The Interpreter Posted June 22, 2006 Share Posted June 22, 2006 Including Magic Mountain: Six Flags looks to deal six properties E-mail | Print | RSS Feed | Disable live quotes By Russ Britt, MarketWatch Last Update: 6:30 PM ET Jun 22, 2006 LOS ANGELES (MarketWatch) -- Six Flags Inc. said late Thursday that it's looking to shed six properties as part of its initiative to sell off noncore assets. Theme parks near Los Angeles, Houston, Seattle and Denver, as well as properties in Buffalo, N.Y. and Concord, Calif., are up for possible sale. The company said that it is unsure whether it would sell the parks in a single transaction or in series of deals, or it could dismantle and reuse rides and attractions elsewhere and sell the real estate. SIX has been looking to reorganize itself since December, when Chairman Daniel Snyder forced out management at the underperforming company. Former ESPN executive Mark Shapiro took the helm as chief executive at the time. He announced the plans to deal the properties Thursday. "We're making progress with our strategy to focus on the growth of our strongest assets, reduce the company's debt and generate increased value for our shareholders," Shapiro said in a statement. Late-trading investors dealt shares in the amusement-park operator lower at $6.06, down about 19% from the regular close of $7.45, which was up 5 cents. The proposed properties include Six Flags Magic Mountain and Hurricane Harbor near Los Angeles; Six Flags Darien Lake near Buffalo; Six Flags Waterworld in Concord; and Six Flags Elitch Gardens in Denver. Also on the list are Wild Waves and Enchanted Village outside Seattle and Six Flags Splashdown in Houston. The move is one of several the company has made to dispose of some of its assets. It also has sold the land around its Six Flags Astroworld; agreed to sell its Columbus, Ohio, water park for $2 million; and exercised the right to terminate its lease on a water park in Sacramento, Calif. It also is trying to sell its two Oklahoma City parks and has received multiple bids. Further, the company is looking to sell excess real estate in Illinois and Missouri. Six Flags said that sales were up through May 31, but down for the three weeks ended June 18 by 1%. Per-capita guest spending was up, however, by 14% while attendance fell 13%. The company discontinued deep discounts in season passes in an effort to "restore price and brand integrity and to wean ourselves from those teens who don't spend money in the park," Shapiro said in the statement. Attendance was negatively impacted by the season-long closure of the park in New Orleans due to damage from Hurricane Katrina. End of Story Quote Link to comment Share on other sites More sharing options...
RingMaster Posted June 22, 2006 Share Posted June 22, 2006 First, the European Six Flags parks go under, then WoA gets bought by Cedar Fair (now Geauga Lake), now they threaten to get rid of its most popular park, Magic Mountain. This is a very stupid move for SF, considering they just now poured so much money into Tatsu, the "world's longest, tallest, fastest flying roller coaster" for their 35th anniversary. Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted June 22, 2006 Author Share Posted June 22, 2006 Old management bought Tatsu. The land alone is worth many, many millions; far more than the park use could ever justify. And even if MM were their most popular park, that does not mean it is either all that profitable or the wisest use of company resources. Quote Link to comment Share on other sites More sharing options...
Vortex Posted June 23, 2006 Share Posted June 23, 2006 Does anyone think Cedar Fair will go after a park? Quote Link to comment Share on other sites More sharing options...
PKIVortex Posted June 23, 2006 Share Posted June 23, 2006 I'm sure Magic Mountains buget is way off. Look how many coasters they have bulit in the last few years. Haven't there last 2 coasters been B&M? Not the cheapest coasters. Quote Link to comment Share on other sites More sharing options...
TheKlockster Posted June 23, 2006 Share Posted June 23, 2006 They are getting rid of their "non core assets". That means Six Flags Magic Mountain, Six Flags Great America and Six Flags Great Adventure will be the last three parks to go. It sounds like they are selling Darien Lake. That looks like a pretty good park - with a Ride of Steel and an Arrow Megalooper. Edit - I didn't see that SFMM is indeed one of the properties up for sale! What the heck?? That is like the Dukes of Hazard selling the General Lee! Quote Link to comment Share on other sites More sharing options...
PKIVortex Posted June 23, 2006 Share Posted June 23, 2006 Sounds like to me, that Six Flags could still go under. Well we know Cedar Fair aint buying them. With 5 new parks to take on for 07 they couldn't hande anymore. Quote Link to comment Share on other sites More sharing options...
