Knott’s Berry Farm, which pioneered the modern theme park in the 1940s but lately has been unable to grow as fast as its rivals, said Tuesday that it has tentatively agreed to be sold to an Ohio company that will pump in the cash needed to help it expand.
Cedar Fair LP, a publicly held partnership that owns Cedar Point in Sandusky, Ohio, and three other parks, will acquire the nation’s last major family-owned amusement park for an undisclosed amount of cash and stock.
Industry experts say the value of the deal, including debts that Cedar Fair will assume, will add up to nearly $300 million.
“Knott’s is well-known nationally and internationally,” said Richard L. Kinzel, Cedar Fair’s president. “We’re very pleased with the way it’s been managed, and we’ll keep the theme park going the way it is.”
Knott’s, which started in 1920 making jams and jellies, added chicken dinners and then grew into a theme park, once held its own against bigger theme parks. But Knott’s share of the market slipped--from third nationally in 1990 to 12th last year--as competitors such as Disneyland, Universal Studios and Magic Mountain grew at a faster pace.
“Clearly, Knott’s was suffering in the competition,” said Ray Braun of Economics Research Associates, a Los Angeles amusement park consulting firm.
Buena Park city officials also cheered the sale, not only for the future of Knott’s but also for the region.
“I think it’s symbolic of the new expanding economy,” Councilman Steve Berry said. “I think it will be fabulous for Knott’s Berry Farm and Buena Park.”
Under the agreement, the family will turn over control of the Buena Park attraction, its fabled Mrs. Knott’s Chicken Dinner Restaurant and the other marketplace shops to Cedar Fair. It is also selling its interest in Knott’s Camp Snoopy, the indoor park at the Mall of America outside Minneapolis.
In return, the family would become the largest single shareholder in the Ohio company. It also would keep its one, off-site chicken restaurant, in Moreno Valley. The family sold its Rancho Santa Margarita restaurant last year. It sold its food unit--the jams and jellies--in 1995.
Two of Knott’s directors, Darrel Anderson and Terry C. Hackett, both third-generation Knott family members, said the owners were satisfied with the deal.
“This was a difficult decision for the family to make,” said Hackett, who sits on the board with founder Walter and Cordelia Knott’s four children and six of 22 grandchildren.
Both Knott’s and Cedar Fair said they expect to complete the transaction by year’s end. They said the park would keep its old-time flavor but would push ahead with Knott’s current expansion plans, which call for a major wooden roller coaster to be operating by 1999.
“There are lots of people who want to see some of the traditional values upheld and the landmarks and traditional atmosphere remain,” said Berry said. “As a resident, I appreciate that.”
The acquisition was lauded by industry experts, who called Cedar Fair a well-run company with the resources Knott’s needs.
And Wall Street liked the announcement as well. The price of Cedar Fair stock rose $1.75 a share to close at $48.50 in New York Stock Exchange trading.
Cedar Fair has been one of several companies on an acquisition binge in the last decade as the maturing amusement and theme park industry consolidates.
“There’s a trend not only to consolidate markets but to grow internationally as well,” Braun said. “Everyone’s looking overseas. Universal is building in Osaka. Disney’s already in Tokyo and Paris.”
Over the years, Knott’s has been credited with pioneering the theme park model. But the evolution came slowly.
By 1940, as word of Mrs. Knott’s dinners and jams spread throughout Los Angeles, diners started lining up to eat. So the Knotts built the Calico Ghost Town attraction, decorated with mining gear and other Western paraphernalia, to give diners something to do while waiting for a table.
“The first time I remember going there, there weren’t any fences up and you could go anywhere you wanted to,” said Arthur C. Brown, now Buena Park’s mayor. “There weren’t any rides back then in 1953.
“We went to the chicken dinner restaurant, had lunch there, walked around, chased the ducks around the lake a little bit. It was magic the first time I went, and it’s been magic ever since.”
The park enjoyed success even after the Disneyland behemoth opened in nearby Anaheim in 1955. But eventually Knott’s started adding rides, and the race to keep up with the competition increased.
In recent years, the family knew that it would need more cash than it could bring to the table to expand and compete against the growing Disneyland and other major Southland attractions like Universal Studios and Magic Mountain.
