SF hidden agenda?

In the end, I think Premier is going to need to use a formula they used before. When they bought Wild World, they found the name was so disparged they had to rename the park Adventure World. Now they may have to use the same technique again, not only with one park but several parks. They will need to "de-flag" several parks and rebrand them to give them a new identity with the public. I can't tell you how many times I have heard the general public criticize my local park, not only friends and family but I've heard it in lines at other parks as well. A rebranding of several parks might be the best way for SFI to go.

Hello? They didn't sell SFWOA to make money...they sold it because it would cost still more to make it a competitor to CP and ages before they'd make any money back.

-'Playa

No, the industry doesn't really involve coasters and rides - more entertainment related. But I enjoy parks, coasters, etc. so I check out what people are talking about from time to time.

You miss the point!

Ok let try it this way. I am a slum lord and buy 5 houses for 100.00 each. I then put another 500.00 in each house cleaning them up. My payment each month for each house is 5 dollars. That's 25 dollars I owe a month.

Well I did not do so good in fixing up the houses. I thought I was going to be getting 10.00 a month in rent and making a pretty penny. It did not work. The people said I was a slum lord, I ruined the property cause I stopped fixing things, and stopped caring about how my properties look. Next thing I now I am now only getting 3$ a month for rent. No one will pay more. So my expendature is 25$ a month. My income is 15$ a month. AS much as I dont want to. I need the income comming in, I am loosing money. I must sell 2 of my properties to have reserves for the others. I now am only getting 9$ a month in rent, but I have some liqiuid cash.

If this example does not work I give up.

Selling properties reduces debt. Period.

Selling anything you owe money on will reduce your debt. You no longer have payments to make on it, therefore that reduces your debt.

I never said anything about making money on a sale.

Any company in financial hardship does not ususally make money off a sale. The sell out of despertness to reduce debt.

*** Edited 8/24/2004 8:51:51 PM UTC by Markieb***

Jeff's point, I believe, is that selling off assets that MAKE money only puts you in a worse position long-term, less INCOME to pay off debt...and when you're $2B in debt, you need LOADS of income just to *service* the debt (i.e., to pay interest).

If SFI had sunk ALL of the money from the Euro sale, along with that from SFWoA, they STILL wouldn't have made much progress in paying down the HUGE balance of debt they're carrying...they need to start MAKING money, and fast....selling off "non-productive assets", (e.g., some of their IDLE land) would help more than selling off PRODUCTIVE parks...

Then again, how the H*** would I know what Jeff meant....the whole dead-assets v. income-generating ones was MY point, LOL...:)
*** Edited 8/24/2004 9:13:41 PM UTC by rollergator***

Selling properties does not reduce debt if the value of your properties is less than your total debt. The company's total assets are $3.7 billion, they have long-term debt of $2.1 billion and annual interest expenses of $200 million. Prior to the sale of the parks, they reported assets of $4.6 billion.

Let's to the math... their total assets were reduced by $900 million. They reduced their tab by $260 million with proceeds from the park sales. Now I ask you... how do they account for the rest of the assets? What else did they sell? My point stands that the sale of parks will not proportionately reduce debt.

'Playa: That was my point exactly. The sale was not to make money. Those parks were sold at a huge loss.

Thing is, Six Flags took the wrong appraoch to fixing up the houses. They should have also raised the rent.

Intamin Fan - I don't necessarily think that if they are paid more that they will perform better. In some cases it would work better, and in others, it wouldnt really matter.

postscript - Perhaps its because there are so many parks that the chain is almost hard to avoid. In most cases, the nearest park to many people is, well, a Six Flags park.

I'm glad this didn't turn into a "SF bash" thread. It's nice that we can descuss SF's problems without being disrespectful of them.

Postscript, SF is interesting to me because they are the biggist park chain and their decisions effect them so drasticly.

Janfrederick, You understand what I am saying perfectly.

I'll reword it. Couldn't the plan have been to build the parks up, "brand" them, and then run them into the ground. Then when they wanted to sell them, interested buyers could see the potential for greatness and would be willing to pay a high price for the parks? I now have another question from reading all of the responsess here...Couldn't this have been the intended idea and it backfired for SF?

Rollergator said something interesting about PKI stock. Could they WANT the stock to dive down low like it did so they could make a high profit later? Could THAT have backfired?

I find this descussion very intriguing so far. It is very interesting that SF seems in over their head. Personally, I haven't visited a SF park in a few years, so I haven't seen this years improvments firsthand.

