Six Flags Entertainment Corp (FUN) 2016 Q1 法說會逐字稿

Good day, everyone, and welcome to the Cedar Fair first-quarter conference call. Today's call is being recorded. At this time, I would like to turn the conference over to Stacy Frole. Please go ahead.

Thank you, Kim. Good morning, and welcome to our first quarter earnings conference call. I'm Stacy Frole, Cedar Fair's Vice President of Investor Relations.

Earlier today we issued our 2016 first-quarter earnings release. A copy of that release can be obtained on our website at www.cedar.com under the Investors tab, or by contacting our Investors Offices at 419-627-2233. On the call this morning are Matt Ouimet, our President and Chief Executive Officer; and Brian Witherow, our Executive Vice President and Chief Financial Officer.

Before we begin, I need to remind you that comments made during this call will include forward-looking statements within the meaning of the Federal Securities laws. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. For a more detailed discussion of these risks, you can refer to filings by the Company with SEC.

In compliance with the SEC's regulation FD, this webcast is being made available to the media and the general public as well as analysts and investors. Because the webcast is open to all constituents, and prior notification has been widely and unselectively disseminated, all content of the call will be considered fully disclosed. Now I will turn the call over to Matt Ouimet. Matt?

Thank you, Stacy, and good morning, everyone. I hope you have had the opportunity to review our earnings release that we published earlier today. I'm going to let Brian speak to the specific numbers in a moment, but the topline message is that early-season results continue to support our optimistic outlook for 2016.

With a strong finish in 2015, and a fast start in the current year, we're on track to reach our FUNforward 2.0 goal of $500 million or more of adjusted EBITDA earlier than our original target of 2018. Our only park with meaningful first quarter operations is Knott's Berry Farm, our year-round park in Southern California. As Brian will talk to, and the reported results reflect, the Farm as we call it is off to an excellent start in 2016, producing record attendance and guest spending levels as well as record results at the Knott's Berry Farm hotel.

At this time of year, we are always cautious to not over-read early-season returns. However, stepping back and looking at the drivers of our optimism, we sort to three things.

First, we are delivering an experience that the consumer is prioritizing over the acquisition of possessions. While we can't claim to have been the catalyst for this shift in consumer behavior, we are clearly a beneficiary and our marketing message is designed accordingly.

Second, as we've discussed many times, we are seeing a sustained bifurcated economic consumer. The introduction of premium products for the higher-end consumer, and a more disciplined approach to yield management, has allowed us to grow per caps and attendance simultaneously. We are continuing to invest and implement products that apply to both the benefit and value-oriented consumer.

Third, transformative investments expand our audience, enhance repeatability, and improve value perceptions. Our newest record-breaking roller coaster, Valravn, at Cedar Point; Carolina Harbor the largest water park in the Carolinas; the Mass Effect: New Earth 4D holographic experience at Great America, which has the largest LED high-definition screen in the world; and the Cedar Point amateur sports complex are just the latest transformative investments.

The scale and quality of these investments provide clear differentiation of Cedar Fair parks from generic regional amusement parks, and our guests reward us with the best per caps in the industry. In a few minutes I will provide additional color on our 2016 plans and an update on some of our longer-term FUNforward 2.0 initiatives, but first I want to turn the call over to Brian to discuss the quarter's results in more detail. Brian?

Thanks, Matt. Overall we're very pleased with the record results for the first quarter. Net revenues for the three months ended March 27, 2016, were up $12 million or 25% to $58 million. As Matt mentioned, we generated record attendance along with increases in all revenue categories including admissions, food and beverage, merchandise, games and accommodations.

These increases primarily relate to the outstanding performance of Knott's Berry Farm, our only park with meaningful first quarter operations. Our team at Knott's has done an excellent job leveraging the park's unique regional brand while also taking advantage of today's technologies. Knott's has become a regional entertainment destination with a tract of seasonal events, including the annual Boysenberry Festival, Ghost Town Alive, Knott's Scary Farm and Knott's Merry Farm.

The excitement surrounding these events, as well as the other investments we've made in the park, has enabled Knott's to already achieve an all-time high in terms of season passes sold and season pass revenues this year. And that's with the core sales months of May and June still to go. Not only did this lead to record sales in the first quarter, but we believe it also sets Knott's up for future success in a highly competitive market.

