Six Flag' buying spree got them into trouble

maybe burke should have a few meetings with kinzel...maybe he can learn something about true business, customer service, and BALANCING the budget with whatever investments you make.

Ok 2 things...

#1 We all leaned how to spell Millennium correctly, now let's learn to spell WALIBI correctly.

#2 The loss of money was all because of (a) bad weather (b) parking situation (c) they should have added one more coaster in that 3 coaster year.

-SS

I vividly recall a conversation I had over a fax machine with a coworker at Cedar Point when another press release came out about another acquistion. I looked at him and said, "what idiot (or institutions) keeps lending money to these yahoos?"

There was absolutely no doubt in my mind back in 1995 that this was an exercise in the absurd and I'm not trying to toot my own horn. I did not major in business and I'm not a financial guru but I just didn't see how this all was going to pay off even as a layman. What did the financers see that I didn't?

Financers are still to this day convinced that buyouts and corporate takeovers are lucrative, good, solid investments. But, even outside the amusement industry, over time and grouped together, nothing has killed more companies either outright, or just degraded the value of their product, more than acquisitions.

The successful ones are the ones that were slow, methodical processes with a lot of thought and analysis, not "we have a lot of money, let's go buy something!". Six Flags' investors saw only the short-term light that many other companies see, and they went/are going the way of most of those companies.

The idea was good, but as I've always said, anything in moderation can be good, anything in extremes is ALWAYS bad. Six Flags took the acquisitions to an extreme and got burned. The good thing is that I believe at the core of it, running an amusement park is a good business and one that you can make money in, so I don't think the parks will all be sold off for the land value, but the giant congolmerate is quite obviously a failure

--Brett, not sure if he made any good points or not ... feeling a little scatterbrained after a long day at work.

I dunno Brett, my Accounting book a few years back said that the Time Warner and AOL merger was a great idea and bound to bring in the big $$$ ;)

You make a great point in what acquisitions do to a company. It looks great on paper but I've seen the quality of the product decrease after an aquisition most of the time. What a sec, wasn't there just talk about AOL and Microsoft merging today?

http://weblog.infoworld.com/techwatch/archives/004020.html

I'm sure AOL will finally see its first profit this century after this move...

See, the difference between Burke and Kinzel is that they come from different backgrounds and by comparison, are on the opposite spectrum when it comes to industry experience. Kinzel as a teenager, worked at Cedar Point, and slowly over a period of decades worked his way up to the top to become CEO. This is a man that grew up learning the roots of the amusement park operation, just like most of the General Park managers appointed to the Cedar Fair parks.

Burke on the other hand, although big corporate-minded and a Wall Street-type of guy, has no real experience in running a theme park business, which is the same to say of his board of directors and all the high-management staff that trickles down from the top to each of the parks.

You can easily see the difference reflected on their parks. Richard Kinzel is a man that flies cross country to visit his parks and to make periodical checkups to see if everything is up to "standard," while I am most certain this is uncharacteristic of Kieran Burke. While I'm not trying to prove any point by the following: I've seen Kinzel take time out to fly out and be present at the unveiling of new major attractions at most of his parks, while I have never seen Burke make an effort to attend any such ceremonies in person.

I think a big part of the problem is that when they slapped the Six Flags names on so many of the parks, there were certain expectations that came along with that. Clearly, anyone who visits Six Flags America is not getting Six Flags Great Adventure, but I'm sure many people expect it. It's like the difference between a Super WalMart/Target Greatland and a regular WalMart/Target. It doesn't happen that the generic advertising can lead a person to think that the park has coasters that in fact that they don't own. It's just another example of cost cutting.

BatwingFanSFA constantly moans about the lack of capital expenditures at SFA, and in some ways he's right (I said someways). When your biggest competition (PKD) is adding attractions every year and you're not, you're in trouble. On the other side, Hershey has also been adding a lot of attractions. The last big attraction in the dry side was Penguin's Blizzard River, not a blockbuster attraction by any means. The Hurricane Harbor makeover was a very wise addition though.

But, adding a new big attraction still won't solve the problems with the employees, the achilles heal of SFA. Customers just want employees who recognize the value of the guests time. The problem is that the "It's Playtime" slogan seems to apply to the employees as well. The employees at HP may not be the most exciting people in the world, but at least they get the job done.

It is staggering how much SFI continues to spend while in mountains and mountains and mountains of debt. Yet the solution to turning the chain around seems so simple: FRIENDLY FRIENDLY FRIENDLY operations - GREAT customer service. Is it that hard to hire young adults or adults in general who get this concept? Perhaps it starts at the managerial level.

I know we all know this. I'm just hoping someone from SFI actually reads this board every now and then (and if so I also hope they visit SIX FLAGS AMERICA to secretly shop the awful operations at that park).

By the way, does anyone have a link to a picture of Burke?

While searching for a pic of Burke, I just found his profile on Forbe's website:

link

A $1,000,000 dollar salary plus other bonuses totalling up to almost $3,000,000 dollars to stash in his wallet in 2004?! Am I reading this correctly?

