Vote of the week: Who should buy the SeaWorld and Busch Gardens theme parks?
Could SeaWorld soon become Six Flags Over the Sea? According to a Reuters report, Six Flags is one of the companies looking at buying SeaWorld Parks and Entertainment
, as the owner of the SeaWorld and Busch Gardens theme parks approaches its initial public offering.
We've known that Blackstone Group, the private investment group that bought SeaWorld for $2.3 billion in 2009, has been looking to cash out. Reuters broke the story about SeaWorld's IPO last month, and now the wire service says that SeaWorld might be entertaining offers to buy the whole thing, instead.
The Reuters piece specifically mentioned Six Flags and Apollo Global Management, which recently bought Great Wolf Resorts. But a sale to Apollo would be exchanging one private equity owner for another. You've got to figure that, one day, Apollo would want to cash out, too. So where does SeaWorld end up in the long term?
With 23.6 million visitors in 2011, according to the TEA/AECOM theme park attendance report, SeaWorld Parks and Entertainment attracted nearly as many visitors as Six Flags, which drew 24.3 million that year. But SeaWorld does not see itself in the same class as Six Flags. Speaking with its managers, it's clear that SeaWorld aspires to take on Universal and Disney, which attract millions more visitors a year and can draw upon the deep pockets and intellectual property of parent corporations.
SeaWorld needs to get bigger to play with Disney and Universal, which suggests an acquisition or merger with some other entertainment firm. But which one?
Let's look at the possibilities:
The Walt Disney Co.
Disney's never bought another company's theme parks, so this seems an impossibility. If SeaWorld had built four-star, convention-friendly hotels at each of its properties, I suspect that Disney would have given SeaWorld a close look, simply as an option for a substantial expansion of DVC. SeaWorld/Busch Gardens hotels and theme parks could have been popular options for DVC members looking beyond Orlando and Anaheim. But SeaWorld didn't get into the hotel resort business, so I think you safely can scratch Disney from this list.
The owner of the Universal theme parks just wrote a big check to Blackstone, buying out its half of the Universal Orlando Resort. But the two chains would appear to complement each other creatively, with Universal developing attractions from the worlds of fantasy and SeaWorld creating ones from the world of nature. Universal Orlando and SeaWorld Orlando have packaged tickets in the past, and coming together under the same owner would help create an even more compelling challenger to Walt Disney World. But what about the rest of the chain? Universal Studios Hollywood and SeaWorld San Diego stand too far from each other to generate much synergy. And I can't see that Universal has any desire to enter SeaWorld's other markets. Universal doesn't have a timeshare product like DVC.
The Reuters story estimates SeaWorld's market cap around $4 billion, which would make it more valuable than Six Flags, which has a market cap around $3.3 billion. So stop me if you've heard this story before. Premier Parks' leveraged buyout of the larger Six Flags chain (whose name it took) nearly sunk the chain, ultimately leaving it in bankruptcy. New CEO Jim Reid-Anderson has gotten Six Flags' finances in order, but does the chain really want to jeopardize its new-found fiscal health with what would have to be another leveraged deal? Wouldn't SeaWorld's building and attraction standards suffer with an over-leveraged new owner that didn't exactly have a sterling reputation for thematic quality in the first place?
That said, the geographic markets line up well here. The only markets where both chains have parks are San Antonio and Southern California. In SoCal, SeaWorld San Diego and Six Flags Magic Mountain stand more than 100 miles apart, so there's not much synergy there. But SeaWorld San Antonio and Six Flags Fiesta Texas could be packaged into an attractive two-park ticket. And would Six Flags executives or roller coaster fans salivate more over the prospect of Busch Gardens Tampa becoming the long-rumored Six Flags Over Florida?
With a market cap of just $2.0 billion and fewer annual visitors than SeaWorld, Cedar Fair also would be trying to buy a chain bigger than it is. Cedar Fair made a big acquisition of Viacom's Paramount Parks not too long ago, so it's hard to imagine Cedar Fair coming up with the cash to pull off an even bigger deal for SeaWorld. And the markets don't line up as neatly as they do with Six Flags -- what would happen with Kings Dominion and Busch Gardens Williamsburg under the same owner? That said, Cedar Fair must covet SeaWorld's license with Sesame Street, which would represent a huge upgrade over the moribund Peanuts franchise for its expansive kiddie lands. New Cedar Fair CEO Matt Ouimet is a veteran of Disney and Starwood, so he knows world-class theme parks and hotels and might be able to do wonders with SeaWorld's assets. If only he had the cash.
Merlin is the world's second-biggest theme park chain by attendance (behind Disney), and has experience owning animal attractions with its SeaLife aquariums. Merlin's Legoland theme parks offer an education-friendly message that would complement SeaWorld well. But there are two huge challenges blocking this deal. First, Merlin's policies prohibit the type of animal performances SeaWorld's known for. And, second, Merlin's biggest owner is… Blackstone. Blackstone's looking for a payday here, not a journal transfer. Forget it.
