For Immediate Release ...
8/24/2010 6:20 PM EDT
The debt-ridden amusement park operator parent of Cedar Point unveiled a new ride today planned for 2011: A a 30-story-tall swing ride called Windseeker that will be built along the Lake Erie beach.
The 301-foot-tall tower for 64 passengers, which will uproot the old pirate ship ride, is being built by Dutch amusement attraction/ride manufacturer Mondial.
Will the new ride ease some of the parent company's money troubles? That remains to be seen. The company also is heavily using social media, such as Facebook and Twitter updates, to engage consumers.
I spent a couple days at Cedar Point and Soak City earlier this month, and there was no sign of financial distress. Just lots of kids, rides and food and gimcracks offered at typical amusement park prices. Park management tells me it gets plenty of visitors from Michigan (which was obvious from a casual scan of license plates in the vast parking lot), and metro Detroit businesses use the park and hotels for corporate events. No austerity measures were visible, nor evidence of cost-cutting.
Sandusky, Ohio-based Cedar Fair Entertainment Co. (NYSE: FUN) is counting on new attractions, a rebounding economy and retooled financial plans to ease its debt load. It reported a $4.2 million second-quarter loss linked to a one-time $9 million charge from a terminated merger and debt refinancing. A year ago, the company reported a $7.2 million profit.
The company last month refinanced $1.8 billion in debt with $1.175 billion term loan and $260 million in revolving credit. The deal pushes off debt due in 2012 and 2014 to July 2015 and December 2016. The company also sold $405 million of senior unsecured notes.
"By successfully refinancing our debt, we accomplished two priorities: greater certainty within our capital structure and significantly enhanced financial flexibility," said Cedar Fair president, CEO and chairman Richard "Dick" Kinzel in a statement announcing the moves.
Financial/investment site Motley Fool recently provided some insight on Cedar Fair's situation: "Attendance plunged 8 percent in 2009 compared to 2008, slicing revenues by $80 million and adjusted EBITDA from $356 million to $300 million. Crushed under $1.8 billion in debt, the company was facing a potential liquidity crisis due to possible debt covenant violations. Investors sold the stock off from $25 to $6. Management made a deal with Apollo Global Management for an $11.50 buyout, but a hedge fund run by former Carl Icahn associate Geoffrey Raynor purchased 18 percent of the company stock, and convinced shareholders to shoot the offer down."
Much of the debt stemmed from Cedar Fair's $1.2 billion acquisition of Paramount's five theme parks in 2006, including Kings Island in suburban Cincinnati. Not long after the move, the credit markets began to decline and trouble began with the debt load. Cedar Fair later tried to sell three parks, but couldn't find willing buyers.
Cedar Fair now owns 11 amusement parks and six water parks in the U.S. and Canada.
Cedar Point is averaging about 3 million visitors annually, the company has said. Cedar Fair has had 13.4 million admissions to all of its parks through July compared to 12.6 million at that point a year ago. Per customer spending is down slightly across the parks, but hotel and other revenue is up, so the picture is mixed.
In a July 11 interview with the Sandusky Register, Kinzel said the company is on the path to get in the black with Cedar Point as the key property: "We can be a profitable company if we manage our expenses. If we can manage our expenses, and keep our hotels full and give the customer good value, this will always be our crown jewel."
He also said the ongoing problems with the new $11 million Shoot the Rapids water rider (which failed to open when the season began, and wasn't working when I visited earlier this month) were a "major blip."
8/23/2010 11:29 AM EDT
We left after the fifth inning.
had clearly given up and had no interest in doing anything at Comerica Park
on Sunday other than getting on a bus headed back to Cleveland. The ashen-gray clouds, which had kept the temperature tolerable, gave way and the August sun quickly regenerated the rotten tropical heat. Lazy play and sweaty misery combined to drive me to the exit.
But five innings was enough to vividly illustrate the mammoth differential between the teams on the field. The Indians are pathetic, a weak-hitting, bumbling lineup of career minor-leaguers, doubtful prospects and washed-up, untradeable veterans. Basically, they're now the team I grew up with in the 1970s and '80s. Not the sort of old-school retro I'm into, thanks.