Markieb said that the parks looked like they were on the right track at the begining of this season, and then reverted back to what it was later on. Is there a chance that at the begining of next season they can do good again and may postpone the "reverting" a little longer? Could they try to figure out what went wrong to cause the "revert" and try to keep it from happening?

I aggree with Jeff that they need to keep their parks now so they have an income to pay off debt. Amusement parks can be very profitable if run correctly.

Other park chains get it right. It just seems easy.

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dexter said:

Markieb said that the parks looked like they were on the right track Is there a chance that at the begining of next season they can do good again and may postpone the "reverting" a little longer? Could they try to figure out what went wrong to cause the "revert" and try to keep it from happening?

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Absolutely. They could. They went in funding the parks, then cut back. Plain and simple $$$$$, or should I say lack of $$$$$$, are prohibitting parks from doing what they need to do.

I had hoped SF's was committed to this program and would have given it 3 years to start paying off. You can't erase years of bad upkeep in a few months. It needed to be a long term commitment to really pay off for them.

Someone said something about SF bashing. That is certainely not my goal. I love the idea of paying $ 40.00 for unlimited access to over 15 parks, and three in my own state of Texas. I have nothing against them at all. They just made some bad business decisions!

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coasterguts said:
They will need to "de-flag" several parks and rebrand them to give them a new identity with the public. A rebranding of several parks might be the best way for SFI to go.

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Sorry man, but you can't polish a turd. You can change the name all you want, but if you're still producing the same product, and have the same problems, it won't wash with the public.

I think you missed what I was saying:

When Wild World became Adventure World, they bought a park that was on the verge of being sold to developers and the land developed. Premier bought Wild World, rebranded it Adventure World and made several significant investments in it. The brand Wild World had such a bad name in the local community, they had to do something to say, "Hey, it's a brand new day, we have a brand new way of doing things and things are better". The result was an increase in attendance and if I'm not mistaken, double digits some years.

Premier could do the same AGAIN. Remove the SF brand from some parks, rebrand them a different company (own them as a subsidary), don't add rides or add small flast rides for a couple of years and make signifcant investments in the "park experience". Including themeing, customer services, guest relations, food etc...

Why not buy a huge chunk of land in Wyoming, move the rides from all of their parks there, let people in for free, and name it 120 Flags Super Vacation Park.

You could build some hotels and buy a small airline that is about to go bust and get your money by charging for peanuts, advertising, and occupancy (and the sale of the old park land).

OK, Wyoming tends to be cold in the winter and happens to be the least populous state. San Diego would be cool, but the land prices are prohibitive. However, just across the border, you could probably get a real good deal and the weather would be just as nice--year round. ;)

They already have a Six Flags in Mexico.

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dexter said:
Rollergator said something interesting about PKI stock. Could they WANT the stock to dive down low like it did so they could make a high profit later? Could THAT have backfired?

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Perhaps I wasn't too clear. What I meant was that *sometimes* former employees can stage "takeover bid" for a company they work for. In that case, it isn't necessarily bad for those individuals who are "in on it" to want the stock price to nosedive so they can buy up LOADS of shares cheap.

I'm only *too sure* their employers (in this case, SFI) wouldn't be too thrilled that their highest-ranking employees might have PERSONAL incentive to lower shareholder value...not to mention that the FTC would seriously frown on such "shenanigans"...but white collar crime apparently pays QUITE well, and punishment seems fairly lenient - at least if the Martha Stewart case is any indication, LOL...;)

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coasterguts said:
They already have a Six Flags in Mexico.

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But it ain't no 120 Flags and it's a looong way from San Diego. ;)

Guys... stop calling it "Premier." It's not Premier anymore. There is no disconnection between what used to be Premier and what is now Six Flags. It's the name that the company has adopted. They haven't gone by "Premier" in years.

Jeff,

I realize Premier and SF are the same company. However, I like to use Premier to compare/contrast between the two companies. Premier was a up and coming theme park operator and Six Flags which is destroying a brand.

I understand coaserguts position. There are many original Six Flags parks that are shells of what they once were since the introduction of the Premier management group.

Here is the lesson to be learned from this catastrophe:

You can't slap the "Four Seasons" sign on a "Motel 6" and expect great things to happen.

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Jeff said:
Selling off more parks will not relieve debt. They need those parks to make money and pay off the debt.

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This may be true sometimes....But as an accountant, I have seen many cases where net profit has been increased by dropping unprofitable product lines, or in this case, parks. If you're losing money, sometimes it is better to drop the unprofitable item and focus more on the ones that are doing well.