Clearing the confusion over Magic Mountain....2006-07-23
By Robert Niles: A reader writes:
Magic Mountain is a place that all of the teenagers like to go. It is like their home and they would be so depressed if Magic Mountain was going to be torn down. My first question is, why don't they just tear down Hurricane Harbor? I mean, the reasons that they are not making enough money [are] because they are spending so much on the water and they are only open in the second season (spring and summer).
Let's clear some confusion: Magic Mountain's making plenty of money. So is Hurricane Harbor. Both are popular parks (though MM could make even more money with a few long indoor or flume rides.)
The reason Six Flags is selling Magic Mountain and some other parks is because the managers who used to run Six Flags borrowed billions of dollars to expand the company in the late 1990s. And, despite the money Magic Mountain and the other parks are making, the company isn't making enough to pay off that debt.
So Six Flags needs to raise cash. And the fastest, easiest way for it to raise cash to sell off the incredibly valuable real estate that Magic Mountain sits on.
The desicion to build Tatsu was made years ago, by Six Flags' old management team, the one that created this financial mess that the current managers are trying to clean up. Even if the park does close, though, Six Flags could make back much of the ride's cost by selling it to another park, which would love to have a year-old B&M roller coaster.
Sure, Six Flags would be happy to sell the whole park to another theme park company. But there aren't many around that would have the cash to buy and operate the park. Disney and Universal never have bought another company's park in the United States. Cedar Fair already owns Knott's Berry Farm and just spend over a billion dollars to buy the Paramount Parks (including Great America in Santa Clara.) Busch used to have a park in L.A., in the San Fernando Valley, but an executive with the company told me that "the cost of rendering that park into a high-quality family attraction in the model of Busch Gardens or SeaWorld is probably beyond our means."
That's it. There are no other companies in this country with an established track record of running a park the size of Magic Mountain.
Still, closing Magic Mountain is not a done deal yet. Six Flags could choose another option to raise cash. Local politicians are thinking up ways to throw millions of dollars of incentives (or, as I like to call them, "corporate welfare") at Six Flags to keep Magic Mountain open. And if real estate values keep dropping in the L.A. area, Six Flags might decide that it's not worth letting go of the park at this time.
But if Six Flags does sell Magic Mountain to someone who closes it, trust me, theme parks and developers around Southern California will race each other to capture the loyalty (and dollars) of Magic Mountain fans. Universal Studios Hollywood and Knott's Berry Farm will introduce new rides to attract those fans. Local water parks, malls and theaters will try to lure them to hanging out at their properties as well.
And even if Magic Mountain closes, I wouldn't be surprised to see a deal where Hurricane Harbor remains open (though under a different name) as the anchor of a new retail/entertainment complex built on Magic Mountain's land.
In short, it's not the park's fault. This whole mess is the fault of a bunch of managers in Oklahoma City, who gambled by borrowing more money than they possibly could afford, under the mistaken notion that the value of the property they were buying would continue rising in value forever, eliminating the crushing burden of those loans.
Not those the Six Flags managers (who don't work for the company anymore) are the only people to make that mistake. Heck, many of the folks who bought homes in the L.A. area over the past four years might soon find themselves in the same situation....
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