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  1. #1

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    Six Flags Considers Unloading Theme Parks - Yahoo.com - 7/9/2006

    http://biz.yahoo.com/ap/060709/six_flags_woes.html?.v=2

    SANTA CLARITA, Calif. (AP) -- Six Flags Magic Mountain is a thrill seeker's paradise, boasting 17 of the tallest, fastest roller coasters in the country while generating as much as $50 million in annual profit.

    But the thrills could be gone if Six Flags Inc. -- awash in debt and fighting an image of its parks as hangouts for rowdy teenagers -- decides to sell Magic Mountain to land-hungry developers who want to tear it down and build new homes.

    New York-based Six Flags is also thinking of unloading its Waterworld Park in Concord, near Oakland, as well as parks in Buffalo, N.Y., Denver, Seattle and Houston as it struggles to slash its $2.1 billion debt and create a more family-friendly image.

    Two weeks ago, new CEO Mark Shapiro stunned analysts by admitting the turnaround will be tougher than first expected.

    "What we couldn't have realized, candidly, was that this brand is much more damaged than we previously thought," Shapiro said during a conference call. "What we couldn't realize is just how many families have literally given up on Six Flags."

    Shapiro took over as chief executive in December after Washington Redskins owner Daniel Snyder won a protracted proxy fight to gain control of the company. Snyder is now Six Flags' chairman.

    Shapiro told analysts the company would not meet earnings expectations because attendance had dropped an average of 13 percent at its 30 amusement and water parks across the nation.

    The news sent Six Flags' stock price plummeting 25 percent. Shares were trading at about $5.40 on Friday after hitting a 52-week high of $11.93 in February.

    Six Flags reported a net loss of $241 million, or $2.63 a share, on revenue of $42.7 million, for the most recent quarter ending March 31. In the year-ago period, it reported a net loss of $178.7 million, or $1.98 a share, on revenue of $49.5 million. The quarter is traditionally tough because attendance at the parks lags in winter.

    Six Flags, the nation's second-largest theme park operator in terms of attendance behind The Walt Disney Co., has spent tens of millions of dollars in recent years to pack Magic Mountain with gut-wrenching roller coasters with names such as Scream, Psyclone and Viper.

    The strategy has helped attract more than 2 million visitors a year to the park 40 miles north of Los Angeles, pumping up its bottom line and making it a hot commodity for potential buyers.

    But building Magic Mountain into a world-class thrill park came with problems.

    Over the years, it has been the scene of fights and other incidents that fed its reputation as a hangout for tough, foul-mouthed teens.

    Despite efforts to make it more secure, Magic Mountain is still recalled by many as the site of a parking lot shooting death in 1998 and a riot in 1993 that started at a concert inside and spilled outside.

    In 2001, the park was sued by a group of minority visitors who claimed stricter security measures amounted to racial profiling. The lawsuit was later settled when a $5.6 million fund was established to compensate plaintiffs.

    A Los Angeles County sheriff's substation now operates at the park, with five uniformed deputies aiding the private security force.

    "The incidents that have needed our attention are usually very minor," said Sgt. Dean Currie. "As time goes on with us being there, the problems continue to diminish."

    Rowdiness was a major theme of Shapiro's recent conference call that came six months after he took over as CEO amid a contentious proxy battle.

    He said families have abandoned some Six Flags properties because of teens who "drive our security problems, our disorderly conduct, loiter in the park, hate my no smoking policy and don't spend."

    He also read a letter from an anonymous parkgoer complaining about kids shouting racial slurs at one unidentified park -- not Magic Mountain -- and a couple engaging in sexual activity on a Ferris wheel during a 2004 visit.
    The company will spend an additional $15 million this year to hire staff and add activities aimed at luring back families, he said.

    "Once you burn mom, she's not rushing to come back and get burned again," Shapiro said.

    Despite the onslaught of roller coasters, Magic Mountain has retained much of the quaintness of a regional amusement park, with bumper cars, historic 1912 carousel, petting zoo and midway games. Over the past few years, it has also ramped up its family offerings with a daily parade and more appearances by licensed costumed characters such as Bugs Bunny and Wonder Woman.

    But the coasters are king at Magic Mountain, which opened 35 years ago.
    "Everybody made a beeline to this ride," Angela Rodgers, a mother with two small children, said recently as she sat outside Tatsu, the park's newest giant coaster.

    In a recent interview, Shapiro said the company has seen lots of interest since signaling that Magic Mountain might be for sale. Some inquiries have come from investment groups that missed out on the sale of five properties operated by Paramount Parks Inc. earlier this year.

    Cedar Fair LP bought those parks for $1.24 billion in cash, making it the third-largest theme park company in terms of attendance after Six Flags.
    Magic Mountain could bring as much as $400 million if it is bought and operated as a theme park, said David Miller, an analyst with Sanders Morris Harris.

    But theme park operators aren't the only ones interested. The park could be acquired by developers and fall to urban sprawl.

    Magic Mountain and the adjacent Hurricane Harbor water park occupy 250 acres of prime real estate in the booming Santa Clarita area. Miller said the property could fetch as much as $300 million.

    Shapiro said the company wants to focus resources on larger parks with the greatest long-term growth potential. Six Flags would not discuss particular parks but said decisions on possible sales would be made on whether a site fit the new focus on family entertainment, was located on valuable land, or drew offers the company was obligated to consider.

    The negative image of Magic Mountain has frustrated some if its managers, who have added Chinese acrobats and an exotic bird show to entertain guests but haven't been able to promote the attractions because advertising money goes to tout the roller coasters.

    "This park is very profitable," Magic Mountain vice president and general manager Del Holland said. "We're proud of what we have here."

  2. #2

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    Re: Six Flags Considers Unloading Theme Parks - Yahoo.com - 7/9/2006

    Okay, a few observations from the article ... again, didn't want my personal opinion to cloud the news article.

    New York-based Six Flags is also thinking of unloading its Waterworld Park in Concord, near Oakland, as well as parks in Buffalo, N.Y., Denver, Seattle and Houston as it struggles to slash its $2.1 billion debt and create a more family-friendly image.
    Do people not check facts anymore? The Houston park closed last year.

    "This park is very profitable," Magic Mountain vice president and general manager Del Holland said. "We're proud of what we have here."
    We have suspected for YEARS that Del Holland is an idiot, but if he is truly proud of SFMM then he really is an idiot.


  3. #3

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    Re: Six Flags Considers Unloading Theme Parks - Yahoo.com - 7/9/2006

    Quote Originally Posted by sir clinksalot
    Do people not check facts anymore? The Houston park closed last year.
    It's true that Astroworld is already closed. However, SF still owns a water park in Houston (Splashtown). Since "Houston" was mentioned in a list that followed "Waterworld park in Concord", maybe the author was talking about Splashtown, not Astroworld.
    These are the games that never end.

  4. #4

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    Re: Six Flags Considers Unloading Theme Parks - Yahoo.com - 7/9/2006

    ^ But I don't think that Splashtown has been mentioned in any other article about unloading parks, nor was it mentioned from Shapiro.


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