CoastersNSich Posted June 23, 2006 Share Posted June 23, 2006 Wow, is Cedar Fair the last "competent" large park chain left? I see Elitch Gardens and Darien Lake being let go as a whole. Magic Mountain? More like the park shrinking, in number of rides/coasters and land. Quote Link to comment Share on other sites More sharing options...
jzarley Posted June 23, 2006 Share Posted June 23, 2006 First of all...I absolutely LOVE listening to Mark Shapiro's conference calls. You can tell he's a guy that lives and breathes Six Flags. (Nobody can read financial results with as much heart & soul as a former marketing guy ) The "last parks to go" as far as divestment or closing would probably be SFOT and SFOG. Primarily because they are owned by local partnerships as opposed to the SF corp. itself. (Although, I believe SF owns minority shares in both partnerships...) If you listen to the conference call, Sharpiro made a few points that definitely indicates SFMM's future as a SF park is in question: #1) The ride mix and image of the park (thrills & teenagers) is contrary to their current "family" strategic vision for the SF brand. He made a comment about how it could be a great park for a company with a different strategic vision than SF's. #2) They feel they could get a "very attractive multiple" for the park...either selling it as a park or dismantling it and selling the land. Think of it this way...assume that SFMM generates $150M a year in revenue (which after learning both KI and CP's revenue numbers this week, seems fairly realistic). Based on SF's EBITDA margins of approximately 17%, that means the park would generate around $25.5M annually in operating income. Now assume that they can sell the park's land for similar per-acre price as they sold the Astroworld site (and that's probably a pretty low estimate considering the land price differences between Houston and LA), but based on those numbers they could sell the MM land for $175-200M. $200M dollars today is worth a lot more than $200M over eight years (which is the approximate time it would take to earn the same amount in operating income). So, I can definitely see how that would make sense from a business standpoint...emotional feelings about the park itself set aside. Or, assuming they could sell the park as is for a similar multiple (10.7 X EBITDA) as CBS sold Paramount Parks, SFMM itself could bring in around $250M. Either way, there's a lot greater value in divesting the park than there is in keeping it operating as a SF. They've announced that their goal is to get their debt down to around $1.6B (which, will actually be less than CF's...even after the announced equity offering). They are going to need some "big bangs" to make that happen. (Selling Wyandot Lake or other small properties for $2M a pop just isn't going to cut it...) Shapiro also said that they had been approached by a few of the "losers" from the Paramount Parks bidding that are still interested in buying parks after having lost out to Cedar Fair in the other deal. It's definitely an interesting time in the industry right now Quote Link to comment Share on other sites More sharing options...
KIBeast Posted June 23, 2006 Share Posted June 23, 2006 First, the European Six Flags parks go under, then WoA gets bought by Cedar Fair (now Geauga Lake), now they threaten to get rid of its most popular park, Magic Mountain. This is a very stupid move for SF, considering they just now poured so much money into Tatsu, the "world's longest, tallest, fastest flying roller coaster" for their 35th anniversary. It's not dumb considering it is one of the parks that is losing money instead of making money. A new coaster has nothing to do with whether or not SFMM makes money. Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted June 25, 2006 Author Share Posted June 25, 2006 No one said Magic Mountain is losing money. It isn't. Quote Link to comment Share on other sites More sharing options...
Kenban Posted June 25, 2006 Share Posted June 25, 2006 But Six Flags as a whole is losing money because of the huge debt. I suspect the real reason they are selling it is that the park does not make that much money and when you consider the amount of money that the sale will generate you can pay down some of the debt which will lower the amount of interest that the chain has to pay. Its possible that the park is worth enough money that they will lower the interest more then the park makes. In the long run with how much the land is worth this is good for the chain. Also about Tatsu the new management has already said if they had been in charge they would not have built the ride and Magic Mountain would not have gotten any coasters for this year. Six Flags last time I looked at the numbers is about 2.4 billion in debt which is more then the company is even worth. I actually think this is the right thing to do I hope that we see a company step up that wants to continue running Magic Mountain as a theme park. Quote Link to comment Share on other sites More sharing options...
Gordon Bombay Posted June 25, 2006 Share Posted June 25, 2006 Its not the park thats worht a lot of money, its the land it sits on thats worth money, the worth of the land greatly outweighs the worth of the park from a business standpoint....thats what happeneed to Six Flags Astroworld. Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted June 25, 2006 Author Share Posted June 25, 2006 And it has happened to many, many, many parks over the years... Quote Link to comment Share on other sites More sharing options...
italianchef Posted June 25, 2006 Share Posted June 25, 2006 It is a shame that Six Flags will probably sell SFMM. It has more coasters than any other park in the world - except for CP. But if it isn't profitable - c'est la vie. One would think with all of those coasters, more people would visit the park. Granted, I haven't seen any figures. For all I know, it can be very profitable. Have a great day! Italian Chef Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted June 25, 2006 Author Share Posted June 25, 2006 Again, MM IS profitable. It is just worth far more as land than it is as a park. Further, the thrill factor at MM is not consistent with what SF wants to become, and converting MM to what SF sees itself as wanting to be is too costly, if it is even possible... Quote Link to comment Share on other sites More sharing options...
