Six Flags [FUN] Corporate Discussion Thread

It is funny out of all the Six Flags properties, They only had hotels at Darien Lake, Worlds Of Adventure, and Great Escape. I think one of the Walibi too.

Great Escape has vastly different demographics than any of their other parks. Their other parks are day trips for nearby residents and are generally close to major metropolitan areas. Lake George has virtually no full time residents, isn't near any major cities (unless you count Albany) and sees a massive influx of tourists in the Spring, Summer and Fall who are all looking for lodging.

Still, their recent sale...

... puts their price point below (I'm not joking) the nearby 3 star Quality Inn, the 2 star Alpenhaus Motel and similar low to mid tier hotels (just from doing a quick Kayak search for one of their $89 dates) and this deal INCLUDES admission to an indoor waterpark and is a date where Great Escape is open and is literally next door. I don't know how well this hotel is doing and I assume they're doing marginally well but there's no reason to think they're making enough money where they feel comfortable expanding the concept to other markets and parks where the majority of guests don't need lodging options. If they felt like that was an option they would likely have already done it.

For California, I think the 3 Raging Waters parks, Castle Park Riverside and Scandia in Ontario would interest Six Flags.

Three large water parks, one small amusement park, and one large FEC.

Okay, I've got to be honest, I think people are making a much bigger deal out of this than they should be.

 

This news was blowing up my news feed too, but how many people have actually read the transcript of the earnings call? I really invite you to do so before getting too excited about this (pro tip: disable javascript to read the transcript so it doesn't pop up with a sign up prompt).

 

But as the call went on it became more and more obvious that they were primarily focusing on water parks. A few people asked follow up questions and the answers always seemed to focus strictly on water parks (which are of course cheaper to acquire and can offer great profit margins as they mentioned in the call). Read the exchange between Marshall Barber and John Duffey from Six Flags and Barton Crockett from FBR Capital Markets & Co. and you'll see what I mean. I think the chain would be willing to acquire or lease a theme park if an opportunity presented itself that made sense, but I think they're primarily focusing on water parks.

As I mentioned earlier I actually listened to the call and as you mentioned they said they would be willing acquire or lease a theme park. They also explained this is a new strategy for them (on previous calls they said no acquisitions in North America). Yes, the focus is on water parks but as mentioned on the call several times they are also looking at dry parks as well. I don't think anyone is making it a bigger deal - the chain up until yesterday said they had no desire to acquire parks. Now they want to acquire parks. They themselves called it a new strategic pillar for them.

Though they seem to be focusing heavily on Mardi Gras to improve their early season attendance numbers

In the call they said Mardi Gras would not just be a early season event, but one likely that would be held at various times of the year.

Their plans of setting up a REIT conversion have gone nowhere and they've decided not to pursue it, Vietnam is turning into quite the embarrassment for them and they're doing whatever possible to deflect tons of questions on it on every single call and they need to come up with another way for them to grow their numbers quickly which is why I think they've decided to go this route. I think acquiring a water park for less money with better margins makes a lot more sense for them right now than purchasing a theme park. They'd do it if the right opportunity presented itself but I don't think it's entirely likely, at least not in the United States.

I've listened to every Six Flags dating back to Shapiro - they have been transparent about Vietnam. Explaining land issues, payment issues, government issues is far from deflecting questions. Don't think its an embarrassment thing - things happen and it was all out of their control. The analysts were more concerned about if the deal was going to be picked up and thus give the company extra cash so they could adjust forecasts. But they've been talking Vietnam issues for several months now - so saying they all of the sudden decided to add a new strategic pillar because of one international deal is a stretch IMO.

As for the REIT there were some tax issues that could present themselves its not like they just decided one day to give it up. It is the latest trend by companies and the analysts pressured them into looking into a year or so ago. They decided it didn't make business sense.

And, they said acquiring or leasing new parks would be in North America. Consider they just went the route of Mexico, I would disagree with your statement it isn't happening in the US since they specifically said it would be near to current parks.

Bill is killing this thread. I barely need to say anything. I will point out a few things:

-There's been an explosion in the indoor water park market across the US, but Great Wolf Lodge lost a ton of money and wound up being bought up on the cheap by Apollo. That business model rides with the success of attached hotels, and Six Flags' capability to operate hotels is at best suspect.

-Hotels can be enormously profitable enterprises. However, hotels are not integrated into the Six Flags corporate structure well at all. That's a lot of internal stuff that needs to be created in addition to the actual physical hotels. Also, there's no actual evidence of market demand for a Six Flags branded hotel anywhere.

