GAcoaster Posted January 28, 2008 Report Share Posted January 28, 2008 From the St. Louis & San Antonio Business Journals: Six Flags considers selling more parks, eying big budget cuts St. Louis Business Journal - by W. Scott Bailey San Antonio Business Journal The financial roller coaster ride for Fiesta Texas' parent company Six Flags Inc. has taken another dramatic turn. Amid speculation from some industry observers that the deeply indebted Six Flags could be headed for bankruptcy, company executives have filed with the U.S. Securities and Exchange Commission a plan that calls for huge spending cuts and the possible sale of more parks. Six Flags operates an amusement park in Pacific, Mo., along with 20 other parks around the nation. Six Flags CEO Mark Shapiro is leading the turnaround effort for the company, which owns 21 theme parks, including San Antonio's Fiesta Texas. Some industry observers are skeptical, however, that Shapiro can overcome the hurdle of roughly $2 billion in debt inherited from previous Six Flags management. Dennis Speigel, president of Cincinnati-based International Theme Park Services Inc., says the debt load is a major issue. Last week he told the Business Journal: "You could bring back Walt Disney (to run Six Flags) and that company is still going to struggle." Shapiro, a former Disney executive who came to Six Flags from ESPN, remains undaunted. But he is preparing to make some more big changes. According to the company's SEC filing, Six Flags is prepared to slash media spending and trim personnel this year. The plan is to cut operating expenses by as much as $60 million in 2008. As much as half of that is expected to come from "marketing-related" cuts, SEC documents state. Six Flags officials, who want to cut loose one of the company's three advertising agencies, plan to reduce radio spending and concentrate more on Internet-driven opportunities that will attract more teens. Still more cuts are planned. Six Flags officials want to slash another $25 million to $30 million from operating costs by cutting personnel and getting rid of what they characterize as inefficient rides and attractions. The personnel move would result in a reduction of the company's "full-time (employee) headcount," primarily through an early retirement program, according to the SEC filing. An additional labor adjustment would come as a result of the implementation of what Six Flags officials refer to as a "real-time seasonal labor tracking system." The trimming may not end there. According to the SEC filing, Six Flags will consider selling off as many as three more theme parks if the price is right. Previous management shuttered Six Flags Astroworld. In June 2006, the Houston Business Journal reported that Angel/McIver Interests LP had finalized the purchase of the 104 acres where Astroworld was located. In 2007, Six Flags sold off seven additional parks. The company still has not reopened its New Orleans theme park, which it claims suffered substantial damage caused by Hurricane Katrina in 2005. Scott Rothbort, a New Jersey-based investment adviser and professor of finance at Seton Hall University's Stillman School of Business, says Six Flags may indeed need to sell off some parks. "It's just a bad business model," Rothbort says, summing up Six Flags' ongoing struggles. "None of this surprises me," says Speigel about Six Flags' planned cuts. Nor would he be especially surprised if Fiesta Texas or the real estate beneath it were eventually sold. Former Fiesta Texas executive Paul Serff, now president and CEO of the Texas Travel Industry Association, says he has no idea what the future holds for Six Flags or its San Antonio theme park. "All I know is that Fiesta Texas is a great park and an important asset to San Antonio," Serff says. Still optimistic Shapiro took over as Six Flags' CEO in January 2006. Early last year he announced plans to significantly increase ad spending and invest in new rides as part of an ongoing effort to try and steadily grow park attendance and revenues. In a March 27, 2007, presentation to Lehman Bros., Shapiro outlined an aggressive plan that included a hefty increase in marketing dollars -- from $59 million in 2006 to more than $84 million for 2007. That plan included a doubling of the amount of funds spent on domestic television and outdoor media. Despite Shapiro's spirited efforts and the increased ad spending, Six Flags' experienced only a slight bump in attendance last year. The turnstile count was 24.8 million in 2006 and 24.9 million in 2007. For the nine months ended Sept. 30, 2007, Six Flags reported a net loss of $142.7 million on revenues of $860.6 million. Full financial results for 2007 were not yet available at press time. What is clear at this time is that Six Flags stock price continues to fall. The 52-week high for Six Flags stock was $6.80 per share. At press time it had dropped to $1.55 per share -- in a market that has turned bear overall in recent weeks. Shapiro remains upbeat. He says Six Flags will continue to invest in its parks. And he notes that there were some fourth-quarter 2007 indicators -- modest gains in attendance and revenue and an increase in season pass sales versus the last quarter of 2006 -- that have helped create some reason for Six Flags management to remain optimistic. "We're looking forward to building on this momentum in 2008," Shapiro says. Says Speigel about Six Flags' future: "I don't know where this goes from here. But they've got to make some cuts and sell some properties." I think the parks potentially on the block are pretty obvious...but you have to wonder if at some point hey just sold one MAJOR park it would do more to pull them out of debt. Quote Link to comment Share on other sites More sharing options...
