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The BLOGFlume—Oh Danny Boy
What happens when an NFL owner makes a hostile takeover of a regional theme park chain?
By Russell Meyer
I don’t know if business news is just slow, but the Washington Post has recently written a series of stories about Daniel Snyder seeking to take control of Six Flags. For those of us in the Washington, DC area, Snyder is an infamous character, more likely to gum up and run a corporation into the ground than bring it into prominence. This makes the first Washington Post article all the more funny: “Snyder Sees Six Flags Flying High as an Empire Similar to Disney.” It does seem likely that the Six Flags will soon see a major change at the top, but I certainly don’t see using the words “Disney” and “Six Flags” in the same sentence when talking about the best theme parks in the world. Daniel Snyder has done quite a bit with his investment into the Washington Redskins, and the value of the team has risen since his $600 million purchase of the team. However, a lot of the increased value of the team has come at the expense of fan loyalty. Snyder’s desire to create more and more wealth has created a fan experience that has more hoops than an incredible dog challenge obstacle course. Since Snyder has purchased the team, fans have paid more for tickets to a stadium that I affectionately call the erector set (it was built in the span of one year) that has very little charm or architectural style. Not only that, but in the drive to make more money, Snyder has increased the stadium’s capacity by adding seats that have view about as good as watching a Red Sox game from inside the green monster. Add to that the absurd parking fees, Snyder’s attempt to keep fans from walking to the games from anywhere outside the stadium parking lots, and a team that has seen more personnel changes than the 1990’s New York Yankees; and you have the recipe for fan malcontent.
Does this mean that Snyder will ruin Six Flags?
Probably not, but his track record in the NFL does not indicate that success rides on Danny’s coattails. However, Snyder is going into this hostile takeover with some heavy hitters at his side. Mark Shapiro, former ESPN executive, and Bill Gates are likely to assist Snyder at taking over the company. Despite the corporate “poison pills” that stand in his way, with Gates and Shapiro, Snyder will likely not have too much trouble clearing the hurdles. With a lot of money, and friends like Bill Gates, Snyder should be able to absorb and defer most of the Six Flags debt, leaving the company wide open for the taking. Once Snyder has completed the transaction, likely after a lengthy court battle, Six Flags will be his. Now what will he do with it?
Six Flags has finally reached a point where it is no longer treading water, and is actually making a profit. However, the parks are far from what a theme park connoisseur would call great. Poorly trained employees, poor security, lack of consistent and detailed theming, and overall poor management has riddled the chain for years. Can one guy really make that much of a difference? If Daniel Snyder is willing to whittle the chain down to a few major parks (8-10) in the biggest markets, the profit from the sales of the smaller parks could be used to improve the remaining parks. The smaller parks have caused a huge burden on the chain with operational costs that are barely outpaced by returns. Also, since the chain is not able to add new attractions to the smaller parks every year or two, the parks lose the public’s interest. Six Flags has made a concerted effort recently to try to add attractions to every park, but many of the additions have been minor, and mostly limited to Tornado waterslides or small flat rides. With 30 parks around the world, it’s difficult to make everyone happy, and as the most successful park chains have demonstrated, if it’s worth the money, people will travel to the ends of the earth to experience a good time. Therefore, if Snyder wants to succeed, he needs to trim the fat, something he has not been able to do as an NFL owner, with a payroll that more resembles a bulging offensive lineman than a lean speedy defensive back. Sadly, the Six Flags Kentucky Kingdoms of the world would need to be sold, so that the focus could be placed in the major markets.
What parks would remain, and what would happen?
By eliminating the smaller parks, and hopefully selling them to local ownership to continue operation, Six Flags could focus its entire investment into a few parks, something that was already beginning to happen. Six Flags Great Adventure would probably remain the “flagship” of the franchise, and continue on its path to become a “resort-like” destination with the addition of a hotel, and more year-round entertainment options. Six Flags Magic Mountain would also gain more attention to try to win back fans it has lost over the fast 5-8 years. Six Flags Over Texas, Six Flags Over Georgia, and Six Flags Great America would also get major investments. In a way, Daniel Snyder’s way of thinking will probably be the biggest help to the franchise. His financial wizardry in determining an admission price just barely far enough out of the average person’s reach to make them work hard enough to buy the tickets could turn the parks from gang-bang haven to suburbanite paradise. Everyone notes that one of the primary reasons for the parks to be in such disrepair and neglect are the dirt-cheap season pass prices, and endless single-day admission discounts. Don’t expect any of those problems with Danny running the show. No more $50 season passes, or $10 weekday specials. And that $10 parking is likely to be a thing of the past too. By no means is Snyder a financial genius, and these moves would likely create more enemies of Six Flags than happy guests, but the end result could be theme parks that will be cleaner, less crowded, and filled with employees who will actually know and enjoy what they’re doing, because they’ll be getting paid better.
How long will this take?
This is definitely not an overnight job, and I think Snyder recognizes that this potential purchase is liable to take a few years to sort out. Depending on how fast he can trim the fat, and come up with a legitimate plan to revamp the mediocre chain will determine how fast Six Flags will be in his control. I think 5-10 years is not out of the question. Can Snyder really make a difference? After taking the time to really think about what he would do, and the people that he’s surrounding himself with, he may be able to make a real difference as owner of the chain. He is probably going to anger a lot of fans who have been spoiled by the dirt cheap prices and parks they can get into from coast to coast. However, as we all know, you have to go through some growing pains before you can be successful. Daniel Snyder wants Six Flags to compete with Disney, and the shrewd (if vicious) way that he thinks is just the way to take on the theme park goliath head-on.
From Russell MeyerIt seems that Six Flags has thrown a huge monkey wrench into Snyder's plans to acquire the company through stock purchases. Six Flags has put itself up for sale. San Fransisco Chronicle 8/25/05
Posted via 220.127.116.11 on August 25, 2005 at 9:06 AM (MST)
Through stock purchase, Snyder probably would have been able to get the company for around $600 million. It is now likely that there will be an auction process where the value of the company will likely supercede the current market value of $660 million. Six Flags has invited Snyder to bid for the company, but they are soliciting other to bid up the company's value to make the purchase undesireable for Snyder.
From Robert NilesPerspective here: Four Legoland parks, the most-attended of which fails to clear two million guests a year, just went for $460 million.
Posted via 18.104.22.168 on August 26, 2005 at 11:47 AM (MST)
From Russell MeyerI think the actual potential sale price is a little deceptive since the buyer will be saddled with $2 billion in debt.
Posted via 22.214.171.124 on August 26, 2005 at 12:33 PM (MST)
From Derek PotterSnyder still is the star bidder in the sale. I still dont think he would fare any better at creating a good theme park or an operation.
Posted via 126.96.36.199 on August 26, 2005 at 8:05 PM (MST)
I guess in Six Flags case, there's no better way to increase your stock value than announce a sale.
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