I think water parks would be the wise thing to invest in and I'm sure they already know that. I have no idea why Six Flags would buy FECs or really small parks. I can't for the life of me picture how buying a Castle Park or Clementon is going to do anything for them without significant investment in new rides and attractions those places have no room for.

^ They answered that on the call as why to buy a dry park. They can leverage their existing infrastructure to be able to operate the park at a larger margin all the while allowing them to push up season pass sales by making a better value out of having more to offer. They mentioned they aren't looking at failing parks, but rather managing parks where their (Six Flags) large scale CRM, marketing, sales, and built in fan base can be used.

^ They answered that on the call as why to buy a dry park. They can leverage their existing infrastructure to be able to operate the park at a larger margin all the while allowing them to push up season pass sales by making a better value out of having more to offer. They mentioned they aren't looking at failing parks, but rather managing parks where their (Six Flags) large scale CRM, marketing, sales, and built in fan base can be used.

I entirely get the rationale. The issue is that unless the park is fairly well established and built out, it won't have much of a fan base to generate that season passholder increase without significant capital investment. In which point, you might as well start building more indoor rides at existing parks and extending the season. Bill is right: it isn't that Vietnam falling through caused them to make this decision, it is that they're starting to hit the wall in terms of growth with their strategy. They can't increase season pass purchases by another 40% over the next 5 years without having more gates. It isn't possible. But those gates cost money, which is money they don't have, which is money they need to borrow. And they'll need to borrow a lot of it to buy/lease established parks with visitor bases or if they buy smaller parks that need capital expenditures. And to be frank, there ain't a helluva lot of them any more. They ran probably half of those places out of business.

Water parks as complements to their own dry park offerings make the most sense. Maybe they can take over a couple of struggling parks out there like Alabama Adventure, Sea World San Antonio or Mount Olympus that fit this bill, but we aren't on the verge of some great new wave of Six Flags dry park acquisitions.

^ I don't understand why Vietnam has anything to do with this and why it keeps coming up. They been mentioning issues with that park for a while. I agree with you it isn't a issue, but disagree with Bill that it has caused them embarrassment and the reason they are looking to acquire parks. They said they are going to make "several" international announcements "very soon" - I think that will more than make up for the Vietnam contribution to their project 600 EBITDA.

^ I don't understand why Vietnam has anything to do with this and why it keeps coming up. They been mentioning issues with that park for a while. I agree with you it isn't a issue, but disagree with Bill that it has caused them embarrassment and the reason they are looking to acquire parks. They said they are going to make "several" international announcements "very soon" - I think that will more than make up for the Vietnam contribution to their project 600 EBITDA.

I don't think Bill said that it was the sole or primary driver for that decision. And perhaps they do have those announcements, but they can't count that money as part of "Project 600" until the check is cut. Also the idea was brought in specifically on the call as "water park acquisition" and discussion of buying/leasing water parks vs. theme parks was probably 10:1 in favor of water parks. It seems pretty clear that they are really looking at water parks.

Bill, back to the Lake George Great Escape Hotel, I imagine they're STILL hurting from all of the negative publicity and all of the articles when you search for them on the web from the big Noro outbreak, lawsuits, etc. Fun fact: If you type in "Great Escape Hotel La...." the fourth thing down that autofills is bed bugs!

Looks like SF is already implementing their new waterpark strategy. They just signed a deal to operate Waterworld California near SFDK, which was once owned by SF.

http://www.businesswire.com/news/home/20170427006844/en/

Edit: ^ you beat me to it.

The waterpark is owned by EPR - the company that just purchased that and a bunch of other parks (Darien, Elitch, WildWaves) from CNL. In the sale details in November it was stated that Premier parks would acquire the rights to operate Waterworld. Guess that deal fell through?

Waterworld makes a lot of sense due to its proximity to SFDK. Of the remaining parks EPR was going to lease to Premier (Magic Springs, Myrtle Waves Water Park, and Wild Waves) none are very close to other SF parks.

Six Flags has sent us a press release confirming their agreement to operate Waterworld California, a water park near Six Flags Discovery Kingdom that Six Flags previously opened and operated.

Six Flags Entertainment Corporation (NYSE:SIX), the world’s largest regional theme park company, today announced it has entered into an agreement with EPR Properties, owner of Waterworld California, to operate the water park located in Concord, California. Waterworld California, formerly owned and operated by Six Flags, is Northern California’s largest water park and is located 18 miles southeast of Six Flags Discovery Kingdom. The agreement is subject to approval by the City of Concord.