Cleveland dominated much of the 1990s — the Tribe swept the 12-game season series with Detroit in 1996 — won two American League pennants and even got within spitting-distance again of the World Series in 2007.
Those days are long over. By now, they're downright apocryphal.
An owner without the financial means to field a contender, or even a competitive team, has doomed the Indians. They’re now the best Double-A team in the majors, and their buffoonish ways aren’t the lovable variety, a la Major League
. Cleveland stands in stark contrast with Detroit’s Mike Ilitch
, who is able and willing to float an inflated payroll for his market (link
) so that his franchise remains successful on the field and at the gate.
In addition to Cleveland’s embarrassing lack of interest, the talent differential was gargantuan on Sunday. And over the three-game series, which a Detroit team that’s struggled since the All-Star break swept and outscored Cleveland 19-3, it was obviously men against boys. Keep in mind, the Tigers lost four straight to Cleveland right after the mid-summer classic. Obviously, a fluke.
Ilitch has the ability to subsidize the Tigers’ financial losses (fueled by player salaries) because he has a billion-dollar pizza business. Cleveland owner Larry Dolan
does not, and his front office is forced to hope for a season or two of competitive play before it must trade the talent on the roster and spend three or four years rebuilding. Success is more a combination of luck and timing. And Dolan is a local attorney, not a global pizza baron.
Cleveland has a tiny cadre of legitimate Major League players, such as outfielder Shin-Soo Choo
(whose first-inning solo home run Sunday was the Tribe’s lone score). Detroit, meanwhile, has elite players such as Miguel Cabrera
and Justin Verlander
, locked up in long-term deals. The Tigers also have a slew of young every-day players on the rise who make the league minimum $400,000, and will for another year or two. That gives the team further leverage to sign free agents or make trades.
The only trades made by the rival Indians are to send away pricey talent — such as Cy Young winners Cliff Lee
and C.C. Sabathia
, and talent such as Victor Martinez
and Jake Westbrook
— for questionable prospects in what’s solely a bid to shed cash. They even sent infielder Jhonny Peralta
on the Tigers in a trade recently because he made too much money.
If any of Cleveland’s young players blossom into talent that demands big money, they’ll quickly find themselves in a different uniform. Cleveland is so desperate to not spend that it will trade talent to division rivals. That’s a sign of a team interested only in the bottom line because the owner is either cheap or doesn’t have the financial ability to pay much. Maybe both. Neither is the case in Detroit.
Detroit will see this year’s $134 million in salaries and signing bonuses drop to $55 million in the offseason, giving the team a staggering amount of room to sign free agents and make trades.
Cleveland, meanwhile, will see its 2010 payroll of $61 million shrink to $27.5 million in 2011, with a slew of players eligible for arbitration. The injury-plagued Travis Hafner
, basically a shell of his former self, is locked up through 2013, and the only other sizeable contracts are centerfielder Grady Sizemore
($7.6 million in 2011) and pitcher Fausto Carmona
Look for Detroit to spend between $90 million and $110 million on players, and be a serious contender to return to the World Series. The Indians, on the other hand, likely will spend maybe $40 million, and will be hard-pressed to win 70 games.
All of this is reflected in the standings -- Detroit, thanks to injuries, is 61-63 and Cleveland is 50-74 -- and at the gate: The Tigers are averaging 30,834 per game at Comerica while the star-crossed Indians are averaging 17,827 at Jacobs Field
-- worst in baseball. (And FYI: I know it's Progessive Field
, but it always will be The Jake to me)
And because the Indians rely on ticket, concession and merchandise sales far more than the Tigers do to cover payroll, it's a Catch-22: Losing means fans don't come out, and without fans the team can't afford to get better players who can win. It's a deadly cycle, and one Detroit doesn't have to worry about.
8/20/2010 11:23 AM EDT
NOTE: See an update at the bottom of this post.
The Detroit News
today is reporting
that private equity investor Tom Gores
is the front runner to buy the Detroit Pistons
The story says Gores, who owns a mega-equity firm in California but has a home in metro Detroit, shares similarities with the team's late owner, Bill Davidson
, including being turnaround specialists in business and being sports fans.