Results in the period also benefited from special events we hosted at Great America as part of Super Bowl 50, which was held at Levi Stadium, as well as the timing of Knott's Boysenberry Festival which took place one week earlier than last year due to the timing of the Easter holiday.

Operating costs and expenses for the first quarter totaled $116 million, an increase of $7 million or 6% from the prior-year quarter, and were in line with our expectations. Operating results for the first quarter include normal off-season operating, maintenance and administrative expenses at our seasonal amusement and water parks and daily operations at Knott's Berry Farm and Castaway Bay.

The year-over-year increase in cost and expenses is a result of the higher attendance at Knott's Berry Farm during the period, higher operating and maintenance supplies and expenses as we continue to support investments made in the infrastructure of our parks, and incremental costs associated with Super Bowl events we hosted at Great America. The increase in the first quarter operating expenses also reflects higher labor costs due to normal merit increases and seasonal wage adjustments, as well as incremental costs associated with new initiatives aimed at maximizing the efficiencies of our workforce over the long-term.

Looking at longer lead indicators for a moment, season pass and all season dining sales, as well as bookings for group events are all trending up compared with last year. This positive momentum is reflected in our deferred revenues, which were up $13 million or 14% to $105 million when compared with the first quarter last year.

Also reflected in these numbers are two new advance purchase initiatives for 2016. All-Season Beverage and FunPix, our new digital imaging platform which is being rolled out at our five largest properties. The early response to these initiatives has been very positive and we expect their sales to increase as awareness builds with our guests throughout the year.

Obviously we're pleased with our record start to the year. These early-season trends combined with the increases in advance purchase commitments that I just mentioned put us on pace to deliver our seventh straight record year. Based on these strong trends we expect our parks to generate a significant amount of free cash flow in 2016 and beyond.

Our focus has been, and always will be, on optimizing the use of free cash flow to maximize unit holder value in both the short and long-term. This includes making strategic high-ROI capital investments at our parks and continuing to grow our distribution, which currently represents an attractive tax advantage deal of approximately 5.7%.

This has been our strategy since going public almost 30 years ago, and it has delivered a 17% compound annual total return to investors over that time. We believe we are well-positioned to continue that success for the foreseeable future. Now I will turn the call back over to Matt.

Thank you, Brian. Each of the Cedar Fair parks has a distinct brand which directly informs our investment strategy and supports strong consumer loyalty. Let me provide a few examples on how this plays out in 2016.

Knott's growth is directly attributable to its distinct brand positioning and the compelling combination of attractions, shows, seasonal events, and entertainment programming, that deliver against the promise of the brand. Someone recently referred to this park as retro-thentic, implying an emotional attachment to its storied history and an authenticity that very few parks can legitimately claim.

This summer we will play directly to this brand positioning by celebrating the 75th anniversary of Ghost Town with Ghost Town Alive, a completely immersive experience that builds on Knott's unique Old West heritage and tradition of live entertainment. We'll also complete our nearly year-long renovation of GhostRider, the best wooden roller coaster west of the Rockies, and Knott's Chicken Dinner restaurant, the highest value fried chicken restaurant in the world. It is worth noting that while Knott's operates in one of the most competitive family entertainment markets in the world, it is well on track for another year of record performance.

At Cedar Point we are launching Valravn. This Park is the roller coaster capital of the world. It is natural that we continue to build on this legacy with the tallest, fastest, a longest dive coaster. Only the third coaster of its kind built in North America. This ride has been receiving national attention, including a segment on the Today show which aired just yesterday.

With the addition of Valravn, Cedar Point now has more than 11 miles of coaster track, more than any other amusement park in the world. I personally had the chance to ride it for the first time earlier this week, and I can say with 100% confidence that riders and spectators alike will be talking about this amazing ride all summer long.

In response to Carowinds record performance last year, we have further enhanced the guest experience with our introduction of the largest water park in the Carolinas, Carolina Harbor. For more than 40 years Carowinds has been the place where the Carolinas come together. Because of the proud heritage we share with the Carolina coast, we thought it was only appropriate to celebrate it with the largest water park expansion in the Company's history.

