Where is Six Flags getting all this money?

Sunday, February 27, 2005 9:40 PM
For a company that according to some reports over the summer was "bleeding money" And recently had some of its minority shareholders walk out on them, Six Flags seems to be spending money this offseason like its going out of style:

  1. Kingda Ka SFGAdv
  2. Ocean Discovery SFMW
  3. Superman Ultimate Escape SF Mexico
  4. Hurricane Harbor SFGAM
  5. Retheme to Hurricane Harbor SFA
  6. 2 New rides at SFNE
  7. 6 Brand Spanking new Pro slide tornados (and more rumored on the way)

With all these expensive ventures one has to think when did Six Flags win the lottery?

Lets also add the renaming of the Splashtown parks to Hurricane Harbors or whatever they are being called this week to the mix as well.

Now, I know from economics class that you have to spend money to make money but with a company that is said to be 3 Billion with a B dollars in the hole, unless they are deffering payments or just got thier American Express Cards in the mail where is SF getting all this spending cash?

And can anyone let me in on where i can get some? *** Edited 2/28/2005 2:42:44 AM UTC by Galvan316***

Sunday, February 27, 2005 10:09 PM
When a company stops spending money on improvements, wether it be a factory or a theme park chain, that's when it's given up and is dead.

Would you or the generl public really keep going back to your loacal 6 flags if they never added to the value of your experience or worse yet started selling off rides to get out of debt.

I have no idea where you can get that kind of money however but if you find out save me a place in line.

Sunday, February 27, 2005 10:26 PM
as long as you can make the payments you get to keep the house....
Sunday, February 27, 2005 10:30 PM
Yeah you get to keep the house, but you dont get to eat, forget about driving a car, and not to mention phone, TV, etc etc.

For a company that is "bleeding money" as some reports said, Why start investing is so much for 2005 only to blame a negitive ROIC (Return on Invested Capital) on the Weather?

Monday, February 28, 2005 12:11 AM
Well the SF Mexico coaster was paid for awhile back if you can remember it was suppose to open a few years ago untill the Mexican Gov. stepped in and stopped it. Even though a company is in debt and unless you are working within the company itself you have no knowledge of their revenue. From a buisness standpoint a company will each year bring in a certain amount of revenue in this case Six Flags Inc. through their parks. Include the selling of Worlds of Adventure to Cedar Fair and the European parks and right off the back you've brought in money along with what each park profited off of.

Basically from there you have a set amount that will go to the accounted debt and then there is the rest of the money that goes to improvements. How does profit rise well through improvements.

Weather isn't their biggest excuse for last year, everyone knows they've been deep in debt for awhile but each year a improvement is shown rather its seen or not.

Monday, February 28, 2005 12:38 AM
I actually think that they spent very conservatively this year. Only two coasters? That's nothing compared to years in recent history. I think that they actually made a good step this year by limiting the "huge" investments.

Who would have thought that we would see a year in which they only install two coasters, one of which is a meager $3-5 million?

Monday, February 28, 2005 12:51 AM

Galvan316 said:
With all these expensive ventures one has to think when did Six Flags win the lottery?
Your profile says you're 20, so let me introduce you to adult life...

Welcome to credit, my friend! It's a way of life! I would think by now you'd at least have student loans to understand that, or perhaps a $300-limit credit card.

My total debt right now is somewhere in the neighborhood of $200,000 when you include my house, car and credit cards. Throw in Steph's student loans and add another $30k. Despite all of that debt, lenders are willing to give me more at great interest rates because I never miss payments on anything, and now and then I make a good bit of money. Besides, a lot of the things I owe money on, namely the house, are worth more than what I owe, so if I can't pay for it, the bank owns it.

Six Flags, while buried a bit, does have positive cash flow, and at the very least they can maintain that even if they can't reduce the debt. Certainly they have the credit resources for cap ex projects, and frankly they can't survive without spending that money. Nature of the biz. The fact that they're pushing water parks at least shows that they get something about the business.

Monday, February 28, 2005 9:10 AM
But at some point, if they don't turn it around, the interest rates and charges will overcome their ability to pay and that's another way they go down the drain.

Cedar Fair I would assume is in a much better debt position, especially since they bought Geauga Lake for a steal and the property's worth so much more than what they paid for it ...