However, a fundamental difference may exist: Tom Gores was born in Israel to a Greek father and Lebanese mother, and his cousin Hala Gores
is an advocate for Palestinian causes, according to this report
from 2009. She has publicly accused Israel of war cimes.
In the story, Hala Gores makes clear she doesn't speak for her cousin, and very little is known about him or his background. I assumed because of his Israeli birth, he was Jewish. But he was born in the city of Nazareth, which is primarily Arab. I left a message for him at his corporate office.
Davidson, who was Jewish, was a staunch advocate for Israel. He and and his wife, Karen (who now owns, and is selling, the Pistons), donated more than $200 million during his lifetime toward causes that included Israel and the Jewish community. He made undisclosed gifts to the Jerusalem Archaeological Park
and the Davidson Center for Exhibition and Virtual Reconstruction
I don't know if Karen Davidson is aware of the Gores family connection to the Palestinian cause, or if it matters. It may not at all. I sent her personal spokesman, Mike Layne
, an e-mail seeking comment. He said said she declines to comment.
Tom Gores is chairman and CEO of Beverly Hills, Calif.-based private-equity investment firm Platinum Equity
, ranked No. 27 last year by Forbes
in its listing of largest private U.S. firms. The magazine ranks him as the 437th richest man in the world with a worth of $2.2 billion. His company has $27.5 billion in annual revenue. He was born in primarily Arab Nazareth in Israel, and grew up in Flint, later graduating from Michigan State University
His name emerged in recent weeks as one of a slate of potential bidders
on the Pistons. It's totally unknown what his politics are, and all of this may matter only to people on the sidelines -- but it's a polarizing issue globally.UPDATE
: Gores' top aide contacted me to clarify his boss' views on the magazine piece and the political difference between with his cousin. Gores replied to the magazine story last year with a long letter (here
) and I asked the aide for further clarification.
"I think by saying 'my extended family's political views as reported are their own, not mine' Tom effectively answers your question, i.e. that he disagrees with the statements," the aide wrote, also noting that Gores isn't very political and was raised Lebanese-Catholic.
In other words, Gores apparently doesn't believe Israel is guilty of war crimes, etc. That could certainly go a long way to ease any worries that might arise in the sale situation -- especially among the hyper-partisan folks on the sidelines.
Questions about his politics were eventually going to emerge in a sale's due diligence (and digging by the media), and could be accentuated because of the news that the U.S. is trying to convince Israel to hold off on airstrikes against Iran's nuclear facilities. World events can very much have an affect on the refuge of pro sports.
8/19/2010 7:57 PM EDT
Someone forwarded to me a copy-paste of something posted at The Gannett Blog
this week that floats a dire scenario for the fate of The Detroit News
and the Detroit Free Press
Here is what was written:
Gannett is going to give up the Detroit Free Press and hand over all control to Dean Singleton in October. The Freepers and News union staff will have to reapply for most positions when the JOA is dissolved. Pay will be cut by at least 12% across the board and salary caps will be imposed. As much as 40% of staff will be cut. The Detroit News will be the dominant paper, but BOTH PAPERS will still exist (this is what I'm hearing). It is unclear how this is going to work. I'm not finding this out. Anybody know how both can still exist in print? A new JOA perhaps? I just know the Free Press will be MUCH more geared for online.
8/19/2010 12:07 PM
I don't see the comment there now, but there is a thread with plenty of commentary about the newspaper situation in Detroit. (Link
) Gannett Blog is visited by people inside the newspapers and inside Gannett corporate, so it's a mix of smoke-filled room truth and fantasy in some of these comments.
I spoke to a source tonight who would be in a position to know if something was up with the ownership of the newspapers, and he said he's unaware of anything going on.
Is that true? Who knows. The newspaper business remains unstable and uncertain. The newspapers continue to lose money. Insiders pretty much agree that something eventually will happen to change the status quo of two daily print newspapers in Detroit. What's interesting about this latest rumor is that is has The News as the major survivor. Usually, it's the Free Press in these doomsday scenarios.
The pay cut stuff is true. I reported that here
And for an update on what management has had to say about the status of the newspapers recently, and for details on the JOA, go here
. You have to be a subscriber to read that one, and if you're not, you should be.
The JOA is a public document, by the way. I have a copy of it, including the addendum from last year that covers the print home delivery changes. There's nothing too crazy in it.
