Another Motley Fool article on Six Flags

Spot-on, as usual.

Totally spot-on. :)

Favorite bit:

"I know that he can be the one to right the wrongs at Six Flags. He just has to refrain from straying as he has late in the 2006 season."

I think it's really sad to see how things have changed from the spring. There was all this emphasis on family attractions (which admittedly some weren't crazy about), but a lot of us agreed that it would be healthy for the company overall.

So what happens when I'm watching the X-Games? I keep seeing ads advertising 160 coasters including Titan, Deja Vu, Kingda Ka, Raging Bull etc. etc. I understand that the X-Games appeals to a younger demographic, but I'm 35 (not long until 36) and I dig the X-Games. I can only imagine that there are lots of other adults watching as well. Watching people doing the unthinkable like doing a double-backflip on a motorcross bike never goes out of style, no matter how old you are.

The only healthy thought I can see behind the ad campaign was "Mom and Dad, take me to Six Flags before the end of the season." Otherwise, it was back to last year(s) all over again.

I love the "Take it online" section of the article...I think all of that would be extremely neat stuff. I thought the construction journals that the SFGadv website had for KK and El Toro were steps in the right direction...but the article is right in that so much more can be done. Official forums on the park pages and guest suggestion/comment pages (that management takes seriously) would also be good steps, imho.

Everything looked real promising earlier this year during the Springtime and right at the start of the summer season...since then, things have looked very dismal and have taken a turn for the worse - seemingly back to what everything was like before Shapiro stepped up to the job.

This is what desperation looks like: facing financial pressures from creditors and shareholders...watching attendance free-fall heavily due to the "strategy" of untarnishing the brand by keeping loitering teens away. Shaving off park hours to save money. Closing Darien Lake a month earlier than planned. Early ride closures for the season to save money. Laying off costumed characters to save money. The STILL CONTINUED prostitution of season passes and heavy one-day ticket discounting.

I suppose Shapiro thought it would be a lot easier to fix than he thought.

'Cause really...what has REALLY changed? Nothing much.

Stock trading at a 52-week low. 6 properties up for sale. Early ride and attraction closures and employee lay-offs across the board. Parks charging premium prices for a half-assed experience.

I'd like to think Shapiro knows what he's doing...

On the last conference call Shapiro admitted the chain was in worse shape than he thought. Methinks that was an understatement.

Thanks, Burke & Co! ;)

Seems like everybody knows what the company needs to do to turn itself around except for the guy being paid millions of dollars to do it.

I'm wondering what good all these offers are going to do-- the bring friends offer, the buy one day get the rest of the season free offer. They may increase the number of guests for the next quarter, but then per cap revenue will drop off again.

They had an increase in per cap spending, but it was almost totally offset by the reduced attendance. That resulted in flat revenue, which doesn't help either the stockholders or those financing the debt.

What makes things appear worse is that some of the things they're cutting back on (the costumed characters for example) are the very things they said would help increase attendance and revenue. But now it looks like the company is admitting it made a mistake adding those things.

This is all very true...but we have to remember some of the existing "clientele" that still come to the Six Flags parks...just because prices are raised and the park becomes more family friendly doesn't mean that the same hoodlums and thugs won't come out to the parks and make life miserable for everyone else. A bunch of the trip reports I read for SFGadv involve line cutting and issues with the "clientele" that come to the park.

It also doesn't help that rides are either poorly staffed or can't get open at all...I think these parks need a few more flat/thrill rides other than coasters to help alleviate the lines at the big rides. Hershey just added the Xtreme Cup Challenge, and a few years ago they added The Claw...both of which help lines out from the coasters in the park, thereby helping to eliminate wait times, and increase mood around the park.

What are they thinking?

Give away the gate to get more butts into the park...to do what? What exactly is this supposed to accomplish?

Because I'll tell you what it WILL accomplish. It WILL give people an opportunity to come to Six Flags for $cheap, and as a result figure out why it is that they DIDN'T want to go there before.

This is just the opposite of the stunt that Cedar Fair is pulling with Geauga Lake. At Geauga Lake, Cedar Fair is going to give away the gate for a few days, clearly so that they can show the place off in an effort to get people who had written the place off in the Six Flags days to see how much it has changed and encourage them to come back again next year.

But Six Flags hasn't fixed anything. They're going to give away the gate to show off filthy, understaffed parks in which half the rides don't work and in which the hours have been cut. They're going to have people griping that the $cheap that they paid was way too much, and they'll vow never to come back again.

This isn't rocket surgery, folks! Is it not obvious that you have to FIX THE PRODUCT FIRST, and THEN drag the butts through the gate?

--Dave Althoff, Jr.

That was the point Mr. Munarriz was making in his article, BigJim. These offers that come out to $15 or less per person continue to draw the hoodlum crowd, not the families the company has said it wants to attract.

Maybe the park thought they would make more money with increased parking and Q-bot rentals, while not really increasing ticket prices or season passes. But the troublemakers still show up, pay their $15 to park, get in the park for next to nothing, and spend nothing inside the park. And who needs a Q-bot if you're just going to cut lines and get away with it?

