Six Flags reports August attendance growth, revenue decrease

Typically, when a business model is setup to lose money (corrected by volume) in the end it doesn't work.

If only 15 parks are turning a profit, those parks can only carry the rest of the company for so long. I wish we could see a breakdown of each park's attendance and balance sheets.

Guess the 15 park time right, here’s my guess:

Obvious money makers:

-Knotts Berry Farm

-Cedar Point

-Kings Island

-Canadas Wonderland

Educated Guesses:

-Kings Dominion

-Carrowinds

-Six Flags Fiesta Texas

-Six Flags Magic Mountain

-Six Flags Great America

-Six Flags Over Georgia

-Six Flags Over Texas

-Schlitterbahn New Braunfels

Profitable but not contributing much:

-Michigans Adventure

-Worlds of Fun

-Dorney Park

Wait, what? Where did this 15 park idea come from?

All of their parks make money; they would have been gone long ago otherwise. The issue at hand is whether some of their parks could make more money (short term) not being an amusement park. For Six Flags America and California's Great America, the answer to that question was yes. I can't think of many other SF parks that might be sitting on land so valuable that it would be worth losing them.

The company lost $100 million last quarter. Surely some of them did not make money.

The weather was godawful during the summer for most of the country. May and June were extremely wet and July and August were extremely hot. This is why people need to focus on the big picture because the parks are so susceptible to weather. At the rate we're going, places are going to do gangbusters for Halloween season unless there's a major pattern swing.

Jeff:

The company lost $100 million last quarter. Surely some of them did not make money.

It's entirely possible that some of the parks didn't make money, but keep in mind that the corporation also had $90MM in interest expense and $130MM in "Selling, general and administrative," some of which could be specific to individual parks but much of which is corporate staff. So each park might be making a smallish profit, but not capable of sustaining all of the debt and the HQ in Charlotte.

There's a ton of depreciation too, but I'd assume you can trace that back to the individual parks.

Yes, weather affected our trip to Busch Gardens Williamsburg this year. Originally, our plan was to incorporate BGW into our weeklong vacation in mid-June with day 1 spent at Colonial Williamsburg, day 2 at BGW, and the rest of the week at Virginia Beach. After walking around Colonial Williamsburg for 30 minutes in 98° humidity, we elected to leave, check into our hotel, call SeaWorld customer service and reschedule our day at BGW for later in the summer (August 11th), then spend the extra day at the beach. We had pre-paid tickets plus a parking pass, and we had to put money on top for rescheduling because the prices were higher on 8/11.

Soon after we got back from vacation, my wife realized August 11th was her first day back at work (teaching Pre-K), so we had to call again to reschedule, this time for this past Saturday...and again had to spend more because it was weekend #2 of Howl-O-Scream.

So as I said, weather affected our trip, but anecdotally, we ended up spending more because of it. Quite a bit more.

My only advice based on my experience is, make absolutely sure you don't ever have to contact SeaWorld customer service. Their hold music is insufferable, especially after two hours.

Touchdown:

Guess the 15 park time right, here’s my guess:

There is almost no way Great Adventure isn't on the survive list if we are talking the next 5 years. They don't do the work they've done and spoke about doing the next 2-4 years without planning to keep it around. Plus being just off the main corridor between Philly and NYC is a bonus.

Yes the attendance has been a huge crater this season but that's due mainly to the "OMG What did you do to Ka?" "We didn't get our last rides!" "and you are replacing it with a gimmick" social media posts all over.

I laugh at the last one because Ka was a gimmick itself.

Flash has been a hit or miss to that same crowd. Some love it, Some hate it. Some think it's in between"

hambone:
Wait, what? Where did this 15 park idea come from?

While not a direct quote, it was referenced during SF earnings Q2 results conference call (I pulled this from a quick Google search). It's been discussed on other threads / sites

Brian Witherow noted that the "lion's share" of earnings comes from their largest 15 or 16 locations. Six Flags reported that these top parks produce 90% of their financial results. This indicates that while the company owns and operates numerous parks, a smaller core group drives the overall profitability

I’m not disagreeing SFGAdv survives, but I’m questioning if it was actually profitable this year. Seems they pissed off most of their fan base and antidotally had a horrible summer. I’m not sure it was profitable this year that’s all.

Touchdown:

Seems they pissed off most of their fan base and antidotally had a horrible summer.

Mforcebob:

Brian Witherow noted that the "lion's share" of earnings comes from their largest 15 or 16 locations.

OK, thanks. There's a big difference between saying the lion's share comes from X locations and that X locations are profitable.

Jeff:

Surely some of them did not make money.

Lets not also forget Inflation and the Job reports… something like 85% of the unemployment numbers where due to Texas alone. I think the job market chais will help hiring but not help guest spending either.

I find the hand wringing over Ka silly, it never had a big line, the bigger prob is you took out two coasters, opened a new one a year late, and still have 3-4 rides always down. Hurricane Harbor was rocking all season though.

I have a feeling many of the Legacy SF parks are actually worse than they thought. Compared to 8-15 years ago some are down 2 million plus, so they truly are still in attendance spiral compred to CF parks, and what CF did to Paramount. Mainly all CF had to fix was CW, and few things at CW and KD, not 6 parks, and all their water parks.

hambone:

Somewhere, long ago, I saw an explanation of how they recognize revenue for season passes month-by-month across the season. I would think GAAP would require them to do so (e.g., they can't claim the entire $100 someone pays for a pass and then close the park it applies to, nor can they just apply the $100 whenever they want to smooth earnings).

And since they don't, as far as I've seen, say "we made $X from season passes and $Y from single day tickets," I'd assume they are a blended rate.

A couple of years ago I had stock in this company, which I do not now. I emailed their client relations and they replied back that the season passes are recognized over the first five uses, one fifth at a time. It had to do with the average use of a season pass. I would assume if it was used less than five times it would be fully recognized at year end.

Ugh, I just realized that I've still got five lousy FUN shares. Down 68% since I bought them as SIX years ago.

super7*:

the season passes are recognized over the first five uses

Thanks. That makes more sense than month-by-month, and would allow them to blend it into the average in a way month-by-month wouldn't. It probably also means that at the end of the season/year, they would need to do some kind of adjustment to account for the >5 and <5 usages. (Would that be an adjustment up or down? No idea. In my case, the average gate would surely go up, because I'm the kind of sucker they salivate over.)

If they recognize revenue from passes based on an expected 5 visits per season, they would recognize the full amount the pass in revenue by the 5th use. Anyone visiting more than 5 times would result in no additional revenue after the 5th visit. If someone visits less than 5x in a season, the park would recognize the remaining revenue for that pass once the park has closed (with park specific passes it would be when that park closed but with all-park passes next season, they would presumably recognize the remaining revenue on 12/31 (when the season ends for year-round parks -- either way though it would be recognized in the 4th quarter)).

Per footnote I quoted above, Six Flags doesn't specify 5 as the number. Just that its based on historical usage as "adjusted for current period trends." May well be 5. But it may also be a different number of expected visits.

....and it might be different in different markets.