Worlds of Fun is the latest amusement park to go on the block
Published: March 9, 2009 at 3:18 PM
Cedar Fair announced today in a press release
that it is putting two more of its amusement parks up for sale: Kansas City's Worlds of Fun
and Minnesota's ValleyFair.
The amusement park chain previously had put Santa Clara's California's Great America up for sale (it has been trying to sell the park to the San Francisco 49ers for land for a new stadium, though that deal is going nowhere). The chain's also been trying to sell the old Geauga Lake amusement park.
Cedar Fair blew its cash and took on a huge debt burden when it bought the former Paramount Parks from CBS for $1.24 billion in 2006. Like Six Flags before it, Cedar Fair's learning that taking on debt to expand in boom times comes back to haunt you when the economy goes bad.
Published: March 9, 2009 at 3:35 PM
Cedar Fair has discussed selling WoF before, and nothing has come of it. I will work my contacts and see if I can find out anything else. No one is probably talking at this point. But why spend $8 mil on a new coaster if you are just going to unload the property?
(Man, I wish I could buy the place...I have so many ideas for making it a better theme park!)
I will say this: if Six Flags somehow scrapes out enough dough to purchase WoF I will kill myself.
Published: March 9, 2009 at 3:59 PM
I think buyers along the lines of the start-up that bought Hard Rock are far more likely than big chains such as Six Flags, James. The big kids just don't have the capital to expand to new parks while sustaining their existing ones.
Ultimately, though, I've long targeted the smaller Cedar Fair and Six Flags parks as candidates not to survive this downturn. WoF, ValleyFair and CGA are among those.
Published: March 9, 2009 at 4:11 PM
Everything I have ever read tells me WoF is a profitable venture. I know it is not doing gangbusters (having missed the 1 million visitors mark each year since CF has owned the place), but the place holds a veritable monopoly in the area (Silver Dollar City is over 3.5 hours away, SFSTL is 4 hours), and receives favorable tax cuts from the city. Plus the addition of the Prowler makes no sense that I can understand for a dying park.
WOF is not great, by any means, but it deserves better than to become another casualty of a poorly run federal/local government that is spending wildly out of control. The place has a rich history and deep roots in the community. I would love to see Lamar Hunt's family (the original owners) step up to the plate and reinvest in the park. When they ran the show, the place was really top notch.
Again, CF has been investigating selling WoF for years - literally since they bought the place - so we'll just have to see if the story has stronger legs this time.
Too bad Disney or Universal won't come swooping in to establish a Midwest presence....
Published: March 9, 2009 at 6:02 PM
Incidentally, Cedar Fair bought Worlds of Fun and Oceans of Fun for about $40 mil in 1995, and say they have invested about $70 mil in the parks to date (including the $8 mil on The Prowler).
Any idea on what they expect to recoup in the sale, if anything?
More likely, Cedar Fair just doesn't want to spend the money it will take to make WoF a premiere Midwest amusement park - at least $100 mil in additional capital is my guess to get the park above its current two-state "regional" status. IMHO, that $100 mil would be spent on at least three new coasters (gotta get that coaster count up), a complete re-theming of the Europa section (including up to a half dozen new attractions to replace the current slate of circa 1973 relics), and about $10 mil in love given to the kid's area of the park (Camp Snoopy) which currently ranks second behind the food court play area at the local mall. Following those immediate expenditures, at least one new attraction should be added per year to keep consumer interest high, which is what used to happen when Lamar Hunt owned the park.
Cedar Fair probably is not up to that sort of commitment. It is easier to sell the park than to build up their brand in the Midwest.
Sadly, we live in a world where our Federal Government frivolously and foolishly prints and spends money without a thought or care, and yet not one penny of those earmarked funds ever makes into the things we the people love the most: our theme parks.
Ladies and gentlemen, it is time for a REVOLUTION!
Published: March 10, 2009 at 8:28 AM
The one thing that I do know about this sale is this. They aren't in a big hurry to sell. They will accept offers, but they won't lose out on this deal, so who knows how long the Cedar Fair flag will fly. The big park companies who do have the money will likely throw their money at the A-B parks sweepstakes first.
