Lease Commitments

12 Months Ended

Dec. 31, 2022

Lease Commitments:

Our most significant lease commitment is for the land at California's Great America, which we sold on June 27, 2022. Concurrently with the sale of the land, we entered into a lease contract that allows us to operate the park during a six-year term, and we have an option to extend the term for an additional five years. The lease is subject to early termination by the buyer with at least two years' prior notice. The annual base rent under the lease liability was initially $12.2 million and will increase by 2.5% per year. Upon commencement of the lease, we recognized a right-of-use asset and lease liability equal to the annual base rent for the initial six-year term. Upon termination of the lease, we will close existing park operations and remove the rides and attractions from the land. As of December 31, 2022, we included estimated lease payments to dismantle and remove rides and attractions totaling $12.9 million within the right-of-use asset and lease liability. The discount rate used to determine the present value of the future lease payments was our incremental borrowing rate. We sublease a portion of the California's Great America parking lot to the Santa Clara Stadium Authority during Levi's Stadium events. The lease payments were prepaid, and the corresponding income is being recognized over the lease term, or through 2027. The annual lease income recognized is immaterial.

Other significant lease commitments include corporate office space in Charlotte, North Carolina and the land on which Schlitterbahn Waterpark Galveston is located. The corporate office space is generally leased through 2029. The Schlitterbahn Waterpark Galveston land lease has an initial term through 2024 with renewal options at our discretion through 2049, which we have concluded we are reasonably certain to exercise. We have also entered into various operating leases for office equipment, vehicles, storage and revenue-generating assets.

Total lease cost and related supplemental information for the years ended December 31, 2022, 2021 and 2020 were as follows:


	Years Ended December 31,
(In thousands, except for lease term and discount rate)	2022			2021			2020
Operating lease expense	$	9,857		$	2,711		$	2,797
Variable lease expense	972			872			173
Short-term lease expense	8,769			7,563			2,205
Sublease income	(715)			—			—
Total lease cost	$	18,883		$	11,146		$	5,175

Weighted-average remaining lease term	6.7 years			14.1 years			16.8 years
Weighted-average discount rate	3.7		%	3.7		%	4.1		%
Operating cash flows for operating leases	$	9,034		$	2,299		$	2,679
Leased assets obtained in exchange for new operating lease liabilities (non-cash activity)	$	85,789		$	4,914		$	1,769

Future undiscounted cash flows under our operating leases and a reconciliation to the operating lease liabilities recognized as of December 31, 2022 are included below:


(In thousands)	December 31, 2022
Undiscounted cash flows
2023	$	15,256
2024	15,039
2025	15,251
2026	15,316
2027	15,325
Thereafter	31,836
Total	$	108,023

Present value of cash flows
Current lease liability	$	12,043
Lease Liability	81,757
Total	$	93,800

Difference between undiscounted cash flows and discounted cash flows	$	14,223