We view this expansion as an opportunity to introduce a new generation of water parks to our portfolio. In addition to the best collection of wave pools and thrill slides, we have emphasized distinct areas for young families, large shaded dining facilities, an expanded offering of private spaces including daily rental luxury cabanas and a separate entrance gate for easier guest access.

Beyond these three parks we have new thrills for every age coming online across our system. Our newly formed partnership with Electronic Arts allows us to expand our amusement dark portfolio with the introduction of great IP-based attractions like Plants vs. Zombies and Mass Effect. We are also expanding our celebratory events across all of our parks, including the season-expending addition of WinterFest at California's Great America.

These limited duration events have proven extraordinarily popular with our season pass guests and create time urgency for visitation by day guests. Lastly, park-wide Wi-Fi will serve a basic guest need and provide the backbone for expansion of our mobile app, FunPix, and various other yet to be announced surprises. I'm very proud of the decisions we've made to drive our business in 2016, and we're confident this will be another record year for Cedar Fair.

While it is important for us to deliver strong results in 2016, we also want to ensure we remain focused on identifying new initiatives that will keep the record-setting momentum going for many years to come. I have said this before and I want to emphasize it again today. Our ability to drive pricing and per cap spending relies on the delivery of a quality guest experience.

This includes innovative new rides and attractions, immersive live entertainment offerings, and exceptional guest service, all of which drive the highly important repeat visitation. As I mentioned in my earlier comments, we have found that embracing each park's unique regional brand and strategically operationalizing that brand leads to a guest experience unmatched by other generic amusement parks. Given the success we've seen at both Knott's Berry Farm and Carowinds we're continuing to execute against this strategy in a disciplined way at more of our parks.

We've recently completed the brand positioning for Cedar Point and Canada's Wonderland, and launched the brand reviews for both California's Great America and Valley Fair. You'll continue to see us program the parks based upon the insights gained from this work. Another important organic growth opportunity for us is developing land adjacent to our parks. We currently have more than 1,300 acres of undeveloped land across North America, and we have exciting plans for putting more of it to use.

We just broke ground last month on the Cedar Point Sports Center, a new amateur youth sports facility in Sandusky, Ohio that overlooks the amusement park. This facility will begin hosting tournaments at the beginning of 2017, which will bring a new incremental audience to Cedar Point. In anticipation of the success we expect achieve next year with this state-of-the-art Sports Center, we have already identified other markets where we believe similar demand exists, and are actively pursuing growth in this area.

We are also creating further differentiation for Cedar Fair by improving existing resort accommodations at our parks and developing new properties. Our out of park revenues grew 8% to $138 million last year, or a little more than 10% of our net revenues. This primarily included resort accommodations, along with several restaurants and merchandise shops, that sit outside of our park gates. We believe there are opportunities to expand this attractive revenue channel more aggressively over the next few years.

This would include the development of new hotels, campground expansions, and the addition of new shops and dining locations adjacent to our park entrances. For example, at Great America, our park in Northern California, we have filed a rezoning application. When approved, it will allow us to add more innovative new rides and attractions, expand the water park, and continue to broaden our offerings that play off the synergy with the neighboring Levi Stadium, home of the 49ers.

There are 8 million people living and working in the Bay Area alone, and today this park's penetration of qualified guests is the lowest in our system. At a minimum, we expect opportunity here matches what we anticipate from Carowinds. Finally, we believe the amusement industry in general is a business that will greatly benefit from advances in technology.

I'm not sure who coined the term, but the latest nomenclature techtainment, the merger of technology and entertainment. Three years ago, we created the first coaster digital interactive with Wonder Mountain's Guardian. We followed it up with the highly successful Voyage to the Iron Reef, and this year we've added Plants vs. Zombies and Mass Effect.

As we determine the sweet spot where the experience is most compelling and where the economics are optimized, you'll see us continue to expand in the area of techtainment. Virtual reality, augmented reality, and emerging technologies give us more tools to make more fun. We will continue to look for new and better ways to generate greater value at everything we do, but at the end of the day, our strategy is simple. We want to develop all of our parks into more than just a place to ride rides. We want our parks to be the place to be for fun.