These things crop up every few months, especially amid contract negotiations for the newsroom unions. Reporters, by their nature, are creative and gossipy creatures prone to imaging the very worst about any situation, especially their own. But that doesn't mean there's no truth to it. We'll continue to watch developments, so check back.
8/19/2010 6:49 PM EDT
It's too soon to say what the latest General Motors
marketing executive shakeup may mean for metro Detroit's automotive advertising community.
Uncertainty, probably. But maybe not much more than that for now. It appears GM's agency carousel has halted for the moment.
GM announced today it has replaced Chevy
brand marketing chief Jim Campbell
with Hyundai Motor America
's vice president of marketing, Chris Perry
Perry previously worked with current GM's overall marketing boss, Joel Ewanick
, at Hyundai. Perry will report to Ewanick.
Campbell came under fire for a memo instructing the automaker's employees to refer to the brand as Chevrolet instead of Chevy. GM quickly backed off.
He's now vice president of GM's performance vehicles and motorsports unit. Campbell had run the Chevy brand marketing since December 2009, replacing Brent Dewar at the time.
Chevy announced in April that it was ending its 91-year relationship with Warren-based Campbell-Ewald
and moving the work to Publicis Worldwide
When Ewanick replaced Susan Docherty in May, he pulled the work from Publicis and awarded it to San Francisco advertising agency Goodby, Silverstein & Partners
, which is now looking for space in Detroit.
Campbell-Ewald has other GM work and is transitioning Chevy work to Goodby. Layoffs are part of the process. It's unclear how many staffers Goodby may hire in Detroit, but insider speculation is that it could be more than 100.
8/16/2010 9:28 AM EDT
Until a deal is signed, I'll maintain a running tally of all the names I hear linked to a possible sale of the Detroit Pistons
. Some have been leaked to us, some from other media reports. Some of those listed are truly interested in buying the team, while others may simply be getting a feel for the franchise market and process.
What we have so far:
~ Mike Ilitch
: Owner of the Detroit Tigers
, Red Wings
, Little Caesars
pizza chain, entertainment mogul. Sam Simon
, owner of Atlas Oil
in Taylor, may be a minority investor in an Ilitch bid. Ilitch and Simon both see more than $1 billion in revenue from this businesses.
~ Andy Appleby
: Founder of Rochester-based General Sports & Entertainment Inc.
Previously worked for Palace Sports
. Led consortium that paid $100 million for English pro soccer team in 2008, Derby County
~ David Checketts
: Founder of New York City-based Sports Capital Partners Worldwide
, a consulting and investment service firm for sports teams that owns the St. Louis Blues
of the NHL
and Real Salt Lake
of Major League Soccer
~ Jonathan Ledecky
: Venture capitalist who previously held a minority stake in the investment firm Lincoln Holdings
, which owned the NBA's Washington Wizards
and the NHL's Washington Capitals
~ Tom Gores
: Chairman and CEO of Beverly Hills, Calif.-based private-equity investment firm Platinum Equity
, ranked No. 27 last year by Forbes
in its listing of largest private U.S. firms. The magazine ranks him as the 437th richest man in the world with a worth of $2.2 billion. His company has $27.5 billion in annual revenue. He's an Israeli native who grew up in Flint and later graduated from Michigan State University.
~ George Postolos
: President and CEO of Houston-based The Postolos Group LP
, which looks to acquire sports teams, live entertainment businesses, venues and media properties that service the sports and live entertainment industry. He was president of the NBA's Houston Rockets
from 1998 until 2006, and also spent time as special assistant to league commissioner David Stern
~ Magic Johnson
: The Lansing native, former MSU Spartan and NBA Hall of Famer reportedly is interested in a minority stake in the team as part of a group bid. He's apparently not linked to any specific consortium yet.
~ An unnamed group of investors from Dubai
, according to a report today
from The National
, a government-owned English-language daily newspaper published in Abu Dhabi
. The report says Emirati investors, who have stakes in soccer franchises, are looking at the NBA. It also references a Detroit News
story as breaking the United Arab Emirates
~ The NBA news site HoopsWorld.com
says there is a Chinese group poking around about the Pistons (link
). No other details.
