Posted Thursday, September 15, 2005 10:12 AM | Contributed by Jeff
By the time the Six Flags, formerly Premier Parks, gobbled up the Waliby Family Parks, with locations in France, Belgium and Holland, it was pretty clear to some analysts that things were getting out of hand.
Wow! Premier bought the Six Flags parks for $1.9 billion. The company's market cap is now less than a third of that. They lost hundreds of millions on the Sea World/Geauga Lake fiasco. They lost money on the European parks. They're still incurring massive losses. Staggering. The board must be all related and/or in love with Burke, because that's legendary failure, the kind of stuff they teach in business school about what not to do.
Let's not forget all the multi-coaster, single-season additions to parks that weren't clean enough, functional enough or sufficiently well-rounded in their ride and entertainment packages to provide a full day of fun to all visitors.
It still dosn't make sense to me how they still continue this trend of massive spending as for 2006, when you think they'd relieze a part of there problems they find there selves in now came from this sort of dilemema in the first place. Just my opinion.
Obviously there were huge mistakes. Budgets cut so only one train operation possible. Closing rides except for weekends to save money. All that nickel and diming isn't going to save the chain from some serious incompetence.
Six Flags did what many corporations and alot of individuals do: leverage to the hilt. It's just too bad they lost so much in the process, it was a gamble that didn't work out, but like I said before, ALOT of excellent coasters came out of Six Flags' actions, and for that we should be happy. Now all they need is a Bill Gates bailout!
You would think someone at the top of the food chain in Six Fags would start taking notice to the succes of there competitors? The 2006 season budget should be spent on all the things the really need.....basic park improvments and a mix of new rides not the plop and drop coaster experiance we have become a custom to ...ya they did some nice things with Kingda Ka's themed area...but as a whole the Six Flags brand name is heavily soiled...and I dont think the long term future of the chain looks very good individual parks will survive but years of BAD desicions have cost them there reputation and there profits.....
Six Flags purchased an increadible number of parks over the last ten years. It would be tragic if these parks end up being liquidated as a result of Six Flags' retarded mangagement approach. Again this highlights the potential at these parks seeing that the problems have more to do with poor decisions at the top than anything else. As soon as smarter management step in watch stocks sore.
^Keep in mind that it was Premier,not SF who purchased these parks,Premier already had 13 parks in their chain by the time they purchased SF...which only had SFGADV,MM,STL,GRAM,SFOT,SFFT,the soon to be gone SFAW & SFOG.
Now the problem is that premier(once they became SFI) still invested heavily in this gamble of buying up parks....parks that were going under for the most part(SFA(as wild world),SFNO) while they didn't have the capital needed for long term investment in the parks which led to a decline in the new rides seen each year after 01.
hmm i think six flags did a great job with the other improovements besides ka. Its cleaner then last year. I find the employees in all better at the park now too. why cant they do this to the other parks?
It's amazing to me how you can read that article and the posts that follow and still not get it. The problem is NOT that they "didn't have the capital needed for long term investment in the parks." The problem is that they went crazy throwing coasters in to parks left and right. And that just didn't work.
Edit: I was talking to Batwingfan*** This post was edited by coasterdude318 9/15/2005 1:41:04 PM ***
Customer service is what is going to bring people back through the gates once they've experienced the product for the first time. This is something many of us saw when Six Flags re-branded so many parks during 1998 and 2000. Now Six Flags is unloading parks because they are losing money and feel that throwing another coaster at the problem is the solution.
I laughed when I read this portion of an article back when it first came out, then again hindsight is always 20/20. The following source is from The Motley Fool Title: "Six Flags vs. Cedar Fair" Written by Rick Aristotle Munarriz June 27, 2001.
Sure, Cedar Fair has acquired select properties and tried its best to enhance the operations. But that's kids' play. Six Flags has gone in, pumped up the attractions, and exploited the Six Flags branding with delicious results. When the company added the Six Flags banner to Kentucky Kingdom, for example, park attendance shot up by 35% the very next season. The turnstiles continue to click even faster now. Last year, the four acquired parks that were rebranded resulted in a 43% uptick in attendance, a 66% spike in revenues, and a doubling of park level cash flow.