Based on what I've read recently, Paramount and Universal aren't in the greatest debt positions either, but then again, Universal parks don't add at the rates that the other "big" companies do.

Monday, February 28, 2005 9:18 AM
Six Flags may be trying to introduce the "airline" syndrome to the amusement park world:

1) run up a huge debt

2) claim that it's not in the "national interest" or something for the company to go belly up. I mean, where else can the average family get a base-line for bad customer service (except maybe the airlines) ?

3)sock the government for a bailout.

'scuse my cynicism on this one....;)

Monday, February 28, 2005 10:39 AM
Uhhhhhh, meanwhile back at the ranch...

This isn't a heavy spending year for SF. Not even close.

Does anyone remember what they paid for SW Aurora?


Monday, February 28, 2005 11:24 AM
All things considered, I think this is not just a *slow year* for cap-ex in the chain, I also think that this is some of the WISEST investing I've seen SF do in the last 8-10 years....(about as long as I've been *around*, LOL)...

P.S. The interest rates on SF's loans are mostly locked in long-term low-rate loans...I don't see a major problem with that until interest rates go up....maybe once the Fed. Gov't. starts borrowing ALL the free money to rebuild the next country we invade? ;)

Monday, February 28, 2005 10:28 PM
First, I'm not familiar with SF's finances. I know they are showing a loss, but I don't know what their cash flow is like. No one here has mentioned that there is a difference between profit and cash flow. A company depreciating previous investment or taking big writeoffs may show a loss while still having a positive cash flow. If you have a positive cash flow, you can show a loss and still not have to borrow money. I suspect that SF's cash flow isn't positive though.
Tuesday, March 1, 2005 2:45 AM
SF's cash flow is positive. From 12/31/03 - 9/30/04 their unaudited cash/cash equivalents increased 79,270,000. Profit and cash flow are recorded seperately from eachother and the details are on different financial statements. I don't know what you mean when you say a company depreciating previous investments or taking big writeoffs may show a loss - all companies have to record accumulated depreciation of their property, plant, and equipment, not just Six Flags.
Tuesday, March 1, 2005 10:23 AM
Q: "Where is Six Flags getting all this money?"

*user checks pants pockets*

A: "They stole my credit cards!" :)

Tuesday, March 1, 2005 1:05 PM
If SF's cash flow is positive then why is it that as of the 02 season we've been seeing less capital being invested in new attractions chainwide?

The 05 season looks to be their biggest cap ex spending season since back in 01.Between 02 & 04 we only had an average of 2 or 3 big coasters & a few flats being built between just 3 & 5 parks,of course this year seems to be a big one for water related attractions.

Tuesday, March 1, 2005 1:40 PM
Would it not be more prudent at this time when shareholders are looking for value to actually bite the bullet and pay down on some of the debt that they have. Once they pay down on that debt they should have some serious capital to work with to pay for major new rides, in theory anyway. Of course that is if they pay down on their debt.
Tuesday, March 1, 2005 1:57 PM
I believe (I'm a little fuzzy on some of the numbers) cap ex limits were the following for the past few years:

2002 175 mil
2003 125 mil
2004 75 mil
2005 125 mil

I believe SFI used the excuse last season that big new attractions weren't bringing the crowds in so they cut back on Cap Ex last year. Well, they found out cutting the cap ex and using deep discounts wasn't bringing the crowds in either.

Tuesday, March 1, 2005 5:22 PM
Cedar Fairs debt management is enough to make any company jealous
Wednesday, March 2, 2005 10:26 AM

If you sell an amusement park that is on the books as an asset with a current depreciated value of $50,000,000, and you sell it for $30,000,000, you have to report a special item which is a loss of $20,000,000. Your cash flow improves by the $30,000,000, and if you are profitable, you also save on taxes. So your profit statement takes a hit, but your cash flow benefits.

Wednesday, March 2, 2005 11:59 PM
That's true, I see what you are saying - I didn't get the way you worded it in your original post, and I thought you were only talking about Six Flags. In that example like you said, the company would report a 20,000,000 loss (debit) to the income statement with cash flows increasing. I bet the effect of the sale of WoA had a similar effect on their financial statements. I think they sold the park for much less than it was worth, didn't they? *** Edited 3/3/2005 5:01:03 AM UTC by Michael19887***

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