8/14/2010 7:05 PM EDT
Lansing native, Michigan State
alum and NBA
hall of famer Earvin "Magic" Johnson
expressed interest in being part of an unidentified group interested in buying the Detroit Pistons
, NBA.com reported.
The story is here
Johnson said he's not talked to Pistons ownership or those who want to buy the team. He said he's been contacted about his interest in being part of a group, but he didn't identify who that may be.
He would have only a minority stake in the team.
For details on who has expressed interest in the Pistons, see Monday's print edition of Crain's
(which goes online on this site Sunday night). I'm not going to reveal details here, but Crain's has learned of at least two parties "kicking the tires" on the Pistons that have not been reported elsewhere. We also have inside details on the overall situation.
Johnson reportedly has a 5 percent ownership stake now in the L.A. Lakers
, which he would have to sell if he wanted a piece of the Pistons. He was part of an unsuccessful bid to buy the Golden State Warriors
For background on Johnson, go here
8/13/2010 1:14 PM EDT
Here's a Crain's Detroit Business cartoon from the cutting room floor. We ran out of space on the editorial page in the print edition but found it too amusing not to share here.
Brooks Patterson, in unsurprising fashion, made the case last week for Oakland County to remain the Pistons' home. Read the Crain’s story here.
8/11/2010 10:01 AM EDT
The enabling legislation that would allow the Michigan Department of Transportation
to move ahead with its participation in the $5.3 billion Detroit River International Crossing
project is being whittled down.
Currently, HB 4961
would allow MDOT to enter into public-private partnership on any project it wants to, which would give the agency the ability to level tolls without any legislative oversight — a key sticking point for lawmakers who oppose the bill and worry is would give MDOT too much power.
Now, Sen. Jud Gilbert
, R-Algonac, chairman of the Senate Transportation Committee
that’s been debating the bill since June, says a revised version will limit the legislation’s scope to just DRIC, Lansing-based Gongwer News Service
Narrowing the bill’s scope is make a vote — none is scheduled, and Gilbert has no public timetable on one — will bring the DRIC debate into sharper focus inside the Senate.
Now, there are some lawmakers who fear giving MDOT a blank check to create new toll roads and bridges and to enter into P3 arrangements at will that could put taxpayers on the hook if the deal’s fail to generate enough money to cover their capital and operational costs.
By making the vote a pure thumbs up/down on DRIC rather than P3 deals, it’s likely that senators will line up based purely on whether they believe a new Detroit River crossing is needed (or financially viable) or if the state should step aside and let Ambassador Bridge
owner Manuel “Matty” Moroun
build a second span for his span.
In other bridge news, U.S. District Judge Patrick Duggan
yesterday heard arguments from Moroun’s lawyers and MDOT’s lawyers over the issue of the new duty-free store at the Ambassador Bridge.
Wayne County Judge Prentis Edwards
in February ordered Moroun’s Detroit International Bridge Co.
to ensure that it followed the contractual building plan for the plaza in the $230 million Ambassador Gateway
project that linked the bridge to a new I75/I96 interchange.
Edwards’ ruling potentially could mean removal of some of the new structures and/or approaches at the bridge, so the bridge company is trying to get the case heard instead in federal court, claiming the state doesn’t have jurisdiction at the federally regulated bridge plaza.
However, the bridge company may have waited too long to seek a switch under court rules, Duggan warned. He eventually will issue a decision on the bid to switch courts, but it’s unclear when.
8/10/2010 9:59 AM EDT
Auburn Hills City Manager Pete Auger
and I chatted yesterday (link
) about his city's position on the Detroit Pistons
-to-Detroit drama unfolding.
Today, he's issued a press release (it's at the bottom of this blog entry) laying out the city's case for keeping the Pistons at the Palace of Auburn Hills
, if Mike Ilitch
buys the team. The gist of it is that Detroit pays to provide services for the downtown stadiums, whereas the Palace pays for everything itself.
Basically, it's a Libertarian-style fiscal responsibility argument, and Auger says at one point, "nominal subsidizing of stadiums can be problematic."
He's right. But he also fails to note that unlike the Palace, the Detroit stadiums are owned by the public. Joe Louis
is owned outright by the city while Comerica Park
and Ford Field
are owned by the Detroit-Wayne County Stadium Authority
, leased to the county and subleased to the teams.