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But now it looks like the company is admitting it made a mistake adding those things.

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Not so much admitting the mistake, but admitting to underestimating the problem.

Repeating some of my podcast comments, but I have to agree wholeheartedly with Moosh (and I did earlier this week) - Shapiro underestimated the depth of the problem when he started this thing. Reality set in and now we're seeing panic mode - which sadly, looks quite a lot like the old guys' 'normal' mode.

Honestly, I still don't think most of his moves were mistakes or bad moves by any stretch. However, backpedaling so quickly is. He should have stuck to his guns.

I mean what happens now? So this season limps to an end and we gear up for 2007. Ok, so what's the plan. You've decided to abandon the original plan the second things looked ugly. You're current plan is the same as the old plan, it sucks and we all know it. What exactly can possibly happen in 2007? New plan rehashed? Same old, same old? Some weird new third plan?

Shapiro was on exactly the right path but I think the reality of the situation set in and he flaked. There is no quick fix answer here. This is a long term, top to bottom, complete overhaul that has to be done.

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Seems like everybody knows what the company needs to do to turn itself around except for the guy being paid millions of dollars to do it.

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Man, I hate that statement. (you knew I would :) )

I don't think for a second the guy doesn't know what needs done. I don't think for a second that the real solution is as simple as the little hens like to chirp on the enthusiast boards. I don't even think it's as simple as Rick Munarriz makes it sound on paper. We can all play armchair CEO for fun, but it means dick.

Sure it sounds simple - run rides at capacity, train your employees better, price correctly, etc. But saying it and doing it are two totally different things. I don't think for a second that the powers that be behind SF don't see this. It's not as simple as "Ok, do it. Whee, we turned the company around."

If it were that simple, we'd all be CEO of some publically traded, multi-billion dollar company - but we're not.

The only mistake I see is the complete 180 on everything that looked like it could make a difference in the long term. No idea why it's playing out this way, but then again none of us are in the boardroom being forced to please everyone (investors, customers and employees) at the same time when it's just not possible.

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This isn't rocket surgery, folks! Is it not obvious that you have to FIX THE PRODUCT FIRST, and THEN drag the butts through the gate?

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Well, that's fine & dandy and makes perfect sense. But what do you do in the meantime? How long does it really take to turn things around?

CP abandoned everything SF at Geauga Lake and still have to let people in for free two years later. Imagine if they were forced to continue on with SF staffing, finances and all that. That's what Shapiro has to do - completely rebuild, reshape and restructure a company that has steadily declined in every aspect with each passing year for at least the last 5 years.

So what's the answer? Where does one start the rebuilding of the company?

In the park? Staffing is a problem, but more staff cost more money. Even harder is chaning the mentality of your staff. You can't make people care overnight. There are both time and money issues (especially for a company carrying two billion dollars of debt) forcing your hand.

How about operations? Same sailors, different boat. Staffing & employees. Money and time. Two things Shapiro doesnt have.

The rides themselves? Get what you have up and running or running to capacity or getting the right additions in each park? Ahh, that pesky time and money thing again. It takes time to change even under the best financial umbrella. Under a the worst of financial situations, cahnge comes even slower...in the face of a lack of time to change. Ouch, the irony.

Pricing? How do you get people in the gate when the product sucks? People complained when the pricing was too high and now here's a thread complaining about giving away the gate. So no price is right until the parks are fixed. Well, that takes time (as I've tried to establish) and until that time you need to generate money to make those fixes. What to do - try to get those still coming to pay or try to get more people through the gates, but risk them noticing your product sucks? Neither answer is right.

It goes on and on. I don't care what quick fix anyone lists or how good it sounds on paper. We can all do it. What none of us can do is make it happen...or even begin to understand what it takes to make it happen.

Nothing disheartens me more than the fall back to the 'same old, same old' with these friggin' parks. I still think Shapiro was on the right path, but for whatever reason his hand is being forced. I suspect it has to do with time and money - neither of which Shapiro has much to play with.

Perhaps SF is unfixable?

I think Moosh summed it up nicely:

Thanks, Burke & Co!

Lord Gonchar, great post.

I just wanted to add that from what I have been able to get out of following the stock lately is that the reason for the sudden late-season cutting of so much activity (rides, characters and hours) is that without increased revenue, the chain cannot meet its interest payments without selling off property perhaps at under the value of the property. While six parks are for sale, the way this all seemed to come across to me was that the chain didn't want to sell these parks, but they were amongst their lowest revenue earners and/or were on land that is wroth a significant amount of money right now. While these six parks are for sale, unless a buyer comes forward at a decent price, Six Flags will not have a cash infusion to help pay off the debt.

Without a cash infusion to help pay off the debt, the chain's debt is crushing itself. Since revenue was essentially flat, the chain may not be making enough to pay off their interest payments, which I believe some high interest loans were coming due soon.