*** This post was edited by thrillerman1 9/15/2005 7:43:28 PM ****** This post was edited by Jeff 9/15/2005 8:19:13 PM ***

/\ Haha. That kind of reminds me of Michael Eisner and his board of directors prior to Eisner's ousting. He was criticized by many for pocketing million dollar-bonuses when Disney stock was plunging and the quality of the company's products were deteriorating. Sounds awfully similar to Burke and Six Flags, although Burke hasn't pocketed any bonuses, he still makes nearly $3 million a year!

Rob: You totally took Rick's old editorial out of context, where he very plainly states that it was still risky investment.

It appears Mr. Burke is missing, lol.

http://www.missing.ws/_missingPersons/missingPerson.asp?id=11

http://http://www.sixflags.com/investor_exe_bios.asp

Funny how easy it really is to find a pic if you just look in the most obvious place first...

With the chances of SFNO re-opening very slim, and Astroworld closing, who do you think will be the next?

Also, in my region we have SFKK and Wyandot Lake (Columbus, OH) as our closest SF properties. Will either one of them be in immediate danger in your opinions?

What a hole/grave they dug for themselves! It's sad.

I remember hearing that the majority of the attendance is from repeat customers (I think somewhere along the lines of 70 to 80%). So where Six Flags went wrong besides over expanding and branding lesser parks the Six Flags name, was giving the guest a reason to come back. There are several parks that were given the Six Flags name and a big new ride, or several new rides. For the most part, that was not the issue.

That initially brought in the guest and made them want to check out the bigger and better park with there great new ride. However what made them not want to come back was the overall park atmosphere, guest service, operations, etc. Geuaga Lake when it was Six Flags was a perfect example. Just look at their attendance numbers, they grew dramatically the first 2 years it became Six Flags.

They added 5 new coasters in that 2 year span including 4 in one year, and aquired a park. I don't know the exact amount of money that cost including the park, but were talking probably around 30 million or more worth of new rides, and probably a 100 million or more for the new park. And that worked to a degree. People checked out the new rides and the new mega park, that claimed to be 3 parks in one, with a wild, wet, and ride side. I think there attendance was around 3 million in 2001. This is really not bad considering its competition in ohio, Cedar Point and PKI was around 3.4 million.

However once the novelty wore off, people needed a reason to come back. The problem though was that they had no reason to come back, since the quality of the experience was lacking. The overall operations and guest service provided during those 2 trail years of 2000 and 2001, was not there. And since that time they added no new roller coasters to drive guest back. So what you have is a park that basically had half of its attendance when it was sold to Cedar Fair. It drew 1.5 million its last year as a Six Flags park.

So there is the problem, you lost half of your guest. This was when you still had both a wild side and ride side, and a water park all included with the admission. I am not going to the issue of them giving away the gate, and how they should have kept the parks seperate; that is an issue for another day. However even with that bargain of 3 parks in one, they had this attendance spike downward.

This was just one park and is the extreme example of what is wrong with the park chain. However the issues at Geauga Lake could be found at other Six Flags Parks to some degree, and are what need to be straighten out first before they really can move forward.

Eliminating lesser parks that don't make money is a sort term solution to their huge debt problem. However in the long run, they are going to really improve on the little things that matter to guest, including customer service, operations, etc. Other family owned parks have had big attendance gains such as Holiday World buy doing the little things right and showing that they care about the guest experience. On a bigger level, Paramount and Cedar Fair are seasonal park chains, that are orders of magnitude better then Six Flags in that area.

That is probably why those chains and parks are doing so well, while Six Flags is suffering. I am not sure if Synder is the answer, but new people on top is needed. The people currently running things including Burke, are just not getting done. A little improvement this year, does not erase all the mistakes they made for the last 5 years. They put them in such a whole, that a new team is needed to get them out.

On the bright side, they do have an opportunity to right the ship and start turning it around. They are already showing signs of that and there are some positives from the past year. They did have a good marketing campaign with the Mr. Six guy and he is now the face of the company. Attendance is up for this year which will create some momentum for next year. Customer service is something that is being addressed and is suppose to be getting better.

Hmmm that link doesn't work for me Coaster Lover, and I don't see Burke's pic on the SF website under the executive biographies.

http://www.sixflags.com/investor_exe_bios.asp

-Nate

His inexperience is reflected on his relatively young age and hair that still has color. He looks nothing like I thought he'd look like! Anyway...so Kinzel's old age and gray hair is the key to theme park success...

KIDDING!

While Karien Burke is not a born and bred amusement park guy, if you look at some of the other executives, they have been in the business for many years.

One person was even maintenance supervisor at Cedar Point.

Yeah, agreed Chitown.

And let's not forget Gary Story who was president of Six Flags up until the end of 2003. He was every bit as much of an industry veteran as Kinzel was. So, I don't think the underlying problem was a lack of industry experience by top execs. It was just the overspending and deemphasized customer service that led to their fall.