Written by Robert Niles
Published: August 31, 2004 at 1:42 PM
The amusement park company has struggled with flat attendance, poor customer reviews and crushing debt payments over the past few years. Now two prominent stockholders have declared the intent to seek changes on the company's board of directors.
Microsoft head Bill Gates and Washington, D.C. NFL franchise owner Dan Snyder each have filed documents with the U.S. Securities and Exchange Commission declaring their possible intention to seek representation on the company's board.
As TPI reported two years ago, Gates owns a significant stake in the company, now up to 11.5 percent of its common stock. A filing made public today on the SEC website today states that over the past few years Gates has "become increasingly dissatisfied with the financial performance of" Six Flags. It also states that the Microsoft chairman may approach other Six Flags stockholders to discuss problems with the company, and could seek to elect a new member to the board.
One of those stockholders could be Snyder. The NFL owner has purchased 8.8 percent of the company in recent months. His SEC filing this week states that Snyder bought into the company because he thinks the stock is undervalued. But the statement also criticizes the company's management, accusing it of failing "to implement measures to increase revenues and decrease expenses, and its failure to do so has caused the Company to be continuously outperformed by its peers in the amusement, recreation and leisure industry."
The filing states Snyder "may consider seeking representation on the Company's board of directors in the future."
Six Flags has performed dismally in recent years, thanks to a debt burden the company took on to finance its expansion in the late 1990s. When a recession and the 9/11 attacks cooled the tourism market, Six Flags could no longer grow fast enough to make its debt payments. So the company scaled back its development of new rides, and sold parks to raise cash.
Demographics could help Six Flags. With the children of the baby boomers aging into their teens and early twenties, American consumers are more likely to look for the thrill rides Six Flags specializes in than the milder family attractions competitors like Disney offer. But 9/11 convinced many Americans to eschew trips across the country to places like Orlando in favor of vacations closer to home. And Six Flags' string of regional amusement parks could not take advantage of that opportunity, either.
Gates' track record as a corporate manager is unsurpassed, building Microsoft from a college-room project into the world's most powerful technology company. He is a good friend of billionaire Warren Buffett, and has been considered a shrewd investor, often following Buffett's lead. However, no SEC filings reveal that Buffett has taken any significant stake or interest in Six Flags.
Snyder's record is mixed, compared with Gates'. The NFL owner built his fortune, estimated by Fortune.com at $740 million, in marketing and advertising. But since he bought the Washington franchise, the team has struggled, playing miserably at times, and Snyder has to fire or buy out several head coaches. This year, Snyder looked to the team's past, hiring legendary coach and current NASCAR team owner Joe Gibbs to return to coach the team.
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