Six Flags to cut $60 million in expenses after drop in net income and flat attendance

Posted Thursday, January 17, 2008 9:46 AM | Contributed by Jeff

Dan Snyder's Six Flags amusement park chain, which has lost money in three of the last four quarters, plans to cut expenses by as much as $60 million this year. The company had third-quarter net income of $89.7 million, down more than 40 percent from $164.7 million in net income a year earlier. Sales fell 1.9 percent to $365.2 million. It's 21 parks drew 24.9 million visitors last year, barely changed from 24.8 million in 2006.

Read more from The Washington Business Journal.

Thursday, January 17, 2008 9:48 AM
There are a lot of ways to spin this, one of them being that maintaining the attendance number while selling several parks is actually a win. But the other side of it is that clearly the marketing endeavor was overkill with very little return on investment.
+0
Thursday, January 17, 2008 12:29 PM
I don't understand this. There's no park by park per-cap numbers. Isn't that how you're supposed to report financials?
+0
Thursday, January 17, 2008 12:39 PM
Actually it's not, because you have to show how each park is doing so that you can compare it to other parks that you own as well as from the previous year's numbers.
+0
Thursday, January 17, 2008 1:49 PM
I totally don't get the need for three different advertising companies, or any number other than one actually. Did they use different agencies for different media? Have them split up regionally? Seems like a very inefficient use of resources, plus I can't really see one firm cooperating with another. Anybody have any insight into this?

Plus what do folks think about SF building more parks overseas while selling off existing North American parks?

+0
Thursday, January 17, 2008 2:16 PM
If they sell of parks to better management, then it's a win - win. They certainly did wait a bit too long to cash in on the real estate swindle/boom. I would guess parks that are not hitting the 1 million mark in attendance would be on the block, but what company would buy at theme park at the start of US recession? Ironic that they invested heavily into Dick Clark productions just a little bit ago.

They certainly are quick to blame marketing. Maybe the focus should turn inward at what elements of the parks are keeping attendance flat. Wholesale inflation went up almost 7% last year. The first thing to go is discretionary spending, and with SF increasing prices for the customers across the board, is it any wonder that spending is down at the parks?

That's what happens when millionaires can't figure out why a middle to low income family being squeezed by mortages, feul, and living expenses may decide that SF has outpriced them from visiting.

Last time I went, they took a meaningless survery just asking for generic info. If they want to improve their parks, they should start by asking their current customers what they want to see changed. Clearly, the execs in the offices are out of touch and unable to figure it out.

+0
Thursday, January 17, 2008 3:09 PM
They really have no idea what to do. I don't think this is going to help. Pretty soon, why don't they close half of the park during the day, and than open the other half at night. Oh no, I gave Shapiro a thought. He might do it just to save some money.

How is selling more parks, and buying more parks going to help this company? That's just stupid. They should only be selling low-attended parks, and not buying any new parks.

+0
Thursday, January 17, 2008 3:23 PM
http://library.corporate-ir.net/library/61/616/61629/items/275719/SIX_pres_011608.pdf

If you look at page 18, there is a note saying that the attendance is not including sale parks. So is it possible that this is a same park basis comparison?

+0
Thursday, January 17, 2008 3:39 PM

They certainly are quick to blame marketing.

I don't think they are blaming marketing (In the sense that you imply, by keeping attendance flat) - they're blaming the cost of marketing for dollar losses. Big difference.

+0
Thursday, January 17, 2008 4:23 PM
Exactly. They're saying that if they spent 10 dollars on marketing, and got only a 1 dollar bump from it, that's a waste of 9 dollars.


How is selling more parks, and buying more parks going to help this company? That's just stupid. They should only be selling low-attended parks, and not buying any new parks.

They're not buying parks. They're letting other people build parks that don't have the experience to run them. These people then pay Six Flags for branding and management contracts. It's a win/win. They spend nothing on the parks but still get a cut of the profits. Doesn't sound stupid to me.

+0
Thursday, January 17, 2008 4:33 PM
But isn't *marketing* the way to get people to "give us another chance now that we're under new management - we promise we're better than we used to be"...?

The improvements have BEEN noted - but they need all those people who swore off Six Flags to give them another look now...

Of course, I'm the wacko who agrees with getting rid of nonproductive deadweight at the parks, but still thinks the PRIMARY answer to their money worries is to grow attendance and in-park spending, NOT by cutting costs on guest service items. Minimum-wage employees are *cheap* - hire LOTS of them. SBNO rides have costs that go WAY beyond cutting the grass around a Metro station - they cost in terms of customer perception of the park.

Then again, I'm not 2 *billion* dollars in debt. ;)

+0
Thursday, January 17, 2008 5:40 PM
I agree DBJ, SF is pricing themselves out of the market for the low income to middle low income families. Look, I have to think about what is the most bang for the buck. SF is a little too steep on thier admission and also the other items for sale in the park. We are in a recession now and people are starting to think more with thier wallets than anything else. I live 2 hrs north of SFOG and with the rise in gase prices and also admissions to the park. SFOG and any of it's parks are out of range for me.

The simple solution is to cut prices across the board, including admission prices.