Having already gone over the lucrative growing power of each new parkgoer, it's easy to see why Six Flags has gone to such great lengths to expand quickly. Does it mean the company has taken on bucketfuls of debt? Yes. But the leverage is worth it. Over the past five years, gross profits have skyrocketed from $39.9 million to $535.3 million. Yes, Six Flags had more in gross profits alone last year than Cedar Fair produced in top-line revenue.
Is Six Flags profitable? No. Not in the literal sense. But that is mostly due to the amortization and depreciation costs that it has had to write off in its acquisitive pursuits. The company remains cash-flow positive and its operating income has actually shot up ten-fold since 1996.
I always thought this article was very short-sighted when it was first written because buying up all those properties was simpy out of control. Meanwhile Cedar Fair took their time acquiring parks they knew they could turn a profit on. The article fully admits that the company was taking on a huge debt and still felt it was worth it! The proof needs to be the ability to turn a profit and while people were running through the gates to see what Six Flags was all about, they failed to look at improving the parks infrastructure, customer service, and other aspects that makes the park work. They simply threw in some coasters and that was that.
They knocked on Cedar Fair's style of growing its business and look where they are now? Their stock is selling 6 times higher than Six Flags and own nearly a quarter the amount of properties Six Flags has. While its nice to have the "build it and they will come mentality" Holiday World is an independant park that is going by "they are coming we gotta build it!" because of what?
Phenominal Customer Service.
~Rob Willi*** This post was edited by HeyIsntThatRob? 9/15/2005 2:12:34 PM ***
Times like these when you never want to see the good old family parks bought up...i.e. Knoebels, Kennywood, etc. Fortunately for Geauga Lake, they were rescued before they were destroyed - but even that has a long way to go.
And you think with the addition of a ride like Kingda Ka, they would create a section of the park with ample midways, except not SF - The golden kingdom's midways are wonderfully themed and quite possibly the most narrow of any midway i have ever seen, it's terrible.
they are wide enough... that area of the park doesn't have much through traffic. It's mostly people going to and from Kingda ka. It's completly unessesary to travel through the golden kingdom if you're headed elsewhere; unless you wanna look at the pretty tigers :) For the traffic it reacieves the paths a adequite the end
I somewhat disagree on the thought that the 'buying spree' was misguided. In theory, they had a decent idea...by nationally branding the park concept. It could have saved them a bunch in advertising and HR expenses. Unfortunately, the larger a company gets, the tougher it becomes to manage. Think about it, it's difficult to run one business, let alone dozens. To make it worse, they aren't all located in our backyard, they are all over the world. Different cultures, differnt laws....it's the reason why many successful companies occasionally struggle when venturing outside their home land.
Believe me, I am not a SF fan, but, the concept could have worked if they had focused on their core business...'fun'. IMO, customer service issues across the entire chain is a major source of the problem, along with a variety of other issues, some controllable, some not.
This situation is going to be interesting to watch.
The bottom line is the quality of the product your providing for consumption. In the amusement park industry that product is "escapism" or the ability to sell the idea that you have taken a trip away from the reality of every day life. Escapism cannot be achieved with rude employees, dirty midways, closed rides, and poor service. If the people at the top of the Six Flags chain actually worked in the industry and were park enthusiasts they would know what was going wrong.
I expect a recovery with new managamenet, but it will take some time and hopefully patience will be given by all. They have some great parks, but they need a new driver at the wheel. It will take time, but Six Flags will get better.
But maybe it's the narrowness of said midways that help with the theme?
Yes they don't pump people through the area fast but they get you to be absorbed into what is happening around the midways. I find myself looking around more in the Golden Kingdom than elsewhere in the park where I just keep moooooooooooooooooooo-ving along to the next attraction.