Six Flags-Could it get worse?

Friday, September 6, 2002 8:40 PM

I have been wondering about what the status of Six Flags stocks mean to how the parks are going to be run in the present to near future. I know that when stocks get low, a business will do everything that it takes to get it back up. With SF stocks so low, could they acctually start cutting even MORE corners in order to save money and get back to where they were?

I really don't know a lot about stocks. In these types of situations with my employers I have seen staff cut down and budgets temporarily cut until the stocks go back up.

They must have been pretty bad off before the stocks dropped. I wonder if they created this by running the parks poorly or if the parks have been running poorly because of a small budget? Which came first; the chicken or the egg? Worded differently, Could this stock thing have been advoided if they had run their parks properly in the first place? Or was it a long time comming and our first clue was one train opperations and poor customer service?

I am not trying to start a debate about "how bad Six Flags is", or "Six flags vs. Whoeverpark". I am assumeing that we all agree that some SF parks are lacking in the "Makeing customers feel like guests" department. I am not trying to start an anti SF debate or anything. I want reasonable and non-spitefull responses. There must be a logical reason SF has upset so many of us.

Most of us, including myself, want to see SF succeed. Hopefully they will, but could it get worse before it gets better?


Friday, September 6, 2002 8:52 PM
The stock thing is only indirectly connected with how Six Flags handles their parks. It may have caused a small decrease in visits, but I don't think that is the main reason. The stock price falling is due to lower than expected earnings, due to lower than expected attendence, due to a generally poor economy. Couple the already poor discretionary spending of the economic downtimes, with the lack of investor confidence right now and you have Six Flags and many other companies taking a hit on their stocks. Just about anybody who missed a projection in the last couple months suffered in their stock price far more than they would have for a similar shortfall say two years ago.
Friday, September 6, 2002 8:57 PM

Stock Price shouldn't effect their operation. The only thing it may effect is their ability to get investors to buy at a higher price when they issue more stock. That is how they get more cash to invest in the chain outside of getting into more debt...

Now if the stock price dropped as a result them not meeting their numbers and hence making budget cut's, then there could be some correlation.

Saturday, September 7, 2002 4:05 AM

Stock price is important because it represents the capital to run and expand the company. Low stock price means no money available for new projects.

If I had any position of influence at Six Flags, I would go to Seattle and make a personal plea to Bill Gates. I would say that I appreciate his interest in Six Flags, roller coasters and the amusement industry, but that there is a company out there called Cedar Fair which is kicking our asss. We need general improvement in our parks and we specifically need new record breaking coasters. I would promise him that instead of calling them "Superman" or "Batman", I will name them "Sky Gates" and "MacroHard".

Saturday, September 7, 2002 6:56 PM

Of course it could get worse.

But then again, it could always get better.

Thursday, September 12, 2002 4:18 AM
Yeah, it could get worse. They could start treating ALL of their parks the same way that they treat SFAW, and make EVERYONE angry, instead of just mostly the city of Houston!

Gay Roller Ride
If you build it, they will come!

Thursday, September 12, 2002 4:51 AM

Six Flags is a heavily leveraged company. They have borrowed a lot of money to finance their park acquisitions and expansions (among them, new coasters). Because of this, they have a lot of interest expense. They probably also paid more than "book value" for many of their park acquisitions, so they have an intangible asset of "goodwill" to amortize over many years, also adding expense (although this one isn't a real cash expense). Because of these two large fixed expenses, Six Flags' operating gain/loss is VERY sensitive to changes in revenue levels. When attendance drops by only a small percentage, the company may have a large gain turn into a large loss, which has happened recently.

Wall Street gets very nervous about companies that are highly leveraged in a shaky economy, especially when their industry is so dependent on a good economy. That's why the price has dropped on PKS, in my opinion. It doesn't directly have anything to do with the management of the corporation. One could argue that better management would lead to higher attendance figures and better finanacial performance. I don't disagree with that observation, but I don't think it's the main reason why PKS is in the dumper right now. It wouldn't hurt to give people reasons to go to Six Flags instead of somewhere else, however.

Revised projection for 2002: 36 parks & 142 coasters. 29 & 116 through 9/3.

Thursday, September 12, 2002 5:15 AM

Personally, I think it will get worse. Disney is a perfect example. They have been cutting back for over a year now. These cutbacks have hurt the guest experience by having fewer employees around for crowd control, guest relations, food services and such. They have also reduced operating hours, laid off many workers and allowed their parks to deteriorate at a level never seen on Disney property (I could go on and on about this topic so I’ll stop now). However, the investors will eventually be "pleased" with how things are looking on paper and they will “think” that management is making all of the right moves with the cutbacks. While it does matter how the guest experience is to a certain degree, the bottom line is proving to the investors that everything is sound and solid to boost their confidence. This is why I think the stock market sucks. It isn't really geared towards pleasing the consumer. It is for the rich greedy ones who are pissed off about how much money they are loosing when the stock price plummets and then we, the consumer, suffer through reduced bang for the buck. Six Flags needs to repair many problems in their company but I don’t think we will see it for years.

Thursday, September 12, 2002 5:18 AM

Bottom line is this: Six Flags expanded too much, too fast. Add that to the bad luck timing of the expansions (which was out of their control), and you get the current financial situation, which is reflected in the stock price.

And usually, when a company has to cut costs, the *last* thing they cut is anything related to customer service and 'visible' cutbacks. However, in the amusement park industry, so much of the annual budget is devoted to 'visual' expenditures (mainly operating expenses) and a relatively small corporate aspect, its entirely possible that SF parks could see some real changes because of lack of money.


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