Who really cares about debt?

Thursday, July 12, 2001 4:44 AM
I see people bash Six Flags Inc. all the time for running itself into debt. More than once people have voiced that they'd like to see the company take time off and pay off its debt before buying/building any new coasters.
My question is this: who really cares? This company may be in debt, but does anyone really, honestly expect it to go into bankruptcy? I personally cannot imagine that happening any time in the near future. My impression is that a lot of enthusiasts who aren't fans of Six Flags parks just like to use it as another bashing point. Can one of you who constantly brings this point up explain?
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Thursday, July 12, 2001 4:50 AM
I have not made that statement. However, as a financial analyst, I can tell you that high levels of debt are not good for stock price and can strangle a business if not carefully monitored. I have seen "hyper-expansion" (no pun intended) kill many companies.
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Thursday, July 12, 2001 6:03 AM
Good example was here in Ohio. Sun TV built all new stores, within a couple years they went out of business. They were a reasonably big chain. Over expansion can shut a business down.
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Thursday, July 12, 2001 6:13 AM
I don't think anyone is "bashing" (I hate that word) Six Flags for their debt load. The average enthusiast doesn't know a thing about corporate finance, so what difference does it make?

From an investment standpoint, I can see where there would be concern, in that if things went sour it might be hard to pay the bills, but so far we've seen that a slow economy is good for the very localized service the parks provide.

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Jeff
Webmaster/Admin - CoasterBuzz.com
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Thursday, July 12, 2001 6:22 AM
In the past when Six Flags was in a lot of debt, the chain was sold to new owners. The current owners, formally Premier Parks, have really taken the cake with amassing new debt. I imagine no one would WANT to buy Six Flags from them at this point and assume $2 billion in red ink.

Here's how Six Flag's debt affects us. Like most companies the chain seeks ways to reduce its operating costs to minimize expenses. This results in understaffing and single train operation and closed rides and attractions that aren't maintained and repaired properly. You simply do not see the conditions you find at Six Flags parks in other profitable parks like Disney, Cedar Fair, Busch Gardens, etc.
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Thursday, July 12, 2001 6:25 AM
I read a Darien Lake trip report recently that talked about Superman ROS being run with one train an entire Saturday, the week of the 4th of July. Maybe pancake is right in that it shows up in certain areas.

Jacob
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http://www.PKIGuide.com
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Thursday, July 12, 2001 9:43 AM

super7, nice call! I loved sun tv... well sux to be em.
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Best Steel: MF @ Cedar Point
Best Woodie: The Beast @ PKI
Best Park: IOA!
Get to the Point, Cedar Point!
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Thursday, July 12, 2001 9:52 AM
The interest and principal repayment on debt is a cost to a business. If a park owner is deeply in debt, it either has to cut costs elsewhere which reduces the quality of what you get, or charge you more to visit the park.
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Thursday, July 12, 2001 10:01 AM
The United States is in major debt, and we don't go "bankrupt."

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A New World. A New Technology. One Last Hope for Salvation. Neon Genesis Evangelion
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Thursday, July 12, 2001 10:05 AM
I'd say the company that is in debt really cares because "they" could go out of business.

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SFGAm Trip - July 13-17, 2001
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Thursday, July 12, 2001 10:12 AM
The vast majority of companies with large debt loads don't go into bankruptcy: they prosper, they pay off debt, they thrive. But some companies do go bankrupt.

My concern regarding Six Flags and the debt that it carries is that they may, in the future, to address that burden, cut costs by closing parks, selling off parks, closing rides in operating parks, or otherwise negatively affecting my experience at one of their parks.

In all probability, that will never happen-- Six Flags will continue to be one of the country's leading park operators. But it is a valid concern, particularly, but not exclusively, for those who own stock in the company.
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Thursday, July 12, 2001 10:39 AM
Fierce Pancake hit it right on the money! The more debt, the more cutting corners, the crappier service. I think that we worry about debt because we want SF to keep giving us new thrill rides, and we don't want them to go bankrpt and stop.

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CDNSN
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Thursday, July 12, 2001 11:36 AM
Consider Webvan for a moment. Good idea, viable concept-- but too much debt, not enough business to service said debt--- now there's no more Webvan.
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Thursday, July 12, 2001 12:51 PM
I care but,i am probably one of very few if there even are any others(on this site) who rely on SF for reasons other then coasters.For the past two years SF has kept food on my table during the winter months.
My husband has a very seasonal job as a concrete truck driver.He works for Ralph Clayton and sons(for those in NJ who would be familiar)and,they do all of Sfgadv's concrete pours.This year,Nitro kept his company busy and alot of the guys working so they could feed their families because,unemployment really stinks.The year before,Hurricane harbour was the reason we were able to get through the winter.So,if SF moved out of our area,we would probably have some trouble during the winter but,if someone else takes over the park,i am sure my husband's job would still pour there.
In all reality,i am sure they would sell their smaller parks before they lost all of their money making parks.I guess you could say i do care about them going bankrupt but at the same time,that very debt is providing my husband income over the winter so we can feed our family.

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~*Rickyswmn*~

*** This post was edited by Rickyswmn on 7/12/2001. ***
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Thursday, July 12, 2001 1:05 PM
Well, that's an interesting perspective, but not really one that's applicable to the people that keep Six Flags in business, the guests.

SFTP/Premier runs the business quite differently than former owners like Time Warner. They've shown little interest in themeing, they run rides at less than full capacity, and generally skimp in a lot of ways to pay for their expansionist plots. I don't think there's ever been a player in the amusement park industry that's aquired so many theme parks in such a short time. They're trying to conquer the planet, but even great dynasties like the Roman Empire have fallen due to weaknesses from within.
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Thursday, July 12, 2001 1:22 PM
I agree pancake and,my mistake for not giving the paying patrons the credit for keeping food on my table over the winter.Thanks to all who continue to go to the park!I just wanted to point out that it does affect me more then just on the coaster level.

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~*Rickyswmn*~

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Thursday, July 12, 2001 1:26 PM
There was a British economist in the 30's who had the ludicrous idea that running in the red can be good for a slowing economy. It stimulates it. It cushoins the bad time. Tempers the wild swings if you will. Perhaps this could apply to smaller entity, like a park for example. Remember, if attendance is low, and a park can't afford to invest in the park because all of it's finances are strictly based on the gate, attendence would get caught in a downward spiral.

I guess the idea is that red gets you through the bad times, the good times pay for the bad times.

But are we in "bad times"? It may not be a good idea to go into debt in good times. Unless you think that you could increase your profits.

Then again, what the heck do I know???

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Yeeee Haaawwww!
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