With that, we would now is open the call to questions. Questions and answers

(Operator Instructions)

Tim Conder, Wells Fargo Securities

Matt, just a couple, and I apologize if you have addressed this already, but I am a little bit late, traveling internationally here. But the question related to just annual guidance, revenue and EBITDA, did you outline that? And more of a housekeeping question, what are you building in at this point or expectations of the impact of foreign currency onto this year's results at this point?

Good. Well, good morning, Tim, and I'm told I should say, happy birthday to your wife. I'm glad to see you are escaping a little bit from Wall Street.

On the annual guidance we went away from annual guidance at about this time last year, and decided that for us, it was more productive to give the long-term goal which was the $500 million of adjusted EBITDA or more by at least 2018. So, and I think it does work well for us, it allows us to be a little less rigid in terms of how we think about the investments we're making. So we don't provide annual guidance anymore. Brian on the foreign currency?

Yes, Tim, on the FX rate impact, we've stated that at this point in time, or at least coming into 2016, we didn't anticipate that the impact of FX on 2016 results would be materially different from what we experienced in 2015. Although that will depend largely on macro factors that are well outside of our control. What I can tell you is that at least in the first quarter, with Canada's Wonderland not in operation, any impact on first quarter results was immaterial.

And Matt, your answer to the first question sets up the follow-up pretty well. You guys have said for several quarters here now that you anticipate achieving that goal earlier than anticipated, the $500 million. Can you give any more color on that? I know you haven't yet, but just asking, should we anticipate that that is reasonable -- reachable by the end of next year, 2017?

I think the implication is that it would be our expectation, that we'd be at least a year earlier than we had anticipated, Tim.

Okay. And then one last one here, you were the first to have virtual reality and competitors are starting to roll that out very aggressively. How do you see the rollout of VR technology here as we go forward, this year or looking in through 2017?

Yes, I think you have to go broader than that, Tim, I think -- you know, the word I that used with techtainment, I think we're all starting to get tools to apply to either existing attractions or new attractions that ultimately will enhance the guest experience. There are three levers that you need to make sure that you can optimize. One is -- and I said sweet spot, and I like that term -- you have to find the sweet spot where it is highly enjoyable by the guest. You have to find that sweet spot where you can operationalize it at scale.

It would be hard for us to heavily market something that the vast majority of our guests couldn't ride. And the third is you wanted the economic optimization, so who's the right vendor to do that with. So if you step away from VR, you've got VR, you've got augmented reality, you've got digital entertainment, you've got for the first time LED backlit 3D technology or 4D technology. So I think, Tim, that expectations should be that we can continue to enhance the guest experience and drive attendance and per cap, but it's a combination of those tools.

Great, thank you gentlemen.

Afua Ahwoi, Goldman Sachs

Good morning. Just a few questions from me.

First of all, I know you don't give the drivers of your revenue in pricing or revenue per cap, in attendance, but is there any way to give us a sense of how much Easter benefited and how we should think about that when we think about the second quarter?

And then I thought it was actually interesting that you mentioned that group bookings are so strong, obviously of there was any part of your business that faced the corporate traveler, it would be that end. We're hearing weakness from some of our other sectors, so just curious to see what you're seeing on your end?

Yes, Afua, as far as the topline drivers, right? And we're not going to give specifics around attendance, particularly for first quarter since there is such a small number of our parks in operation, really the core of it all being at Knott's. As we said in our prepared remarks, the shift of the Easter timing in the calendar benefited Knott's somewhat as their Boysenberry Festival shifted up one week. With no other parks with any meaningful first quarter operations, it had little effect beyond that.

If I look at results through the second weekend of April, which would normalized for any calendar shift, at that point time our revenues remained up double digit percentages. So I think as we said, we are very encouraged by the start of the year, and those long-lead indicators, just project that, the strength of those early trends out a little bit further.

And on the group business, I think we are seeing is -- we're not seeing a dialing that back, which I know as an industry we're seeing -- others are seeing corporate travel being dialed back. But I think what's playing is again, the maturation of our sales force. We put in an incentive sales team in place a couple of years ago, and we've really now sorted to the people that are really good at it. And that's working for us.