The goal was to either refinance those loans or sell some parks to pay them off right now. Since it looks like both of those methods may not work, Shapiro is quickly cutting things to help pinch pennies for the creditors. As was brought up before, quite unfortunately these are the same things that had been done to improve the parks.

There is no easy answer -- while raising the price of season passes and not giving away the gate sounds like a plan, it does not take into account the amount of people per year who use season passes to get in, and the per capita they spend. If the chain's attendance takes a double digit cut right now by doing this -- even though it should be the eventual goal -- they will be sunk in 2007.

The other thing is that I don't think that 2006 should count as the first year to judge Shapiro's work. By the time that he took over, new rides were already being constructed and a lot of things were probably set from the previous management. I think that next year when we get to see what improvements the parks make is when we finally get to see what he is going to be all about. If all that we see is a few spinning coasters, we're in trouble. If we see more maintenance, more employees, and more of the family fun that he promised, then we'll be able to start judging. And if not... Viva la Cedar Fair!

The company must be doing good, I mean the board of directors bought a ton of treasury stock! =\

You have to remember something. Shapiro and snyder did not make the current budget. Old management did.

When 2007 seasons budget is made I bet things liek characters will get a lot bigger budget and maintanance will get a bigger budget as well.

Since there will be no more big coasters for a while that means more money to go to the needed areas.

Also their panic mode is not really the same as the old management.

They cut characters they did not get rid of them all together. Old management would have got rid of them totally.

This management is trying unlike the old ones. Yes they are reducing park hours but that is something that wasnt done under old management.

Just remember Rome wasnt built in a day . :)

Lord Gonchar, excellent post. You summed it up quite nicely. I think the bottom line is, Six Flags is out of money and thus the reason for all of the cuts we're seeing. Personally, I'm looking forward to what 2007 brings.

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majortom1981 said:
You have to remember something. Shapiro and snyder did not make the current budget. Old management did.

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That's actually not true. The only park budget that may have been in place before the takeover was SFMM's, since it's a year-round operation. The rest are typically not set until late winter/early spring.

I agree with what most of the others here have said. I think Redzone was on the right track, and it's disheartening to see all of the cuts going on. These aren't major things; they're going back on nearly everything they promised from the start. Characters have almost completely disappeared. Parades are being cut. Obviously customer service and operations have taken a major hit. I fear they're living too much in the short-term right now and they're destroying hope for the long-term. Maybe that's not completely true, or maybe they have no choice but to live in the short-term. But I think it's truly disappointing to see this new team resorting to old tactics.

I think there must be a lot going on that we're not aware of. I think theories about not being able to make interest payments are probably right on. But I still think there's something else happening that we don't know about. It's really just a feeling I have, but it must be something pretty major in order to cause such major (negative) changes.

I'm forced to wonder - is the ship is sinking or are they simply tossing excess baggage in hopes of keeping it afloat for another yer? I doubt anyone here can say for sure. Maybe Shapiro priced the parks too highly. Maybe it was a lost cause to begin with. It would be a shame to see Six Flags go away, and I hope they can pull it together next year. This year hasn't been so great. Unfortunately, I don't know how many times we can hope "things will be better next year" when the company is in such bad shape.

-Nate

Hey...I thought I was the one who summed it up nicely? ;)

Quick, name this show: "In the middle of the summer in the middle of the park, there began a great adventure for a boy whose name was Mark" ;)

Just in case: http://en.wikipedia.org/wiki/Lidsville

The opening sequence was filmed at SFOT...which is probably where the company will end up retreating.

*** Edited 8/17/2006 3:55:32 PM UTC by janfrederick***

I don't know... remember Burger Chef? Norge? Winky's? AMC?

Will we soon add Six Flags to that list of once thriving, now defunct brands?

Perhaps the best thing really is just a massive sell-off. Don't get rid of six of the parks. Get rid of all of them.

How else do you truly restart from the ground up?

Sell them all off, pay off the debt. Say so-long to the investors, hopefully have a couple bucks left over for cab fare home.

Sometimes you just have to pull the plug.

Great post from Gonch a few posts ago.

But I don't think it is going to change many thoughts on here.

- There are those who realize that this is a long term turn around and believe that Shapiro (et al) are on the right track...

- there are those "arm chair CEO's" who already believe that he failed because the turn around was not instant (after all, from their vast experience they know that it is easy to get an efficient and happy work force... just click on the "education" button a few times until their little face Icon changes from sad to smiley!)...

- and there are still others who, while they may whine that one of their favorite coasters at one of their favorite parks might be closing, they seem to be secretely delighting that the Six Flags chain (not one of their favorites) is teetering on the brink of destruction.

As for the first group (those who see this for what it is, a long term project that will take time), you are preaching to the choir.

As for the second group... forget it... they know better.

As for the last group... may as well talk to the wall. Face it... if a host of angels would appear and a heavenly glow would surround Shapiro as he walks on the surface of the lake at Great Adventure, this anti SF lot would simply say... "So your guy can't even swim."

*** Edited 8/17/2006 4:38:09 PM UTC by SLFAKE***