Cedar Fair (NYSE: FUN), owner of a large chain of amusement parks including Cedar Point and Kings Island, has had a rough time the last couple of years. However, it has been making some operational changes that could put it in place to enjoy renewed success when the industry rebounds.

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An Unfortunate Convergence
The recent history of Cedar Fair found this master limited partnership (MLP) doing well historically when it decided a couple of years ago to buy the Paramount Parks. This group included Kings Island and several other well known properties, but Cedar Fair had to go deeply into debt to finance the purchase, and still owes $1.7 billion as an overhang of that development.

While these purchases made Cedar Fair much bigger, integrating the expanded park portfolio has been challenging, as the recession coincided to cause a headwind if not a massive wall of wind. With park attendances slackening the last couple years, driving down revenue and earnings, Cedar Fair has been in a weakened position. (Learn about MPLs in our article, Discover Master Limited Partnerships.)

Cedar Fair's Not Alone
Walt Disney Co. (NYSE: DIS), the amusement park leader, has experienced a 9% downturn in park and resort revenue in the last quarter and has had its operating profits from that group shaved by 19%. Disney, of course, can rely on its hefty television and movie income to boost the bottom line in such tough times, something the pure park play Cedar Fair can't do.

More noteworthy has been the bankruptcy of Six Flags (SIXFQ.OB), which filed for Chapter 11 despite its record revenue and robust attendance at its twenty parks in 2008. Six Flags had accumulated $2.42 billion in debt, which will be restructured and will include a new $600 million loan, showing the effects of the economy on the amusement park industry.

Great Wolfe Resorts (Nasdaq: WOLF), on the other hand, with its indoor water parks has done somewhat better than Cedar Fair or at least has plunged less in revenue and earnings. But the indoor water park does not appear to have the answers for the industry, nor is it necessarily showing a change in consumer habits. Though Cedar Fair's attendance was still off in 2009, when the economy recovers attendance may rebound and simply prove the drop was a temporary recessionary trough.

Other competing amusements for the leisure dollar, such as International Speedway (Nasdaq: ISCA), which owns tracks where NASCAR races are run, have seen business down. Live Nation (NYSE: LYV) the concert promoter has also seen a downturn and is now in discussions with Ticketmaster Entertainment (Nasdaq: TKTM) to merge.

Cedar Fair's Steps
Cedar Fair has cut its distribution payment (which functions as a dividend) this year, has sold vacant land it held in Canada and will apply the more than $50 million it will receive to pay down debt. It has also amended and extended its credit agreements, a significant development which will push back repayment periods and make its $1.7 billion in debt more manageable, as well as provide for more overall financing flexibility. Meanwhile, revenues and earnings are expected to pick up substantially, so it is looking more and more as though Cedar Fair has weathered the worst of what the down economy has thrown at it.

The Bottom Line
Going forward, Cedar Fair is investing in major new roller coasters, both at Carowinds and Kings Dominion, and is showing an increased strengthening of alliances and synergies, most notably with NASCAR and Cedar Fair's new Giga-Coasters. These investments are a sign that Cedar Fair expects to emerge from the recession not just upping the ante as an amusement park, but also as a strengthened business for the future.

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