29yrswithaGApass Posted January 28, 2008 Report Share Posted January 28, 2008 Besides the possibility of selling off the land, I wonder how vulnerable the Safari park is to closure in the scheme of things. Quote Link to comment Share on other sites More sharing options...
Up_Up_and_Away Posted January 29, 2008 Report Share Posted January 29, 2008 If Busch were to buy the park, the Safari would be safe. "Jack Hanna's Wild Safari" has a nice ring to it! Quote Link to comment Share on other sites More sharing options...
GAcoaster Posted January 29, 2008 Author Report Share Posted January 29, 2008 That would be interesting! Quote Link to comment Share on other sites More sharing options...
29yrswithaGApass Posted January 29, 2008 Report Share Posted January 29, 2008 Jack was a "special guest" at SeaWorld Orlando when I went earlier this month. He's a funny guy - very entertaining. His show was in the indoor theater and there was a photography restriction. Quote Link to comment Share on other sites More sharing options...
29yrswithaGApass Posted January 29, 2008 Report Share Posted January 29, 2008 I think the parks potentially on the block are pretty obvious...but you have to wonder if at some point hey just sold one MAJOR park it would do more to pull them out of debt. I think Six Flags took everyone by surprise when they put Magic Mountain up for sale a couple of years ago. As we know, the price wasn't right and they retracted their idea of selling it. Not to say that if a better offer came through tomorrow they wouldn't jump at the chance. Quote Link to comment Share on other sites More sharing options...
The Master Posted February 2, 2008 Report Share Posted February 2, 2008 (edited) I think it would be a shame if SF had to sell off more parks but hopefully it won't come down to that. A while ago it would seem to be SFKK and SFMM would be the most likely but since SF has invested alot in SFMM to fix up X, remove broken coasters and add Thomas and SFKK getting a new water slide they seem very unlikely now. A few years ago there where rumors of SFA could be sold off since it is on some the most valuable land in of all the SF parks and it is not getting any upgrades this year . Edited February 4, 2008 by The Master Quote Link to comment Share on other sites More sharing options...
redsoxfan0810 Posted February 3, 2008 Report Share Posted February 3, 2008 SFA is a huge candidate, they haven't gotten anything new in several years. Quote Link to comment Share on other sites More sharing options...
rcji Posted February 4, 2008 Report Share Posted February 4, 2008 I hope they don't point at SFMM to sell it again! Quote Link to comment Share on other sites More sharing options...
The Master Posted February 4, 2008 Report Share Posted February 4, 2008 (edited) They probably won't this time since they have invested alot into SFMM. Two parks I know are 100% safe from being sold are SFOT and SFOG since SF does not own them, they are only leased to SF which explains why SFOT is not the flagship park. I am more afraid of what the budget cuts could be like less staffing at the parks. Edited February 4, 2008 by The Master Quote Link to comment Share on other sites More sharing options...
rcji Posted February 5, 2008 Report Share Posted February 5, 2008 ^^^And also more park hours were cut. Quote Link to comment Share on other sites More sharing options...
The Master Posted February 5, 2008 Report Share Posted February 5, 2008 It was two years ago when half way into the summer season that they cut a hour off of all days at all the parks. It was a real mess at HH where it closed at 5 instead of 6 plus they closed half of the water slides at 4! I hope they don't pull that crap again. Quote Link to comment Share on other sites More sharing options...
29yrswithaGApass Posted February 5, 2008 Report Share Posted February 5, 2008 I think the park is playing it a bit more cautiously this year and trying not to over-promise and risk under-delivering. Cutting operating hours two years back was a hard pill to swallow. However, they are now using better business models and making better business choices and I am confident that they will be less likely to disappoint us with those types of surprises. Quote Link to comment Share on other sites More sharing options...
Great Adventurer Posted February 6, 2008 Report Share Posted February 6, 2008 This scares me. I really don't want to see any parks get sold... I love the Six Flags chain (In addition to the fact that I can use my season pass at any SF park!). Quote Link to comment Share on other sites More sharing options...
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