Crankin with Frank

David vs. Goliath: The New Cypress Gardens will use an 'FEC Strategy' to Take on Worlds Biggest Theme Parks

E. Brunswick, NJ - This month I'm delighted to share what could be the amusement park industries' biggest success story of the year. The rescue of the decades-old Cypress Gardens park in Florida provides a perfect object lesson in how the FEC philosophy of "family value" can play a central and successful role in keeping out industry viable, no matter how big and powerful the leisure entertainment competition becomes.

The Cypress story also dramatizes how entrepreneurial spirit, wise management, solid finance and professional market feasibility assessment can work together with the public sector to preserve and enhance a great American entertianment property. The venue is set for a dramatic rebirth as Cypress Gardens Adventure Park under the leadership of CEO Kent Buescher, founder and majority owner of Wild Adventures Theme Park (Valdosta, GA). The new CGAP will re-open in early December.

If CGAP performs as expected, drawing repeat family business primarily from the regional market, it will demonstrate how carefully targeted attractions and amusement can thrive in the shadow of the biggest, gaudiest, deepest-pocketed theme parks on the planet. The partners at Amusement Entertainment Management are happy to have played a small but vital role in the rebirth of Cypress Garndens, in cooperation with GE Commercial Finance, Comercial & Industrial Finance. And AEM looks forward to an ongoing relationshop with this American tradition.

History of Cypress Gardens
The story of Cypress Gardens is a long and distinguished one. Founded approximately 70 years ago, this 150-acre seaside park drew visitors and fans from around the nation and the world to its unique mix of attractions, which include a waterfall, topiary and rose gardens, two water-ski arenas where thrilling stunt performances were staged, an antebellum-style Southern plantation mansion, butterfly conservatory, theatre, zoo, nursery, historic radio and train collections and more, including botanical gardens.

But by the 1980's, other parks and attractions in the Orlando region were waging a $100 million-dollar spending war and Cypress Gardens was falling behind. While all the beauty and splendor of the original Cypress Gardens remained, the pizzazz of Disney World, Universal Studios and others was luring away visitors despite boosting tourism to the region as a whole. During it last year of operation, CG drew more than 700,000 visitors. However, bottom-line profits were too low and capital was needed for infrastructure improvements and the owners desided against investing more money in the park. Subsequently, the doors closed in late 2002.

Here were 150 acres of prime water-front property that could have potentialls gone into the hands of a real estate developing company. Condominiums were proposed for the site; the unique appeal and one-of-a-kind gardens of the original park were at risk of becoming a piece of America's history.

In a beautiful example of preserving one of this country's great natural treasures, a white knight stepped forward in the form of Buescher, who was already running his Wild Adventures Theme Park. He became keenly interested in aquiring the property and preserving Cypress Gardens as a theme park, and his passion was shared by local and state government leaders, along with various lobbying groups. Eventually Polk County and Florida Governor Jeb Bush arranged a $13 million grant to be used toward a $20 million purchase of the property from the real estate developer.

We now turn the story over to Ralph Willis and Shea Wallon, managing director and vice-president, respectively, of Comercial & Industrial Finance's Sports and Entertainment Group. CIF is a premier global provider of structured financing solutions to the comercial and industrial marketplace with over $10 billion in assets. As Willis and Wallon explained, "The Sports & Entertainment Group was formed earlier this yea as a growth platform committed to a variety of markets including sports franchises, theme parks, water parks, family entertainment centers, ski resorts and other sports and entertainment sectors."

The GE team had previously established a relationship with the man who would become the white knight for Cypress Gardens. "We were first introduced to Kent Buescher about three years ago as he was seeking financing for Wild Adventures," said the financial pair. "We were very impressed with his ability and vision to build Wild Adventures from a petting zoo into one of the top 50 U.S. parks in a relatively short timeframe. Last year we closed a $23 million senior dept facility for Wild Adventures that re-capitalized the park's balance sheet while also giving needed working capital and growth capital."

So when Buescher came to the GE team to ask for its support in rescuing Cypress Gardens, he found they were more than ready to listen. "Kent approached us with the possibility of reviving Cypress Gardens," said the GE folds. "We knew of the park's storied history and had heard thath te park had closed, so Kent's intrest in Cypress received our attention. For Cypress, Kent needed aquisition capital as well at development capital. We ere very intrigued by Kent's vision to reposition Cypress into a family-style regional theme park while maintaining the park;s beautiful botanical gardens and water shows."

For Cypress, GE proposed a $48 million financing plan that would refinance the Wild Adventures facility, while also providing the capital to aquire and develop Cypress Gardens. GE arranged for other lenders to join what would ultimately be a $51 million debt facility while Buescher arranged for an additional $28 millio of equity capital.

AEM's Role
Next, the GE team wanted a comprehensive market survey and in-depth project analysis to ensure that the proposed revamp was sound. It selected Amusement Entertainment Management for the job; this was one more cooperative project for two companies that had established a successful working alliance in the past.

"We utilized the services of AEM for the feasibility study and asset appraisal for the Cypress Gardens financing and we also had AEM complete similar work for Wild Adventures." Willis explained. "We have worked with AEM for a few years now and rely on their consulting abilities and industry expertise to assess various entertainment industries and to asses individual financing opportunities.We have formed an excellent relationship with AEM and, rather than utilizing their services on a project-by-project basis, we have jointly put together an ongoing consulting program that allows us to consult with AEM as needed as we come across potential financing opportunities or just want to brainstorm."