+0
Thursday, January 17, 2008 7:50 PM
50 bucks for a season pass... thats a great deal! You got 5 to 6 months of a place you can go and spend all day. You can pack a lunch and camp to save money. Disney cost a crap load more and for us coaster nerds.. Disney doesn't have any bang for it's buck. SF needs to cut it's losses with some of these poorly run parks and Rebuilt. Cuts need to made from the top and some better training of their employees would help.
+0
Thursday, January 17, 2008 9:32 PM
Oh I found a way to save money...

SELL SFKK!!!!

Then rename that Wedgie thing and put it in another park...

I'm a genious lol

+0
Thursday, January 17, 2008 9:48 PM
SFKK is probably the last park they should sell. For what it costs to run, the return is probably phenomenal. I honestly think they should sell one of the gold mines - Great Adventure. They'd get a huge chunk of money for it and the buyer would have to have the capital and energy to develop it into a resort like it was always going to be but never was. Six Flags has never had the money or creative resources to pull it off in the 30 years they've owned the place - it's always been about just scraping by and making sure all the other mouths in the chain were fed. Let someone else give it a shot. Besides, it's not one of Shapiro's favorites.
+0
Thursday, January 17, 2008 10:53 PM

SFKK is probably the last park they should sell. For what it costs to run, the return is probably phenomenal. I honestly think they should sell one of the gold mines - Great Adventure. They'd get a huge chunk of money for it and the buyer would have to have the capital and energy to develop it into a resort like it was always going to be but never was. Six Flags has never had the money or creative resources to pull it off in the 30 years they've owned the place - it's always been about just scraping by and making sure all the other mouths in the chain were fed. Let someone else give it a shot. Besides, it's not one of Shapiro's favorites.

good call. maybe not great adventure... sense it has hurricane harbor and that animal thing, they can still do a lot with it...

im thinking SFMM. sell that!

+0
Friday, January 18, 2008 12:00 AM
If marketing gets butts in the park one year, at great expense, but the park leaves a positive impression and they come back the next year or more, I suppose you could amortize that expense for the purpose of calculating ROI.

Hey, lying with numbers is like an eXstreeeme sport in this industry. :)

+0
Friday, January 18, 2008 8:28 AM
They would be crazy and stupid to sell Great Adventure. Great Adventure has the most potential out of all the parks. Great Adventure has been getting better and better.Its not that far from NYC and it has the land for a hotel or one of those great wolf indoor waterparks.

Great Adventure needs more flat ride which they have been ignoring. Flat rides are cheap.I could only see them selling Freat Adventure if somebody like Disney or Cedar Fair bought it though it would be awfully expensive. Great Adventure is about 1800 acers and I don't think any company has that much money to spend on buying a park.

+0
Friday, January 18, 2008 9:38 AM
That's the word everyone has always used about Great Adventure - potential. But when will anyone make use of it? Six Flags is too busy worrying about parks half its size to think of turning GAv into a resort. Every owner that company has had - Bally, Wesray, Time-Warner, and so on - has thought that of GAv in the beginning, then did nothing toward making it happen. You see Mr. Shapiro drawing attention to certain parks he does like and sees the greatest potential in - Great America, New England, Great Escape, Fiesta, and the original three - and he doesn't speak much of Great Adventure. Maybe he sees fulfilling its potential as not worth it. I just hope he sells the whole property before he sells off the excess land for operating cash, because that would totally remove the potential for anyone to ever build it out. You'd see McMansions and BigBox surrounding the park within a year and then would come the noise and height restrictions, etc. I think the township should fight any land sale or subdivide with every tooth and nail. The tax income of all those houses and stores look good at first, but the people running Jackson aren't stupid. They're still waiting for the megaresort they were promised in the 70s and would probably welcome a new operator rather than breaking the land up for development and keeping the park as is.

What Great Adventure could theoretically become is out of Six Flags' league. And I think it's out of Cedar Fair's too - their operating practices and "average creative" whitewash wouldn't work in NJ. I used to say SF never should and never will sell Great Adventure, but the more I think about it...it would be perfect for Universal. They could bring it up to their standards within a couple of years - it wouldn't look like their other parks, it would really be a one-of-a-kind thing for them. But they could build another gate with mostly indoor movie-type attractions that could run all year and hotels and an indoor waterpark, and they'd have a nice living, breathing billboard in the NY-NJ area for their Florida property. Zillions of people from NY go to Disney year after year and never set foot at Universal. Their biggest market for Orlando is completely unaware and untapped.

+0
Friday, January 18, 2008 10:47 AM
Seahwk. The new management has been doing a great job with great adventure. The park needs work in the customer service areas and ride operations areas before anything else is added to it. They are tackling these issues first. They stated themselves when they canceled the hotel plans that they see other problems that need to be fixed first.

I wouldnt mind seeing universal with the park but I do see that the current management has big plans for this park. There is even going to be a stock holders meeting at Great Adventure this year(I have my reservation in already). There are reasons why they moved the headquaters to NYC.

The problem is that six flags cant spend all the money on this park but I feel this park has been getting better and would only do better under people who have the tons of money required for this park which right now I feel is nobody . (universal has its hands full with the harry potter stuff,and Cedar Fair just bouught the paramount parks).

+0

You must be logged in to post

POP Forums - ©2018, POP World Media, LLC
Loading...