It's strange that they would spend 8 million on a new coaster at WOF only to turn around and sell it. I understand that the economy isn't the greatest, but they should anticipate some decent numbers this year for the park with Prowler despite the recession. I'm calling this a precautionary listing. If for some reason the company's numbers go in the toilet this year because of the economy, they presumably have a way to get some quick cash. Cedar Fair is a financially sound company, but is still carrying a lot of debt from the Paramount purchase, and doesn't want to go down the Six Flags path. If the season crashes, they will sell for cheap. If it doesn't, than they will hold out for the best bid.
As for Valleyfair, perhaps they think the park has no more room to grow. It is Minnesota after all, and the season is short. However, there is no competition, so if it's a profitable operation, why sell it now when buyers are few and money is tight? Again, I think it's an insurance policy. They are anticipating that there may be some rough times ahead for the company, and this is their plan. They have managed to sell a small chunk of the Geauga Lake property, but the real estate market in Ohio is in the toilet, especially in the Cleveland area. Great America has been tied up in public and legal matters for a while. They don't really want to sell, but the 49ers and their new stadium have caused major issues with parking and so forth, and Cedar Fair doesn't want to sell at the 49ers offer price, which is a joke...so there you have it, Cedar Fair with a multiyear lease and an NFL franchise nose to nose...with the decision going to the city.
I think that it's good that Cedar Fair is looking to the future, but I'm not sure they will have to pull the trigger on these sales, because while it may be a tough year, I don't think that the horrible season they are anticipating will happen. Staycation baby...staycation....right James?
Published: March 9, 2009 at 6:27 PM
You got it, Derek! I spent my $500 on five Gold Passes for the family. I am doing my part. WoF may not be much, but it is my home park, and I'll be damned if I will let it go without a fight! ;)
Published: March 10, 2009 at 8:45 AM
The smartest move for CF would be to dump the smaller regional parks to people who would want to own them and improve them accordingly. Then, focus on your big draw parks (Knotts, Cedar Point, Kings Island/Dominion, ect..) by improving quality of service and, in some cases, rides offered.
Published: March 10, 2009 at 10:01 AM
This is the same story that I've watched repeat itself dozens of times in the newspaper industry: You've got a solid, profitable local business that's not making an obscene amount of money, but enough. It serves its community well, even if it is not an international draw.
But the corporation that owns it is deep in debt, and needs all of its local businesses to be making obscene profits, in order to pay off the corporation's debt.
So, in order to balance the corporate account sheet, the corporation looks to sell the local business to raise cash.
The problem? No buyers. In acquiring all these local businesses, the corporation became one of only a small handful of companies still in this business. All the others sold out to the handful and went away. And the other companies among the handful face the same problems.
So the corporation either... sells at a fire sale price to an undercapitalized buyer entering the business,
holds onto the local properties, but slashes expenses and lays people off in an attempt to create an obscene profit, or
shuts down the profitable local business to play accounting games that might help the corporation.
Throw in a national deflation trap because businesses in every industry did the same damn thing and the Fed's already cut interest rates to near zero and that hasn't helped, and the situation for borrowers becomes even more dire.
Six Flags and Cedar Fair, as corporations, are screwed -- even though many of their individual parks remain profitable and highly desirable businesses.
The best solution, for theme park fans, newspaper readers or anyone else affected by this type of problem, is for the corporations involved to go bankrupt -- for their debts to be discharged, and the local businesses to be reorganized either as independent entities, or as part of a new corporation under fresh management, with no debt burden.
But current management wants to save its skin. So it will bleed the local businesses near to death to avoid bankruptcy. Or it will attempt to limp along under Chapter 11, rather than accept Chapter 7. Ironically, by doing this, the corporation is destroying the asset value of these currently viable local businesses, increasing the chances that when the corporation finally goes defunct, it won't have *any* profitable assets of worth to anyone. And its consumers will be totally screwed.
Published: March 10, 2009 at 10:52 AM
Thanks for the explanation, Robert....and it makes a lot of sense, but why add The Prowler? That is the part of this whole scenario that just doesn't make sense. Unless the parent company does not have total control over the spending of the local branch? I confess, I just don't know how it all works.
Funny thing is, I don't even care if CF owns WoF, I just don't want the park to be closed down completely. Maybe I should run an add in the paper and try to get 10,000 Kansas City area people to invest $5,000 each and offer Cedar Fair $50 mil for the property. Local ownership would ensure the park stays open, and the fact that WoF is profitable now means it can continue to operate without a hitch.