And there's no doubt the transformative level of invest we're making and our catering facilities, both in the quality of food, the menu offerings, as well as just the physical plants, these are the best group facilities for these type of events that exist in the country. I think that's what we're seeing the payoff for. But it's not a budget area issue. It doesn't appear to be, at least in the markets that we are operating in.

Got it, and then actually just a follow-up to the question on Easter, pretty impressive results through April so far. Is there anything you can attribute to the strength? How come we're not seeing a typical headwind that we would expect with the Easter shift?

That's a great question. The calendars, at least at our parks, because we have so few parks that are open right over that window, I think you wouldn't necessarily be -- I wouldn't over-read that one way or the other, Afua. A, and I just think that the one that really drove our business for the first quarter plus, it still remains Knott's Berry Farm.

And you know, I can't tell you how proud I am of that team there. And I'm proud of our marketing team quite honestly, because they drove the brand positioning work that went with it. So I think, again, I think for us we're a little unique. There's just not enough operating days around that time frame to read one way or the other.

Thank you.

Thank you, and congratulations on your marriage.

Thank you.

Ben Chaiken, Credit Suisse

Just ask the VR question in a different way, what is giving you hesitation, or what did give you hesitation?

You know I think, Ben, I think we want to make sure what I said before, that we are picking the right tools, the right vendor, that we can operationalize it in a way that is consistent with the way our parks work. And so we've still got some questions on how to do it. It is -- it will be a tool that will make its way in the industry.

I just want to make sure that when we do it, it optimizes it from guest experience standpoint, from an operating standpoint, and from an economic some point. And we haven't answered all of our questions in that regard yet. But you know, look, we are introducing Mass Effect, which will be the new best technology experience in the country, even with the large players this year.

It is an example where we don't use VR. We use backlit high-definition LED screens to give the best -- the clarity to the 3D effect along with the 4D effects. So I wouldn't get hung up on one technology or another. What I'd like, quite honestly, is the more people that are using the variety of technology that's available, the quicker we'll sort to where the sweet spots are.

And so whether it be what's going on in Europe these days, what has gone on in Asia these days, what's going on in the US these days, I love the fact that in this particular industry, it's not like you go into a factory and create a new chip that goes in a phone. It's out there and you can see how it works and once the guests validate it, whether it be VR, augmented reality or the other stuff, we will all take advantage of it. I don't know if that answers your question, but I think it's broader than just VR.

That's helpful, and then just switching gears a little bit, you implied in 2015 that you relied more heavily on volume and price, when you think about 2016 pricing internally, could you take larger price increases at parks that have a larger CapEx investment in 2015, or is a broader companywide decision? And then a second piece, when you think back on years past, you have greater success pushing price when peers are also on the same cycle of volume versus price?

Ben, it's Brian.

So taking the first part, that it's no doubt we leaned more heavily into volume in 2015 and built on that. And I think you hit it right on it, a lot of our ability or willingness, maybe, is a better way to say, to take pricing is often tied to our capital programs. So I think when I look at the capital program for 2016, and you have to look at it really on a park by park basis, because that's the way that the business works and then it averages up to something.

When I look at the menu of new attractions for 2016 with Valravn at Cedar Point, the big waterpark addition at Carowinds, and the work that we're doing out Knott's around their ghost town area, and the rebuild of their coaster, et cetera, we will lean into pricing and have more confidence to take pricing throughout the season in parks like that in years like 2016. When I level step up for a second and look at how does that averages out across the system? I think we've said this on previous calls, I would characterize 2016 as maybe being a little bit more right down the middle.

I think we're going to little bit more heavily into price than we did last year. With that said, I think there definitely still is volume to be gained, particularly with the season pass lift that we are seeing at parks like Knott's Berry Farm. And then for the second part of your question about the others in the industry, I think one, I would just take a step back and say it's great to see a little bit more discipline in pricing, but we don't compete head-to-head. At times there can be market bleed in messaging.

That said, really our pricing decisions and the challenges that we face really are more built around legacy pricing practices that we have our individual parks. So we may face different decisions in Cincinnati, as an example, than we do in Richmond, and that doesn't really have anything to do with any of the other Cedar Fair parks or any other parks in the industry, it really has more to do with what the market is used to and how we train those markets.