Last spring, the family partnership quietly decided in a meeting at its Independence Hall complex to find a partner with financial clout, even if it meant selling the park, said Hackett and Anderson.
Several months ago, the partners hired investment banker Goldman, Sachs & Co. in New York to find a match. More than a dozen national and foreign companies responded. The list was quickly whittled down, and about three weeks ago, the Knott family started serious negotiations with Cedar Fair.
Cedar Fair is known for letting each of its properties operate autonomously, something the Knotts liked. The Ohio company liked Knott’s Berry Farm and its future, especially plans for the huge wooden roller coaster that will reach out to Beach Boulevard, the main road into the attraction.
Cedar Fair “loves coasters,” said company spokesman Brian Witherow. Roller coasters are the big features at the successful Cedar Point park, a pure amusement park with no themes to exploit.
“We’re very excited about the opportunity to put in world-class thrill rides out there,” he said, quickly adding that no major changes at Knott’s are contemplated.
Kinzel said Cedar Fair will proceed slowly and will continue the themed areas of Knott’s. “We want to keep market share and continue to keep a good, clean, safe park,” he said.
Knott’s, with 3.6 million patrons last year, was slightly ahead of Cedar Point, which had 3.5 million visitors. Together, Cedar Fair’s parks would have about 10 million patrons after the acquisition.
The deal also would combine Knott’s Berry Farm’s $120 million in revenue with Cedar Fair’s revenue of $250.5 million. As a privately held company, Knott’s doesn’t report its profit. Cedar Fair earned $74.2 million last year.
The transaction isn’t expected to affect many Knott’s employees, whose numbers range as high as 4,000 in the peak summer season to as low as 350 in the winter. The park’s longtime president, Terry Van Gorder, will help with the transition and take a consultant’s role at the end of the year, Hackett said. Van Gorder already has sold his home in Palos Verdes Estates and bought one in Oregon.
While Knott’s would get a well-financed company to support it, Cedar Fair gets its first all-weather attraction. Besides owning Cedar Point, on the Lake Erie shore west of Cleveland, Cedar Fair has Valleyfair near Minneapolis, Dorney Park & Wildwater Kingdom near Allentown, Pa., and Worlds of Fun/Oceans of Fun in Kansas City.
In those cities, Witherow said, even bad summer weather can hurt attendance. The parks have small children’s play areas based on the Berenstain Bears theme, but none comes close to Knott’s Camp Snoopy or Disneyland’s Toon Town.
Kinzel said no thought has been given yet to building hotels around Knott’s in an effort to make it a destination resort. The company has three hotels at 128-year-old Cedar Point and is putting in more rooms, but it hasn’t turned its other parks into resorts.
“We have no master plan,” he said. “We’re very pleased with the way Knott’s is managed.”
Also contributing to this report were Times staff writer Greg Johnson and correspondent Mimi Ko Cruz.
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The sale of Knott’s Berry Farm to Ohio-based Cedar Fair LP will provide much-needed capital for Southern California’s oldest theme park to compete against Disneyland and other amusement locations. Knott’s attendance, hurt by increasing competition, has never returned to its pre-recession level. How Knott’s Berry Farm, Knott’s Camp Snoopy Store and parks owned by Cedar Fair (in bold) compared to top North American amusement parks in 1996:
Attendance Rank Park (in millions) 1. Disneyland 15.0 2. The Magic Kingdom at Walt Disney World 13.8 3. EPCOT at Walt Disney World 11.2 4. Disney-MGM Studios 10.0 5. Universal Studios Florida 8.8 12. Knott’s Berry Farm 3.6 13. Cedar Point (Ohio) 3.5 14. Knott’s Camp Snoopy (Minn.) 2.6 41. Valleyfair (Minn.) 1.2 45. Dorney Park & Wildwater Kingdom (Pa.) 1.1 51. Worlds of Fun/Oceans of Fun (Mo.) 1.0
Knott’s Berry Farm attendance in millions, and park ranking among the top 50 North American amusement parks:
Source: Amusement Business
Researched by JANICE L. JONES / Los Angeles Times