Anyone interested in a grass roots effort to buy a theme park?
Published: March 10, 2009 at 1:15 PM
James, sometimes people invest new things somewhere to sell the whole package. Think about it-- this will attrack a lot more people, and if they sell it, it will probably sell way beyond the profit of Prowler.
A family who used to live down the street from us, sold their house after redoing their 2nd floor, adding a new part to the 2nd floor, and repainting the house. They get a profit for it...
Published: March 10, 2009 at 1:46 PM
I have it on good authority that Cedar Fair would sell off just about any of their properties for the right amount, and that they are just putting out "feelers" right now to gauge interest. For the right price, sure they will sell, but that price would be a premium, I am told.
Based on the info I have received, I am leaning toward Derek's explanation of what is going on right now with these potential sales. However, only time will tell....
Published: March 10, 2009 at 1:49 PM
Worlds of Fun may not be the biggest and most visited amusement park but it is the only near one in the area. The others are Silver Dollar City which has nothing on WOF. and Six Flags but that's across the entire state!! who wants to drive at least 4 hours to go Six Flags St. Louis??? who can tell me that? Also Worlds of Fun has great potential!! this is my home park and if this park closes the whole metro area of Kansas City and neighboring state will be furious. Lamar Hunt's family should definitely save this park.They made the park so if they take it back I know for damn sure WOF will grow and take it to new heights and use the money more wisely!! Cedar Fair goes up on their prices way to much. Also if they would stop putting roller coasters in Cedar Point and use the money more wisely!! its almost every year they get another world break coaster! did they ever think of giving those kind of coasters to Worlds of Fun??? Kansas City is so easy to get to from everywhere. Its the Midwest!! it don't make any sense to sell a park when they just got a new coaster. Worlds of Fun is going to make so much money this year!! It will come back on top!! If Lamar Hunts family sees this please take action. I am 16 years old and i have been going to worlds of fun every single year since i was 3 years old and i love the park. Dont let them take it away!!!
Published: March 10, 2009 at 3:06 PM
Worlds of Fun is not going anywhere. Even if Cedar Fair sells the park (doubtful) it will still be open and operational. Keep in mind, the park is profitable. Most people don't just close profitable businesses these days.
As a side note, Silver Dollar City is a superior THEME PARK to WoF, but WoF has more coasters. If your measuring stick is coasters, then WoF wins (slightly), but in every other category, SDC is clearly the best park in the state.
And please, don't get me started on SFSTL...it is the worst park I have ever visited.
Published: March 10, 2009 at 6:00 PM
I just don't think Cedar Fair is dying to sell WoF. If they are that cash strapped, why would they bring an 8 million dollar investment into the park and at the same time put it up for sale? It doesn't make sense to do that. It makes sense if they are expecting a return on their investment and will hold out for the right price, but they have to know that people are buying at a discounted rate right now.
I think they are too smart to have a fire sale, but are being preemptive with their actions. If you read the press release, you will notice the words "long term" used a few times. If they can still continue to properly service debts, make cash distributions to shareholders, and run the parks at a profit, then they will keep WoF and everything else. What I do think is that Cedar Fair can't afford to have a bad year, and given the economic climate, it's a very real possibility that they will...although IMHO, I think that they will be just fine if they aggressively pursue the public.
This company has a good amount of debt to manage, but the parks aren't losing money, and the balance sheet isn't a total wreck. It's not like Six Flags, where operating costs were way out of control and the parks were losing big money and lots of attendance in normal economic times. I know that there are a lot of potential problems, but that's exactly what they are....potential. They aren't eminent, and devaluing the company by selling off parks isn't the way to deal with a potential problem. I think that management understands that, but I also think that they don't want to be caught off guard, so I understand their announcement that the parks are for sale. That still doesn't mean that they will sell them.
Published: March 10, 2009 at 7:57 PM
'Nuff said! ;)
Published: March 12, 2009 at 5:31 PM
Excerpt from a posting on the Official Worlds of Fun website:
While parent company Cedar Fair Entertainment is considering options to possibly sell Worlds of Fun & Oceans of Fun, rest assured, the Midwest’s premier entertainment destination is here to stay. In 2009, Worlds of Fun is investing in its future with a new $8 million block-buster ride and VIP perks for loyal Season Pass holders.
I guess they wanted to calm us locals down a bit! ;)
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