Roller-coaster year for amusement industry may head uphill, analyst says

SANDUSKY The amusement park industry's roller coaster ride is on the upswing, an analyst says. Theme park revenues fell in 2009, but revenues in the industry should rise 1.7 percent in 2010, predicts Nima Samadi, an industry analyst at IBISWorld, a market research company based in Los Angeles.
Tom Jackson
May 24, 2010




The amusement park industry's roller coaster ride is on the upswing, an analyst says.


Theme park revenues fell in 2009, but revenues in the industry should rise 1.7 percent in 2010, predicts Nima Samadi, an industry analyst at IBISWorld, a market research company based in Los Angeles.


Samadi said Friday his forecast of an upswing definitely applies to Cedar Fair.


"It's a company that's been a real cash flow generator in the past," he said. "It's definitely a company that has the potential to remain profitable in the future."








Click HERE to read about Cedar Fair's roller-coaster year.







Samadi said his forecast for an amusement park revival assumes the travel business will get better and the economy will recover.


Stacy Frole, director of investor relations for Cedar Fair, Cedar Point's parent company, said Cedar Fair also is expecting better days ahead. She pointed to forecasts in the proxy statement the company issued earlier this year.


Cedar Fair reported on Feb. 11 that it had a rough year in 2009, with net revenues of $916.1 million, down from $996.2 million in 2008.


EBITDA -- earnings before interest, taxes, depreciation and amortization, the company's favorite metric -- fell 15.7 percent, from $355.9 million to $299.9 million.


Cedar Fair didn't provide guidance to analysts last year and hasn't announced plans to do so this year.


But in its definitive proxy statement, filed Feb. 10 to make its case for the sale to Apollo Global Management, Cedar Fair revealed the four-year financial forecast it shared last year with Apollo officials.


The company projected revenues of $966.6 million in 2010, $988.2 million in 2011, $1,012.2 million in 2012 and $1,036 million in 2013. EBITDA also will steadily rise, the company forecast on page 58 of the proxy statement.


Samadi remarked that major amusement park chains have been acquisition targets. He noted that Apollo Global Management is trying to acquire Cedar Fair and that Apollo reportedly also is interested in buying the bankrupt Six Flags chain.


It might make sense for Apollo to buy both amusement park chains and achieve economies of scale by merging the two, Samadi said.


A special meeting to decide whether to approve Apollo's takeover of Cedar Fair has been rescheduled for April 8.


The Blackstone Group, a private equity company similar to Apollo, bought Busch Entertainment Corp. and Comcast bought NBC Universal.


"Industry players have been a prime private equity target due to the massive amount of debt the industry had acquired over the last decade," Samadi said.


"Major players have overpaid in the past to acquire regional players and increase their market share. But despite the cyclical downturn in revenue, private equity firms can still reap the benefits from these relatively stable cash producers in the long-term."


Cedar Fair executives have explained that Apollo's acquisition with the company will help Cedar Fair deal with about $1.6 billion of debt. Cedar Fair acquired much of that debt in 2006, when the company bought the Paramount theme parks chain.






You made a mistake. Order your senior platnam pass on line for 90 bucks, includes parking and soak city.
Good Luck.


I just went to the Cedar Point Web Site to see about purchasing season passes for the park this year. No way Jose. They are not giving any breaks to the Senior Citizens of Sandusky. In previous years you could purchase a plantium pass and get the parking along with going to Soak City. Well that is now all taken away. If they expect the City of Sandusky to support them, oh well this person will not be. No wonder they are having problems.


Certainly it must be illegal for a company to pick and choose which unitholders they get onboard with them in order to manipulate a sale!
Also, someone told me that the tax breaks we have received from the Fun shares get affect taxes when sold. That is, we pay tax on the the tax benefit we enjoyed while holding the shares. It's different than regular shares of stock.
So not only will the shares be bought at what is most likely a low ball price then we pay tax on the tax benefits realized over the years.

Leland Wykoff

Dear Parrot and Fellow Unitholders,

In answer to the question, "Will you be coming to the meeting April 8th?"

All I can say is, "I would not want to miss this meeting for all the world."

Leland R. Wykoff


From the Newy York Times

"Sometimes there are simply events that are mistakes but only in retrospect. Take Cedar Fair’s meeting postponement last week. In hindsight, a last-minute postponement of a shareholder meeting that has a significant number of retail investors might lead to quite a scene. In fact, that is what happened as Cedar Fair postponed its meeting at approximately 9:00 p.m. the evening before but the unitholders showed up anyway (Cedar Fair is a partnership and so it has unitholders instead of shareholders).

From reports, it appears that the only person to greet them from Cedar Fair was a forlorn investor relations person, Stacy Frole. Ms. Frole, who no doubt was thinking that she didn’t sign up for this part of the job, barred the unitholders from the meeting place. The unitholders then had their own “meeting” on the street outside complete with minutes, all of which are on the Web site of The Sandusky Register, the local paper in Cedar Fair’s home town in Ohio. It was a nice try by the unitholders, but not a valid corporate act.

In some news reports, Cedar Fair appeared to blame this postponement on Apollo Management, because the firm has a contractual right to demand the delay. It does, but Cedar Fair agreed to this provision, making argument a bit tendentious. For future deal lawyers, take note of this and certainly don’t yourself show up at such a meeting if you can’t avoid such a last-minute announcement. Or at least remember to advise your client to try to announce the postponement a bit more in advance to avoid such scenes. In Cedar Fair’s case it may have been unanticipated or unavoidable, but still an act that produced more harm than good.