 

“This is an exciting new venture and a great opportunity to provide families with more entertainment options in this important market,” said Six Flags President and CEO John Duffey. “Guests in Northern California will now have the opportunity to enjoy two beautiful Six Flags parks. This is truly a win-win, as we welcome our 20th property—Waterworld California—back into our family of parks.”

 

The 30-acre Waterworld California features more than 35 water attractions, including the region’s largest wave pool, an interactive children’s play area and its newest offering—Break Point Plunge. This heart-pounding, 270-foot long looping thrill ride launches riders in a capsule from a height of more than six stories. Other extreme slides include Honolulu Halfpipe—a mammoth curved tube slide and Cliffhanger, one of the park’s signature speed slides.

 

Waterworld California opens for the 2017 season on May 13. Six Flags Discovery Kingdom is now open Fridays, Saturdays and Sundays and opens for daily operation, beginning May 26. For more information, visit http://www.sixflags.com or http://www.waterworldcalifornia.com.

Exciting News! Just to make sure everyone remembers though, North America includes the US, Canada, and Mexico. (And Greenland) So every time the company says North America just keep that in mind.

Fantastic News! I wonder if Six Flags is planning on purchasing more of their former properties back

Fantastic News! I wonder if Six Flags is planning on purchasing more of their former properties back

Judging by the amount of complaining in the Darien Lake thread, it sounds like that park could benefit from Six Flags taking it back under its wing. Sure, it would receive cloned rides, but clones are better than nothing.

Fantastic News! I wonder if Six Flags is planning on purchasing more of their former properties back

I kind of hope they buy back some of their old properties like Elitch Gardens, that park is really sad, being their newest ride is a used, trailer mounted swing ride. I would love to see them buy back Darien Lake, that park is depressing as their newest ride is a Super Loop from 2015. And most of all, I would love to see them try and buy back Six Flags New Orleans. I know it would be a stretch, considering the city is probably not very trusting of them, but I think it is possible. They have recently rejected just about all offers from the park (and all three of the offers were more than what the property is worth), because the city said those companies have the finances to buy the park, but they don't have the funds to back their projects. I mean, Six Flags has the immediate funds to buy and rebuild the park. Imagine if they RMC'd the Mega Zeph!

Elitch Gardens back under the SF banner would be interesting . . . . especially with Fright Fest and HITP (even in late September/October, I know the temps in Denver can dip low)

Six Flags New England will be doing HITP this year. Cold weather doesn't seem to be an issue.

And most of all, I would love to see them try and buy back Six Flags New Orleans. I know it would be a stretch, considering the city is probably not very trusting of them, but I think it is possible. They have recently rejected just about all offers from the park (and all three of the offers were more than what the property is worth), because the city said those companies have the finances to buy the park, but they don't have the funds to back their projects. I mean, Six Flags has the immediate funds to buy and rebuild the park. Imagine if they RMC'd the Mega Zeph!

That would be awesome, but there is no way Six Flags will buy that New Orleans park again. It was their least profitable park while operating and, as it is, the cost of repairs would exceed the park's worth. That was the reason Six Flags cut their losses and got out of Dodge (with their hefty insurance check in hand). That was right after the hurricane. Since then, the park has been looted, vandalized, infested with snakes and gators, and left to rust in the weather for 12 years. The cost to refurbish the park would be much more now.

Now, if another company rebuilt the park into something profitable, I can see Six Flags looking to buy it again. The way it sits now, I don't think the company would touch it with a 100-foot pole.

I know this might not happen, but it's possible that Six Flags can also buy a zoo or aquarium since they have experience with animals (SFDK, SFGAdv, and SFWOA). Six Flags could possibly buy a zoo and transform it into something similar to SFDK.

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Elitch Gardens back under the SF banner would be interesting . . . . especially with Fright Fest and HITP (even in late September/October, I know the temps in Denver can dip low)

I live in Colorado, New season pass holder this year. I use to do season passes when it was Six Flags Elitch Gardens, and I can tell you this, the park is still pretty nice, in decent shape, but I believe it's best years were during the days when Six Flags owned the park. I would love to see the park be purchased again by six flags and invest in some new marquee rides! Currently the park was recently purchased in 2014 by and investment group including Kroneke Sports and Entertainment. They have invest new rides, but nothing amazing. They have a new 17 story swing called the "StarFlyer" and a new slide called the " Mega Wedgie" which looks pretty identical to the same slides they had before in the same spot.

Finger crossed that Six Flags would look at Elitch Gardens again!

Fantastic News! I wonder if Six Flags is planning on purchasing more of their former properties back

They didn't purchase this property, they are just managing it. It is not owned by Six Flags.