Posted Monday, January 23, 2006 6:22 PM | Contributed by Jeff
Since Snyder launched his bid to take control of Six Flags last summer, the stock market value of the company has grown by more than $360 million. Since the first of the year, Six Flags stock has gained 37 percent. And it has jumped every time Snyder announced another management move.
After "Fiascoworld", nothing of that nature would surprise me. And hey, it would probably be a good move. Who would miss SFMM anyway? Not the families that could purchase a home/condo in that insanely high end area.*** This post was edited by DWeaver 1/23/2006 10:24:55 PM ***
I'd guess if they sold it, it would be to another chain, and not selling it just for the land value, as was done with SFAW. Correct me if I'm wrong, but I'm pretty sure Cedar Fair had expressed interest in the park...
Yeah, Moosh is right. Snyder wouldn't get nearly the amount of cash by selling to another chain, that he'd get from a housing developer. And forget Cedar Fair, they already have a park 75 minutes away.
As problematic as SFMM is, it still is one of the chains top performing parks, so to sell it even for land would be a huge mistake. If managed correctly, the long term benefits of SFMM are far greater than any money gained from a one time land sale.
Interesting though that the stock rise is divorced from reality. With most of the parks closed or in limited operations, and all the actual additions to the parks are actions of the previous board, the stock rise is attributed mostly to a serious of announcements that actually have not changed the parks one percent. I give credit for Snyder & Co. for raising the stock price without producing any tangible results.
Except SFMM has not been managed correctly for many, many, many years. If you added an expensive stereo and custom rims to your car and then never got an oil change, tune-up, or other needed maintenance for 10 years eventually it will be more cost-effective to keep the rims and stereo and sell the car rather than get a new transmission, engine, brakes, shocks, etc.
That being said I again caution everyone to not jump to any conclusions. Right now all was have is one [speculatory] sentence in an article.
"The Six Flags park near Los Angeles could fetch $350 million to $400 million more".
I'm sorry, that just reads very suspiciously. However, we've seen articles that make mistakes and take things said out of context. They seem especially careless when it comes to the theme park industry. But forgetting the article that quote came from still doesn't hide the fact that like Astroworld, SFMM is at a crossroad. It's the park that has suffered the most from mis-management, and it's going to be the toughest to fix. It's still a park that makes money, but not nearly as much as it should be making.
Like Mamoosh said, I'm not jumping to any conclusions, but you have to wonder if there are more headline making announcements heading our way.
This maybe what they could do.If they sold the land and got a local government a little ways away (Cheaper land) to donate them the land (or 100 year lease)to rebuild the park.(you know like the ball stadiums)They could make the move next year.Some local government would do it for the tax revenue.If they move would the GP still come. I think so.I am not a contruction manager but I would think they could move it for 50-100 million and net 300 million to pay down the debt and still have the same number of parks.
Kevin, The cost of moving all the rides from Magic Mountain to a new site may cost around $100 million, but don't froget that they would have to build new buildings, pave a new parking lot, put in new footpaths and all that other stuff like bathrooms and restaurants and things like that. If they did move the entire park, it would probably cost more in the neighborhood of $200-300 million when all is said and done. If they fetched $400 million for the property, they only net $100 million. They would be better of just closing it and selling off or moving the rides. That will not happen as SFMM is a flagship park and will not be taken out of the chain. It is far to valuable to close.
I would also like to give kudos to Mr. Snyder and Mr. Shapiro for allowing the stock to rise even when most of the parks are closed. That is a step in the right direction. Also, we can all see what will be hapening with SF in the upcoming years by what was said...."for the price of Tatsu, we could fix that park up and make it look nice again." I would bet all SF parks are going to be undergoing a major overhaul over the next five years, and adding new themeing and landscaping and painting and things like that instead of spending huge amounts of money on new coasters. I would still look for attractions at the parks on a yearly or bi-yearly basis, just not huge coasters like we have become accustomed to. Look for more family oriented rides, and flat rides to make a comeback. That worked for PCW, and now they are the most visited seasonal park!!
So the stock has been increasing on a bunch of “hot air” with no change in the underlying fundamentals… Where have I heard this before?
Can somebody give me a sound reason to trust this is anything but smoke and mirrors? I love to make money…so please explain to me what you have heard that has fundamentally changed this corporation and would make it a good buy?
Kudos to those with the guts to buy in the last month… I hope you are as wise in timing the sell…