and Enchanted Village in Seattle, WA. In addition, Astroworld was closed and the underlying land was sold and Six Flags New Orleans, which was devastated by Hurricane Katrina is very unlikely to be reopened.

[KIBeast]

IMO, the two parks that could get cut under the CF chain would be Great America & Carowinds.

[CoastersRZ]

An interesting little tidbit. The SplashTown water park in Houston is the site of the failed Hanna Barbera Land kiddie park, that Taft built in the mid 1980s. It was a terrible failure, and only survived a couple of seasons.

I think a couple of the other parks that Cedar Fair wouldn`t consider selling are Kings Island and Canada`s Wonderland. In various conference calls, Dick Kinzel has listed these two parks alongside Knott`s and Cedar Point.

[WooferBearATL]

An interesting little tidbit. The SplashTown water park in Houston is the site of the failed Hanna Barbera Land kiddie park, that Taft built in the mid 1980s. It was a terrible failure, and only survived a couple of seasons.

I think a couple of the other parks that Cedar Fair wouldn`t consider selling are Kings Island and Canada`s Wonderland. In various conference calls, Dick Kinzel has listed these two parks alongside Knott`s and Cedar Point.

We kid ourselves in thinking that Kings Island would not be jetisoned.

I think that if push came to shove, Kings Island would be closed and liquidated rather than selling to a competitor that would pose a threat to Cedar Point.

I think the CF park in greatest jeopardy is Kings Dominion. It's a very good sign that they are getting a new/used ride this year.

Though I think that CF would be crazy to get rid of Wonderland, I'm betting it would bring one of the strongest returns of any of the parks in a sale.

[Cory Butcher]

See, Woofer, that is what scares me, that they would just close Kings Island and liquidate in this worst case scenario. But I still don't believe that would be the course of action. Look at how much the Paramount parks garnered from Cedar Fair, Everyones thought was, "woah they overpaid". But if you just sell off assets to liquidate you get mediocre market value from your rides. Three of them which are wooden coasters which won't be relocated, and some older steel coasters, the rest are family rides. I dont think the threat of a competitor turning around a park against them, would keep CF from gaining the added capital that comes from the sales of not just rides, but a fully functioning business sans staffing. Personally, I would risk the competition and get all the cash that I can from a sale, afterall, I can reinvest that cash and keepaway the competition. Maybe even buy the park back at a much later date!

[BoddaH1994]

I think the CF park in greatest jeopardy is Kings Dominion. It's a very good sign that they are getting a new/used ride this year.

What about Kings Island, which got a used ride last year and nothing this year?

[Browntggrr]

CF is not going to sell a park and liquidate the assets unless they have to do it.

And the only reasons that they would have to do it is if the park(s) was costing more than it was bringing in, as in the case of GL.

Now GA could be sold due to the issues that they are facing with the proposed 49ers stadium, but even at that, those plans are still in the very early stages. Nothing has been finalized.

And I'm sure that someone will bring up CF's debtload. Another false misconception. Sure they have debt. But until they start defaulting on the loan (which will big public news) or start removing board members, especially Mr. Kinzel, CF is fine. Think of it this way; most people go into debt when they purchase a house, well you don't start selling assets to make a house payment until you have to.

Don't worry about KI, KD or any other park. There is no smoking gun that points to a park closing.

[The Interpreter]

There are many terms and covenants in those bank loans. Targets for attendance, revenue, profit, etc., are common. I am quite certain there are such covenants in Cedar Fair's financing. Six Flags has had to renegotiate its loans several times, because it was unable to meet the covenants at the time. Just paying back the money on time is not enough when the creditors have so much at risk. They want to know, and demand to know, that that repayment can be expected to continue.

[Browntggrr]

But until CF does not meet those expectations, there is no reason to worry.

And so far, there have been no indications that they are not being met.

Even at that, whatever bank(s) gave CF their loans I'm sure looked very closely at SF's situation. Obviously they don't want their money to fall into the same issue as SF's creditors.

[WooferBearATL]

I think the CF park in greatest jeopardy is Kings Dominion. It's a very good sign that they are getting a new/used ride this year.

What about Kings Island, which got a used ride last year and nothing this year?

I certainly don't think that bodes well, do you?

[Browntggrr]

Moving in a ride from a closed park doesn't really indicate anything.

But even reading between the lines; why would CF moved a ride from a closed park to a park that could potentially close?

[Cory Butcher]

The same reason that you would remove two rides from the front entrance, and say that you are doing it to refreshen the parks appearance?

I don't believe that and don't buy into conspiracy theory, so I don't see any correlation to bringing in a used ride and a park going under, a ride is a ride is a ride, and I most certainly will always be back to...ride.

[WooferBearATL]

The same reason that you would remove two rides from the front entrance, and say that you are doing it to refreshen the parks appearance?

I don't believe that and don't buy into conspiracy theory, so I don't see any correlation to bringing in a used ride and a park going under, a ride is a ride is a ride, and I most certainly will always be back to...ride.

You're only going to expend additional capital if you need to make said park more attractive to another buyer or to keep the park in your chain. You're not going to move a ride to a park that will be closed or liquidated.

[Browntggrr]

The same reason that you would remove two rides from the front entrance, and say that you are doing it to refreshen the parks appearance?

What do you mean?

[Cory Butcher]

The same reason that you would remove two rides from the front entrance, and say that you are doing it to refreshen the parks appearance?

I don't believe that and don't buy into conspiracy theory, so I don't see any correlation to bringing in a used ride and a park going under, a ride is a ride is a ride, and I most certainly will always be back to...ride.

You're only going to expend additional capital if you need to make said park more attractive to another buyer or to keep the park in your chain. You're not going to move a ride to a park that will be closed or liquidated.

Right, I know that, you are the one that stated that adding a used ride didnt bode well for the park, not me. You also stated that since Dominion is getting a used ride that they are in the most jeopardy. This statement contradicts the statement that you just made,

You're not going to move a ride to a park that will be closed or liquidated

The same reason that you would remove two rides from the front entrance, and say that you are doing it to refreshen the parks appearance?

What do you mean?

Well, you said,

why would CF moved a ride from a closed park to a park that could potentially close?

. The reason they would do that is to make the park more attractive to buyers, or keep the public at bay and not riot by thinking they still will visit their beloved park for years to come. Its like "spin" in the media. I simply wanted to add another conspiracy theory, that I DO NOT believe in. I stated that the reason they woud do that is the same reason that CF announced they would "remove rides to freshen up the parks appearance at the main gate". Both things could have been done for the same reason. Which I once again DO NOT believe. I was just throwing out another conspiracy theory since we get so many going on here. Which is why I labeled that statement as something that I don't believe.I just wanted to put it out there.

[Browntggrr]

^ OK.

I did not understand what you meant.