Meanwhile, the Cedar Fair deal also brings us an example of the importance of details. After the postponement, Q Investments — which owns 18 percent of Cedar Fair — issued its latest missive. The firm said that it believes “in the potential long-term value of this business” and wants to be a long-term holder. Q Investments added that it would not support a transaction that forces it to surrender its units and does not provide “an ability to participate in the long-term value of the business.”

Note the missing detail: Q Investments does not say that Cedar Fair should remain a public company, simply that Q should continue as an investor. This letter can be read as an open invitation for Apollo to negotiate a deal with Q to become part of the buyout group."


Will you be coming to the meeting April 8th?

Leland Wykoff

To read the public spanking Cedar Fair management got at the hands of the New York Times check this out:

This is a most embarrassing public repudiation of Cedar Fair actions by a respected journalist and expert on mergers.

Note the professors comments in reference to Q Investments statement about not being cut out of the upside of the deal. The professor notes, correctly, Q Investments language suggests they may go along with the merger if they are cut into the equity of the new company.

This action would really take the retail investors to the cleaners. Everyone would win, except the large number of individual investors. This action, should it occur, would resemble, in my mind, Greenmail.

Greenmail is an illegal activity. It is when one large investor gets preferential treatment, usually a higher price for their shares, than other shareholders. Giving a party selective access to the upside of the deal whilst depriving other parties that opportunity is suspect.

And this is the heart of the problem with the sweetheart deal Cedar Fair Management and Board have hammered out in the proposed merger with Apollo: management and the board get to participate in the upside of the deal without suffering any downside.

They are shifting all the downside risk (read “costs”) to the Unitholders while feathering their nests with all the upside potential and thus avoiding downside costs.

It is a case of “heads I win, tails you loose.”

Cedar Fair reports season pass sales up 30% at Carowinds. They also report expected strong increases in park daily attendance.

Will the Cedar Fair Apollo proposed merger complete?

It is difficult to say if the deal will consummate.

Much depends upon the actions of the two big funds which hold approximately 27% of the shares. If they push for inclusion, via equity in the new Apollo controlled entity, it is possible they could garner the votes for it to pass.

But then, again, Apollo could fail. For those who still doubt savvy money thinks this is a stinker of a deal for Unitholders–look at the position the Knott family has taken.

The Knott family is on record as opposing the deal. These are folks adept at financing and running large resort parks. If they feel it is a bad deal for them, you can count on it being a bad deal for you.

The Knott family controls more than 3% of the Cedar Fair Units.

Given the small Unitholders disgust towards management, I think this deal may very well be scuttled by a “no” vote.

No voting will not be enough. Unitholders must then take strong action to rescue CF from the entrenched management and board.

For CF to prosper Kinzel must be sent packing. It is likely CF would not be in the position it finds itself in today had Kinzel retired, AS WAS PROMISED, shortly after the Paramount Parks acquisition.

What CF needed then, and desperately needs now, is a forward looking CEO and Management Team. The “accounts mentality” must be swept from the executive offices.

Unitholders and the company need leadership on pricing, product, and promotion. Leadership which has been absent under the likes of a past-his-prime and past-his-retirement-date Kinzel.

You can bet Apollo is planning for just such a redirection of the actions in the executive offices.

For Unitholders to be rewarded they must maintain control of the company and make the necessary changes in the executive suite.

Other Unitholders have noted Kinzel Executives failures in dismantling the Paramount Park Season Pass and ticket sale programs--thus ending the $100 million a year cash cow Viacom had enjoyed.

Kinzel executives also ended the valuable branded character licenses with Viacom, thus impacting park level revenues, and, more recently, have ended the Nickelodeon franchise license agreement.

Thus CF investors are left, literally, with "Peanuts."

Given the prospects for a strong operating season ahead–now is the wrong time to conduct a fire sale of the company.


Who cares about this no one can afford Cedar Dump but the rich and they can have the over priced dump.

DEEPsix's picture

@chongo... you're right, they have priced themselves out of the ball park... $9.50 a soda, and the Mamma B fries are a wisp of a cup from what they used to be, and X3 more $$$$... the days of our youth are lost, the memories of our youth we long, better times may be in the past, and until FUn realizes the could triple attendance just by dropping price by 4 bucks, they'll never be the FUN of their youth. Debt has driven them out of fun times. also, the city sold their soul to CP too...


why would it. People will not travel, but people will stay local to enjoy summer activities. The reason fun keeps low is not because of attendance. yes attendance has been down ever so bit the last few years, but not by a huge number, not enough to count. It's the overpricing of the food, merch, and other activities. It's the inability to take even the smallest details and enchance them for the guest experience. It's the ability of the company to seem like they do not care how a guest feels in their park on a day to day basis. I never like to compare them to Disney, but in a sense you can. They take the guest experience to new heights, they are leaps and bounds above the rest, not in just the amount of money they spend, or have to spend for that matter, but in the manor in which they interact with the guests and make each one feel like they are a vip. This is something that not just CF lacks, but a lot of major amusement chains lack. Once you spend the small bucks and figure out how to care for your guests, they will come back on a more regular basis, and when they do they will be spending more money. Word of mouth takes off at that point and so the trickle down effect begins. Now I know it cannot be that easy, but it has for years seemed to me that easy. Once you do the little stuff, the big stuff no only becomes easier to do, but more effective and cost effective also. Just my oppinion there though

DEEPsix's picture

YEAH RIGHT.... IF YOU BELIEVE THIS ONE(SAMADI) I HAVE A HEALTHCARE PLAN FROM THE GOV' YOU SHOULD BUY TOO... NO way FUN will see anywhere near projected rev's over the next 2 yrs... taxes, and unemployment will keep this roller coaster on the down side. Samadi is a typical hustler, they are a paid enterprise, funded by the very companies they report on...