A Wild and Woolly Ride for the Industry

While it’s not as exciting as a ride on a screaming roller coaster, an ongoing theme park industry consolidation and the arrival of new competitors is more than enough to keep park owners jumping.

The deal that will blend Knott’s Berry Farm into Ohio-based Cedar Fair LP was driven by changing economics that make it more difficult for family-run parks like Knott’s to survive in the shadows of cash-rich chains owned by familiar names like Walt Disney Co., Six Flags and Anheuser-Busch.

And, as parks seek shelter in consolidations, operators also must keep a wary eye on new competition from players such as Dreamworks SKG, Sony Corp. and Ogden Corp., which feature high-tech virtual attractions in shopping malls across the country.

“There’s a tremendous, growing demand for entertainment, because people have more disposable time and income,” said Dennis Speigel, president of a Cincinnati-based theme park consulting firm. “And for Cedar Fair, this gives them an excellent chance to keep growing their revenue base.”

Cedar Fair, a 10-year-old publicly traded partnership, began in 1987 as the operator of two old-line theme parks in the Midwest with combined attendance of 4.1 million and $96 million in revenue. By 1995, Cedar Fair had acquired two more parks and reported 1996 combined attendance of 6.9 million and $251 million in revenue.

The Knott’s deal though, is by far its biggest acquisition. The deal that is scheduled to be completed this year would add an estimated $120 million in revenue and 3.5 million in attendance.

“While Cedar Fair has been taking a more aggressive position in terms of acquisitions, Knott’s will be the jewel in their crown,” Speigel said. “Deals like this don’t come along every day because Knott’s has had a special place in the hearts of the industry and consumers for a long time.”

While Cedar Fair has crafted a deliberate pace, a competitor, Oklahoma City-based Premier Parks Inc., has made dramatic string of acquisitions in recent years.

Premiere Parks, which was formed in 1983 to purchase a frontier-themed park in Oklahoma City now owns 12 parks and operates a city-owned marine attraction in Vallejo. The company boasts 8.4 million in combined attendance and $93 million in revenue.

Like Cedar Fair, Premiere Parks has concentrated on acquiring small-but-profitable properties that have room for growth.

While Premier and Cedar Fair are chain operators, they allow their properties to retain a heavy local flavor when it comes to appearance and attractions.

In a recent interview with Amusement Business, a trade journal, Cedar Fair President Richard L. Kinzel said that his company believes in keeping the flavor of acquired properties.

“We try to keep our parks as much of a mom-and-pop operation as possible. We treat our parks more as a collection of parks instead of a chain.”

Theme-park industry observers credit Cedar Fair with spending relatively freely to build new roller coasters and other attractions to keep its parks current.

“People want more excitement, new rides, a critical mass,” said Jim Harmon, a principal with Management Resources Inc., a Tustin-based consulting firm. “And that’s where Cedar Fair’s management ability will come into play at Knott’s.”

Knott’s represents Cedar Fair’s first venture into a year-round theme park; it’s other properties all close during the winter. And, Knott’s is also its first true theme park; its other holdings are more along the lines of a traditional amusement park.

So it’s uncertain whether Cedar Fair will try to incorporate well-known elements of Knott’s Berry Farm--like Camp Snoopy or its crowd-pleasing Mrs. Knott’s Chicken Dinner Restaurant--at its other parks. Knott’s family members on Tuesday said that negotiations over use of Knott’s images and trademarks is ongoing.

Observers said that the Knott family’s decision to strike an alliance with Cedar Fair should bode well for the park and Southern California’s tourism industry.

“This will mean new blood, new thinking and new money,” said former Disneyland president Jack Lindquist. “When an attraction like Knott’s prospers and grows, that’s good for the whole tourism industry.”

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Companies at a Glance

Cedar Fair expects its purchase of Knott’s Berry Farm and Knott’s Camp Snoopy store to boost its annual revenue to $400 million and combined attendance with its other attractions to more than 10 million. Details on the two companies:

CEDAR FAIR LP

* Headquarters: Sandusky, Ohio

* President/CEO: Richard L. Kinzel

* Business: Owns and operates four amusement parks: Cedar Point (Sandusky); Valleyfair (Shakopee, Minn.); Dorney Park & Wildwater Kingdom (Allentown, Pa.); Worlds of Fun/Oceans of Fun (Kansas City, Mo.)

* 1996 revenue: $251 million

* 1996 net income: $74 million

* Status: Public

* Exchange: NYSE

* Tuesday’s close: $48.50

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KNOTT’S BERRY FARM

* Headquarters: Buena Park

* President/CEO: Terry E. Van Gorder

* Business: Owns and operates Knott’s Berry Farm amusement park in Buena Park and Knott’s Camp Snoopy store at the Mall of America (Bloomington, Minn.)

* Annual revenue: $120 million

* Status: Privately held partnership; prior to sale, Knott’s was the only major family-owned amusement park in U.S.

* Terms of sale: Undisclosed amount of cash and stock

Source: Cedar Fair LP, Times reports, Bloomberg News

Researched by JANICE L. JONES/Los Angeles Times