You know, Ben, the other thing is I'd bounce back to my comment I made at the top, which is -- I'd broaden it a little bit. I've been in the industry almost 25, 30 years. I've never seen a time when the destination and the regional parks have all been doing record numbers at the same time.

And I do think we're basically seeing a shift in consumer behavior, which is prioritizing experiences over possessions. So there's no doubt that there's a little wind at our back, and generally that is an opportunity for us to lean in a little bit.

Thanks a lot. That's really helpful.

Sure.

Joe Edelstein, Stephens Inc.

I wanted to ask just on the past products, and higher thinking about the offer today, do you see yourselves moving towards or perhaps offering a membership-type programs as an alternative option, just as another way to smooth the overall seasonality within the business?

You know, Joe, if you go and study, which we obviously do, the various season pass programs that exist in the industry broadly, you'll find a variety of different practices. I think you'll continue to see -- if you look at our growth of our season pass program both in volume and pricing, it's hard to argue that it's not been a successful strategy.

You'll continue to see it evolve, and I think evolution is probably the right word here over time, we continue to talk about what is valuable to the consumer? And where is there a consumer benefit? So where we see the opportunity for the consumer to have something that benefits them, you'll see our program evolve. At this point in time we're not evolving into a membership program.

Thank you.

And then also could you comment just on what the penetration or the attachment rate, it looked like for some of the other additional past products, the dining, FunPix, even just how are you going about marketing those products today to help get that awareness level up for these newer products?

Well the good news is the season pass audience is the easiest audience for us to communicate with. Right? We've got all the information, they've welcomed our communication with them, and our CRM system works very effectively to talk about which particular benefits would be most appealing to which consumers.

So generally, things like the all season dining program or the all season FunPix program, or the all season beverage program, is very easy for us to communicate the value proposition to the individual consumers that have season passes. And in the park, we do the classic arrangements, as well, in terms of where we locate those promotional activities, and continue to drive. We don't release attachment rates, maybe is a good way to think about it, as it relates to these individual products.

But I can tell you we're very pleased with what were seeing out of the gates. And I think it also, we've talked about this before, Joe, the nice thing is it's an advance purchase commitment. And once they buy their beverage or their food ahead of time, they still come to the park and tend to spend the same amount of loose cash that they would otherwise.

And so, it's all positive and I think it's something that we're continuing to build on. To not make this answer too long, we do see improved penetration rates over multiple years. We're continuing to see even those parks that have had the product for maybe two years or three years continuing to see the growth in that, which is telling me that we haven't quite found the ceiling on that yet.

That's great to hear. And just to switch gears to the expense side, you did call out some of the higher labor costs. Is this primarily within the California parks? Or are you seeing this on a more broad-based basis?

Joe, it's Brian.

So as we've said previously coming into 2016, in fact we expect to see pressure on seasonal labor costs with the escalating minimum wage rates at all of our parks. I would say in the first quarter, it was predominately California, given the fact that Knott's is the only park with meaningful operations.

And then I think we also have to acknowledge there are some incrementallity in there because of some additional events, we mentioned on the call in our prepared remarks, the events around Super Bowl 50 at Great America, so you've got a little bit of year-over-year apples to orange comparison there. So I would say yes, in the first quarter, no doubt that the majority of the increase in labor cost is residing in California.

We've got a lot of initiatives that we've begun to put in place. As I mentioned in my comments, some of the incremental costs in Q1 are the seeding costs, if you will, associated with those initiatives. We've begun to implement, as examples, technology to help eliminate some labor in places. So think about cashless turnstiles, or tollbooths, I'm sorry, at a couple of our parks. Testing food kiosks is another way to eliminate cashiers in some of our food venues. So those types of costs are getting seated in Q1, as well.

I appreciate that extra commentary. Thanks, and good luck.

(Operator Instructions)

James Hardiman, Wedbush Securities.

So let's focus on Knott's Berry since that's obviously the park that's open for the entirety of the first quarter. The Easter commentary was helpful, but I'm looking for reasons not to ratchet up my numbers for the rest of the year given the strong start.