The leases are negotiated by lots of highly-paid lawyers and political appointees vying to get their clients/bosses the best deal. The Joe Louis lease, for example, has been in talks for years. And if the Ilitches own the Palace, they have a bargaining chip: A place the team could play until a new arena is built. The city may not have much negotiating room, and Joe Louis was built in a rush in the late 1970s to keep then-owner Bruce Norris from moving the Wings to Pontiac. The Lions had left, and Mayor Coleman Young didn't want to see another team go.
The Palace is very rare in sports, a venue built entirely with private money. That's just not how the game works. The late Bill Davidson spent $70 million on construction by the time it opened in 1988, and another $25 million in more recent upgrades. In tax-friendly Auburn Hills, something like that is possible. In major cities, not so much.
The Ilitches came out yesterday more definitively than ever to say they're going to build a downtown stadium for the Red Wings
, and have said for some time that the Pistons as a co-tenent could make all sorts of financial sense. But we're a long ways from that point, and the public vs. private argument on stadiums is going to be hashed out before then. Crain's should be your first stop on that (and all other) stories on the subject.
Speculation (and logic) says that if the Ilitches buy the team and Palace, they'll move the Pistons downtown (where they used to play), but keep the venue for concerts. It's a facility with no mortgage, so it's probably far more attractive financially than the basketball team. So in the end, Auburn Hills may lose not much more than prestige.
Here is the release in its entirety:
Auburn Hills, MI—August 10, 2010—The City of Auburn Hills, a dynamic community committed to innovation and growth, responded today to news that the Pistons franchise may be purchased by Detroit sports magnate Mike Ilitch.
“First, we are pleased to hear that a Michigan based entrepreneur and sports lover wants to buy the Pistons,” says Auburn Hills City Manager, Pete Auger. “Mr. Ilitch is a true and staunch Detroit supporter and has the opportunity to expand his legacy into Oakland County if his purchase of the Pistons includes maintaining the Palace as its home base.”
Auger says a sound business case exists for keeping the Pistons in Auburn Hills, but not for moving the team to Downtown Detroit, as has been speculated.
“The economy of our state and indeed the nation does not position any community - much less Detroit, with its longstanding fiscal crisis - to embark on a new, taxpayer subsidized sports and entertainment venue,” states Auger. “The award-winning Palace, just 25 miles north of Detroit, is self-funded, pays taxes and is regarded as one of the finest sports and entertainment venues in the world.”
The Palace opened in 1988 and was built by the late Pistons’ owner Bill Davidson and a group of private investors; no taxpayer dollars were used. It has garnered numerous nominations and awards as a sport and entertainment venue and is consistently one of North America's top-grossing arenas. Neither taxpayers in Auburn Hills or the State of Michigan assumed any long-term debt in association with the Palace. On the contrary, the City of Auburn Hills is using only 4.3% of its debt capacity and recently received a bond rating upgrade, despite challenging economic times.
Auger explains that through a freedom of information request, he learned of the rarely discussed security costs for policing Detroit’s existing stadiums.
“While the Palace currently pays the City of Auburn Hills for police coverage, the City of Detroit absorbs police costs of $1.5 million annually for coverage at Joe Louis, Comerica Park and Ford Field,” affirms Auger.
Auburn Hills City Council Member Anne Doyle says it is incumbent upon municipalities to be fiscally responsible and offer value and provide essential services to residents.
“Auburn Hills is not in a position to tell Detroit how to govern itself, but it would seem inadvisable at best for Detroit or any other city to take on costs associated with building a new stadium when basic services are being delayed or not provided at all, and an award winning, tax-paying facility is available in close proximity,” comments Doyle.
Auger concludes that even nominal subsidizing of stadiums can be problematic.
“Even though Mr. Ilitch would be the ‘owner’ of the stadium, there is an undeniable public ownership component at play here as well, and it’s not the type of public private partnerships that we need to be supporting. Let’s show the rest of the nation that we can collaborate as a region and a state and make decisions that are best for all, not just for a few,” says Auger. “Keeping the Pistons in the Palace of Auburn Hills does that.”