The GE team's primary contact at AEM is Jerry Merola, although on occasion they also work with this author and Joe Camarota. "All of them have been great to work with and, while we probably take an inordinate amount of Jerry's time, he is always willing to discuss issues with us and goes out of his way to make time for us." said Wallon

Independence and objectivity are important values to GE, so at a certain point they turned AEM loose to do its thing. "For all of our financing opportunities, we want our consulting assessments and appraisals to truly be independent," the GE folk commented. "So while we initially worked closely with AEM to identify the scope of the project and ensure that it had the necessary information to complete the project, subsequent to that AEM personnel completed the project on their own."

AEM obviously saw that the Gardens plan had many strengths right off the bat, with Buescher's seccessful track record prominent amoung them. Here at AEM, we beleive that Kent's Wild Adventures Theme Park is the fastest growing park in the country, despite being just seven years old. Buescher started the business as a petting zoo; today it's a theme park that attracts 1.1 million people annually. On this new venture, Buescher decided that rather than build just another theme park at Cypress, an FEC style strategy would be proposed as part of the $50 million redevelopment plan.

This is where AEM entered the picture. AEM's Merola explained, "The GE team asked us to analyze the central Florida market for the concept of a traditional family entertainment site with a strong nature appeal, catering chiefly to local and regional patrons (with some expectation of tourists traffic as well). To find the answers, we broke apart the demographics of the regional Florida consumer. We performed focus-group work to learn their spending capabilities."

AEM's feasibility study turned up some crucial results. "Interestingly," Merola continued, "we learned that local consumers and state residents were concerned that even with a local's discount, the $50 to $60 entry fee for Disney World or Universal was exceeding affordability. Regional customers needed an entry fee of around $30 to enable them to become repeat customers. We also found that families desired an affordable venue that offered activities the entire family could do together. That meant rides and attractions, but not an emphasis on thrill rides. We found that the Cypress Gardens concept offered a strong appeal to all ages, while rides were great for kids and families, the gardens were enjoyed by all and held particularly strong appeal to seniors."

So, with all this in mind, the question on the table was simple. Could the proposed budget and the redevelopment plan that was comtemplated by Buescher succeed in building and maintaining a viable niche? "Our conclusion was yes." said Merola. "the new owners could acheive their financial goals by using the right price point; maintaining the unique (and literally irreplaceable) heritage of the gardens; and adding the right attractions."

By the way, in our review of competitive properties, AEM's team realized this particular formula of the gardens and the Wild Adventure-style attractions if not offered by any other park or attraction at the planned price point. Yes, there are parks with bigger attractions, but they cost more. Yes, there are live aquarium and aquatic animal parks, but they did not have the same diversity. Cypress could be a leading venue, then, in an emerging market niche that we see as the "family value" segment.

As Merola put it: "The values in this case are not political issues, but family togetherness and diverse entertainment value, offered at a cost that can be afforded by a family of four or six. The goal is to offer just as much entertainment value as the 'big boys' at considerable more affordable prices."

The "new" Cypress Gardens will preserve the breathtaking botanical gardens andthe thrilling water-ski shows that originally made the site world famous in the 1930's. The new FEC-park facilities include about 45 new attractions, including four major roller coasters: a custom-build S&S wooden coaster; a Vekoma Junior Coaster; a Vekoma Suspended Family Coaster; and a Vekoma "Boomerang." Other top attractions include the spinning-car ride "Yo-Yo" by Chance Morgan; A Ferris wheel from the same manufacturer; A Zamperla "Disko"; a Zamperla spinning donut cage called "Power Surge"; and an Intamin swinging capsule-type ride called "Inverter."

Traditional family rides include a Zamperla "Rio Grande" Old West-style train; a Zamperla "Samba" ride; a Zamperla "Rockin' Tug" swinging boat ride; a double-decker carousel by Chance Morgan; SBF bumper cars and other. Among the thrill rides are an ARM Inc. "SuperShot." The traditional game room is quite elaborate, utilizing the entire main concourse (a roofed, open-air pavilion) of the original Cypress Gardens. More than 150 machines are expected including a full redemption component with themed prize counter.

And that's not all. Phase II will see CGAP build a water park as well, closely emulating the successful water park from Georgia's original Wild Adventures.

AEM is delighted to have assisted with this happy new chapter in the Cypress Gardens story, and we're proud of our performance, GE's Wallon commented: "The [AEM] assessments were completed within the timeframce that we needed, which is very important for us, and the completed work was very thorough and gave us a much better understanding of Cypress Gardens."

Accordingly, GE foresees an ongoing role for itself and AEM in the "new" Cypress park. "I believe we have formed a great relationship with Kent Buescher and we look forward to working with him as financing needs arise with Cypress Gardens, Wild Adventures or any other project he may be involved in," said Wallon. "Our group is very relationship-oriented and, to that end, we hope that Kent and our other clients view us as financing partners. As ongoing capital needs arise for either park, we also intend to continue to utilize the servicesof aem to assess the opportunities.

To learn more about the new Cypress Gardens Adventure Park, I recommend all to visit and see for yourselves. Of course, bring the entire family. You can also pay a virtual visit at www.wild-adventure.com