jzarley Posted June 25, 2006 Share Posted June 25, 2006 I would imagine that most of the parks are "profitable" as far as operating income goes...it's the corporate debt overhead that causes the loss for the corporation overall. EBITDA doesn't mean a whole lot when your service on the debt is killing you... Did anyone else catch the (brief) comment about how they were in danger of "violating certain bank convenants"? That's the statement that is really pounding the stock...not the potential fate of SFMM and the other parks mentioned. Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted June 25, 2006 Author Share Posted June 25, 2006 Oh yes. And I am quite certain Messrs Snyder and Shapiro realize their time is potentially limited. Thus the "fire sale." And the need to QUICKLY raise funds. Banks love to get money back....that always makes them happy. Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted June 25, 2006 Author Share Posted June 25, 2006 See this article for more: http://www.msnbc.msn.com/id/13515092/ Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted June 26, 2006 Author Share Posted June 26, 2006 And this one: http://www.buffalonews.com/editorial/20060624/1057725.asp Quote Link to comment Share on other sites More sharing options...
KIBeast Posted June 26, 2006 Share Posted June 26, 2006 I don't forsee anyone buying SFMM and maintaining it the way it is. Too much money to be made in the real estate. Maybe they could relocate some of their coasters to other parks, although that would be expensive too. Quote Link to comment Share on other sites More sharing options...
Jasper Posted June 26, 2006 Share Posted June 26, 2006 I would love to to see Cedar Fair purchase SFKK because it is close to me and i believe that they could do a lot for it. Quote Link to comment Share on other sites More sharing options...
italianchef Posted June 26, 2006 Share Posted June 26, 2006 The new GM of Kings Island, whomever he or she will be, will make important decisions that affect our Kings Island experience. I think that we will be in good hands with Cedar Fair. Sure I will miss "Paramount", but the reality is what it is. So long as we the enthusiasts communicate to Maureen Kaiser and her awesome staff what we'd like to see......our ideas will be considered. Let us face it. We don't interact with the higher ups. We interact with the line folks. They are the ones who have always given us an awesome Kings Island experience and will continue to do so regardless of who owns the park. And I'm so relieved that an investment company didn't take over because it would have made nothing but budget cuts to maximize profit. Have a great day! Italian Chef Quote Link to comment Share on other sites More sharing options...
Kenban Posted June 26, 2006 Share Posted June 26, 2006 I would love to to see Cedar Fair purchase SFKK because it is close to me and i believe that they could do a lot for it. SFKK is not up for sale. Actually its one of the parks thats on the short list as being core to the chains turn around. Quote Link to comment Share on other sites More sharing options...
KIBeast Posted June 26, 2006 Share Posted June 26, 2006 ^You are correct, Kenban. It is a profitable park for Six Flags and fits their new image. I agree wholeheartedly with Chef. Quote Link to comment Share on other sites More sharing options...
deidre1976 Posted June 26, 2006 Share Posted June 26, 2006 So what do we know about the Wyadot lake property? Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted June 26, 2006 Author Share Posted June 26, 2006 So what do we know about the Wyadot lake property? That Six Flags is giving up the lease and selling the equipment in place that it owns to the Zoo for $2 million. This is the last season under Six Flags. Quote Link to comment Share on other sites More sharing options...
Vortex Posted June 26, 2006 Share Posted June 26, 2006 It is a shame that Six Flags will probably sell SFMM. It has more coasters than any other park in the world - except for CP. But if it isn't profitable - c'est la vie. One would think with all of those coasters, more people would visit the park. Granted, I haven't seen any figures. For all I know, it can be very profitable. Have a great day! Italian Chef The coasters are the problem they have to many. If they would have added more kid rides and flat rides for the hole family. SFMM might be making alot of money. Just be glad Paramount did this with the parks or we could have lost our park. Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted June 26, 2006 Author Share Posted June 26, 2006 For the six zillionth time (SIGH), MM IS making money. The issues are: (a) whether it fits or can be made to fit the family image that Snyder and Shapiro want, and ( whether the land under it is so valuable it is smarter to sell the park and apply the monies to the huge debt that former management left behind. This is NOT about whether or not MM is making money, it IS about whether or not MM fits the new Six Flags and/or whether it is just smarter to sell the place and move on... Quote Link to comment Share on other sites More sharing options...
KIBeast Posted June 27, 2006 Share Posted June 27, 2006 Come to think of it, I would think that many of their coasters would be hard to relocate as many are adapted to the Mountain landscape. Quote Link to comment Share on other sites More sharing options...
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