Was whether a factor? Obviously, on the East Coast, the Midwest, it is easy to compare snow to no snow, but did you see what appeared to be any sort of weather benefit to Knott's Berry in the first quarter?

James, I will tell you we really didn't. In fact we had anticipated, you know, the national media, El Nino. And did not actually see that materialize in Southern California.

So I don't know if weather was a differentiator. You know Brian said, and it may have been missed, at this point in time we've already reached record levels of season pass sales at Knott's Berry Farm. And typically our peak period for doing that is in the next six weeks. So it's product-related, it's marketing-related, it's product-related in a highly competitive market.

The other thing, James, we, and everyone on the call, we had been a little bit conservative in our expectations for Knott's simply because Harry Potter was being introduced at Universal. And pre and post Harry Potter we have not seen a change in the trend line. James, if you will allow me, I want to bridge to just one thing and we'll come back to you.

What Knott's has taught us is the value of the seasonal events. There is no doubt in my mind that the two or three week seasonal events at Knott's, and candidly The King's Island has done for a number of years, is driving both season pass value, as well as incremental visitation from day guests. And so, if I had to put my finger on something it wouldn't be weather, it would be the increased popularity of these seasonal events.

That's really helpful, and you actually touched on what was going to be my follow-up, which is just the competitive environment, in that L.A./Southern California market, obviously you had the Harry Potter at Universal and then presumably there is going to be a Star Wars attraction at Disney either next year or shortly thereafter.

I think a lot of us have fallen into the trap maybe on the Sea World side, thinking that a rising tide would lift all ships and that proved not to be the case, as some of these attractions came on in Florida. But as we think about that Southern California market, what can you tell us about sort of the impact of Harry Potter, and what gives you confidence longer-term that that's not going to be an issue for what is your biggest park?

So the biggest distinction between us and Seas as it relates to Anaheim versus Orlando, James, is the size of the population base available to us for season pass holder. The second thing is, and I will go back to what I said at the top, brand positioning -- you need brand positioning for our parks, is something that I think our leadership team understands extremely well.

And what Knott's has found is it's found its place in the marketplace. This is the communities park, not necessarily the corporate park. And then from a value proposition standpoint, you know the pricing at Knott's for a season pass is roughly what it costs for one day at Disney. So I think that it's a very different situation than what Joel will face in Orlando.

The other thing is we've got leadership team that's pretty familiar with that marketplace and the players in the marketplace. So if there were early indications one way or the other that we were seeing some pressure, I think we would probably, our radar would be up for that. But we haven't seen that yet.

That's extremely helpful. And then just last question for me, the Sports Center that's going in near Cedar Point, end of the year, talk about how we should think about the impact that's going to have on that park, and then maybe as you expand that concept, I think there were some items in the prepared remarks that suggest that this is just the beginning. Is there any precedent for this a relationship between sports events and amusement parks, and how should we think about that message?

So the precedent that I'm most familiar with was what used to be called Disney's Wide World of Sports, I think it was called the ESPN Wide World of Sports. The economic model that was designed for that had very little to do with making money off the sporting events, but the fact that the teams and the entourage associated with the teams bought hotel rooms and bought theme park tickets.

What you find when you travel across the country is one of the fastest-growing aspects of tourism is amateur sports tourism. A number of people are participating in these events and the entourages that travel with these teams. In almost every instance, the facilities that exist today come up short with the alternative entertainment options once the game is over.

And so what we are finding already is dramatic interest in the sports field here, not only because the athletes will have national quality fields, but they'll have something to do, and as I've always described, their sister who is tired of watching the brother play baseball is excited to ride Top Thrill Dragster. So any time we can do these events -- these approximate to our parks, it will have very strong strategic value in attendance. And in most cases, if not all cases, the cost of the facility will be substantially burdened by local government authorities.

Excellent. Really helpful. Thanks, Matt.

Barton Crockett, FBR Capital Markets & Co.

I wanted to drill in a little bit on the commentary around your disinterest in pursuing a membership model. I was wondering if you could explain what is it that you see less appealing about that.

