Six Flags announces drop in attendance, capital expenditures while stock takes hit
Posted Wednesday, August 11, 2004 11:28 AM | Contributed by gamndbndr
Six Flags Great America released its second quarter results, revealing that attendance was down 4% while per capita spending was up 2.8%. The company retired $260 million of its $2 billion debt through the sale of the Cleveland and European parks.
The company will spend $125 million on capital expenditures in 2005, about $35 million of which will include a new water park at Six Flags Great America.
The stock took a hit on release of the results, losing 11%.
Six Flags new motto- "If your not one of our flagship parks: piss off!"
Maybe this statement should be the motto. When Six Flags had a just a handful of parks (Texas, Georgia, Mid-America, Magic Mountain, etc.) they did okay. I think some serious thought should be put into divesting the smaller, less or non-profitable parks.
To steal a line from the political arena, "was (insert your small park here) better off before PKS bought them?" Sure cap expenditures are great, but then what? It's the same old tune, can you justify a $20M investment in a park that loses you $10M. SFWoA proved that you cannot just throw money at the issue.
They got too big too fast, Now everyone, not just the shareholders, pays the price.
guys they spent $75m on all parks last year so if they were gonna "piss" on the little parks then they would not be spending more. Also there needs to be a marketbale crowed around the little parks. It dont make sence to spend $12 accross the board. When one park has 3 million peeps near by and another has only 100,000
CoasterDad64, your comment contains an important fallacy, where you say, "...serious thought should be put into divesting the smaller, less or non-profitable parks." Vernon has the right idea: some of the smaller parks that haven't been getting the big CapEx dollars are the actual profit centers for Six Flags. Wyandot Lake is a prime example. The park makes plenty of money, very little of which gets spent on Wyandot Lake. In markets where major capital expenditure is not necessary to increase attendance and per-caps, it doesn't make sense to make major cap-ex investments...instead, focus the capital on the markets where no new ride = declining attendance. Using money earned at the 'donor parks' makes it possible to make larger investments.
In other words, the parks that are the biggest cash drain on the company are also among the biggest and best performing in the company.
Incidentally, my local small park was a lot better off after PKS bought it, but has suffered since PKS bought Six Flags.
Vernon: We can assume... but that just makes an ass out of U & ME. ;)
It's not that Six Flags should be equal across all parks, so as much as GIVE them something. Throw them a friggin' bone. Who cares if they come from a smaller market? They still got to compete against their own regional parks, and if they're going to keep competiting, give them a budget for a) general park improvements (ie: paint & fix lightbulbs) and b) new rides/attractions. To squander ALL of the money away at the flagships & leave the little-guys behind is simply unfair. There are some non-flagship parks which haven't recieved anything in 3yrs.. and attendance has been noticably lagging. You can't say it's not justified when they've been dumping money for years into the flagships & attendance has been sagging (oh, but per-capita spending is up!)... the little ones have to be heard. A spike in their attendance is no different than a spike in one of the big-boys attendance (well, generally speaking).
Premier bought Six Flags what, 8 or 9 years ago maybe? Back there, when I was working at a competitor, we all looked around and asked ourselves who are these folks and how can they afford to go out and buy park after park.
Obviously.......they could buy them.....they just couldn't run them.
Okay, here's what I remember. Around 94' Premier Parks bought out a bunch of little parks such as Wild World, which then changed the name to Adventure World in 95'. Then around 98', Premier Parks bought out Six Flags from Time Warner for close to a billion dollars. This then gave them the right to change the name on any existing Premier park they owned to Six Flags. They then changed from Premier Parks to Six Flags Inc. (don't remember the year). Confusing isn't it? And the public hasn't been any the wiser (well, most of the time), which works to their advantage.
"In other words, the parks that are the biggest cash drain on the company are also among the biggest and best performing in the company."
I am going to have to respectfully disagree here. To be a "best performer" they must be profitable. Where's the fallacy?
The company's problem is high debt and low earnings. They got into debt by purchasing every local park that would take their money.
It is not a fallacy that growth must be controlled and deliberate. PKS went wild and now they are paying the price. They took a loss when they sold the Aurora property, but they also put the cash directly against the debt. This is not a bad thing.
Is there not a possibility that they will have to go bankrupt? I'm not a financial expert, but I do not recall, nor do I see, anything remotely positive about this company and how they do business. What would be the positives that would make somebody buy this stock? Or are we talking about pure speculation since the price is so cheap that you’re hoping to make a quick/easy buck should the unlikely occur?