And then just more broadly, if we look at your one comparable out there, Six Flags, they are putting up double digit attendance growth with a very big increase in active pass, which is both membership and season pass. I was wondering if you could tell us if you think there's anything there at there Six Flags that you think is worth emulating, or if you think that that's an approach that doesn't make sense and is worth staying clear of?

I think what's probably more important and appropriate for me, Barton, is just to talk about what we believe about Cedar Fair parks. We have -- and I've used the word a couple times a day -- I think our parks are differentiated from other amusement parks that may exist around the country. And so we're happy with our program. We're happy with the quality of our audience from an economic benefit standpoint. We enjoy the best perk caps in the industry. I always want to be careful to make dramatic changes under environments where were doing such -- so well.

So our season pass program has grown dramatically over the last three or four years and continues to drive what we think are going to be great expectations for 2016 and 2017. You know, we're smart enough, I would hope, to monitor the rest of the industry. If we see something that works for us, we'll be responsive to that, but it wouldn't be appropriate for me to critique another organization's particular program.

Okay, but as for membership, can you give us any sense of why you don't think that's appropriate for Cedar Fair?

I'm not going to go to specifics today. We have a reason that we have our program in place. As I said earlier, you'll continue to see our program evolve. I think our primary focus on season pass program is anytime we change it, is it better for the consumer? And that's the one thing that I want to make sure as we continue to evolve our program.

Okay. And if I could switch gears a little bit. You know, you are looking to improve the experience at your Great America Park out near the Levi Stadium, and to what extent is that park competitive with others? I know there's a Six Flags park up in Vallejo, it's a little ways away. To what extent do you think there's some type of inter-park competition there? And to what extent do you think that's really just not a factor in that market?

I don't think it's a factor in that market. You've got such a big population base. And increasingly, you've had the barrier of time travel -- not time travel in terms of sci-fi, but time travel in terms of California highways. And the location of Great America, if you actually go and pull down the satellite photo, is extraordinary. You would never get a site like this again for an amusement park.

The nice thing is our ground lease runs for another 70 years plus. And so, I don't see those competitive at all. In fact, we enjoy -- all of our parks are basically this way, we basically enjoy a captive market for the most part. Except for Southern California; I would say Southern California certainly we think about Disney and we think about Universal when we do what we do.

That's great, thank you.

Matthew Brooks, Macquarie.

I was wondering if you could provide a little bit more color about the new Valravn ride. I know you probably can't give specifics, but maybe you can say something about previous examples about opening record-breaking coasters and maybe how that impacted the attendance?

Every time we've open record-breaking coaster we have set a record. Not only in terms of fastest, tallest, longest, but in terms of our economic performance. We have very high hopes for Valravn this year. I've ridden it; unfortunately I can't yet tell you Brian has ridden it. We will embarrass him into that this afternoon.

And we have media day here today. Yesterday we had about a 10-minute segment on the Today show, national media. That's the type of coverage this type of ride gets. And amplifies our marketing message. Today we have media day here and we have dozens of local and regional television, newspapers, bloggers, here today. So our expectations for Valravn are high and that's part of the reason we think 2016 is going to be so good.

And have you said already, what rides you have for 2017 that might be on that scale?

We haven't, but we've had something on our radar.

Okay. Thank you.

(Operator Instructions)

And it appears there are no further questions. Speakers, I will turn the conference back to you for additional or closing remarks.

Thank you, operator.

So look, I want to thank everyone for your ongoing interest and support of Cedar Fair. As I close, I really do need to acknowledge our leadership team and all of our associates. I not only get to work with a lot of really smart, dedicated people, but these same people have instinctively high self-imposed standards, and it's been my privilege for the last five years to work with all of them.

Finally, I truly believe that the strength of the regional and destination amusement business is a validation of the priority people place on having fun with their family and friends. With all of the distractions and obligations people have today, they continue to choose our parks in record numbers. I encourage all of you to visit our parks this summer and experience firsthand what differentiates Cedar Fair parks from other entertainment offerings.

I'll turn it back over to Stacy, thank you everyone.

Thank you, everyone, for joining us on the call today. If you have any follow-up questions, please feel free to contact our investor relations department at 419-627-2233.

We look to forward to speaking with you again in about three months to discuss our second-quarter results.

And that does conclude our conference call today. Thank you all for your participation.