How about an entertainment company that's not yet in the theme park business? If any of the nation's top cable channel owners wanted to challenge Disney and NBCUniversal by expanding into theme parks, Discovery Communications buying SeaWorld would seem the most logical thematic fit. The creators of "Shark Week" owning SeaWorld? With Discovery Channel and Animal Planet in the corporate portfolio, synergy abounds with this deal. This would also allow SeaWorld management to stay in place, while giving the company some additional financial resources to expand into hotels and TV-themed attractions. C'mon, who wouldn't want to see a Mythbusters theme park show?
Your other major cable-channel companies are Time Warner, Viacom, News Corp, and Scripps, but Time Warner and Viacom abandoned the theme park business in the past, selling Six Flags and Paramount Parks, respectively (see above). I cannot imagine SeaWorld's environmental messages fitting into the News Corp portfolio, either. That leaves Scripps, which has a market cap of $8.8 billion, but Food Network and HGTV aren't nearly as complementary to SeaWorld as Discovery's properties.
So for the sake of this little hypothetical, let's assume that one of these companies someday will either own or be owned along with SeaWorld Parks and Entertainment. Which company would you like to see become SeaWorld's new home? To keep us with five options, I'm eliminating Merlin and Scripps, leaving you with a choice of Disney, Universal, Six Flags, Cedar Fair and Discovery.
Please tell us in the comments why you chose the option you did. And thank you, as always, for reading Theme Park Insider. Have a great weekend!
Cedar fair seems to be small enough to want the parks, but big enough to bring up the cash
"CEO Jim Reid-Anderson has gotten Six Flags' finances in order"- that statement couldn't be farther from the truth.
Don't forget that Blackstone still might move forward with an IPO for SeaWorld, making them their own pup locally traded company.
a few points that mentioned on this discussion from the boards already:
Blackstone could merege Merlin and Seaworld and sell both companies through an IPO.
According to Reuters the two companies in early talks to buy Sea World/Busch Gardens are Apollo Global Management LLC and Six Flags Entertainment Corp.
I selected Disney. Disney's own parks are doing quite well and they are constantly expanding to new markets, but it can take advantage of SeaWorld to good effect. With Animal Kingdom, Disney isn't afraid of exhibiting live animals; however, SeaWorld will have challenges that Disney may or may not be prepared to handle. Thus, it must decide if the operations make sense.
The problem with the IPO route is that it doesn't allow SeaWorld to get bigger, to compete with Universal (at least) on a somewhat more equal footing. The current IPO might not raise enough money to cover the cost of the Antarctica expansion. Subsequent offerings for the whole value of the company would provide a welcome boost, but I don't see where they capitalize SeaWorld to the level where it can be a serious, ongoing competitor to Universal and Disney. Six Flags and Cedar Fair surely aren't, at comparable capitalization levels.
Here's another complicated, yet somewhat logical, scenario: A split sale.
Robert Niles writes: "The current IPO might not raise enough money to cover the cost of the Antarctica expansion."
I only have one word to say about Six Flags buying Busch Gardens and SeaWorld.
Interesting idea about a split sale...
I voted for Discovery just because it seems more "right" from a nature/conservation aspect, but I would LOVE it if SeaWorld and Busch Gardens joined the Universal family! As for "Six Flags Florida" ....Dear God NOOO!
Optimally, Sea World Parks and Entertainment should be their own entity. As a proud employee of Busch Gardens I feel that a sale to a company that focuses more on roller coasters than the whole park experience would be a travesty' BGW was voted by National Amusement Park Historical Association as the "World's Most Beautiful Park" for the 22nd consecutive year! I have never seen a Paramount park, an Universal park, or a Six Flags park on that list. I have visited many parks, to include Disney properties, and have not seen any place that pays as much attention to cleanliness and overall asthetics as BGW.
I would not ever want to see Six Flags purchase Busch Gardens. Not ever. I think that what Six Flags represents and what Busch Gardens represents are worlds apart, and Busch Gardens would lose everything in that process.
I think Disney should purchase the parks. I live close to Busch and I am really tired of all the coasters, at least with Disney they have rides that appeal to everyone. I do enjoy the animals, but I also like the rides as well. I had a season ticket to Busch and got rid of it for that reason. I would take Disney, and Universal anyday compared to Busch Gardens.
I'd suggest none of the major theme park operators go for SeaWorld Parks and Entertainment.
"And would Six Flags executives or roller coaster fans salivate more over the prospect of Busch Gardens Tampa becoming the long-rumored Six Flags Over Florida? "
I'm worried about Sesame Place. What would Six Flags do with Sesame Place. I work there and do not what to lose my job
How about Herschend. They own or manage 5 smaller parks and 2 aquariums. They would be probably not have the capital by themselves. But in conjunction with another investor, they bring the operational skills.
While I have only visited Busch Gardens Williamsburg, Tampa, and Seaworld Orlando, I think it's clear that the vision of what a park should be for Seaworld Entertainment is vastly different from that of Six Flags and Cedar Fair. Busch Gardens has striven to stay ahead of the curve on not only rides, but overall guest experience.
Also, I abstained from voting because I'm waiting for a better option.
I always have wanted to see a Starbucks park. The Sea Worlds and Gardens were run great for 30 years by a beverage company, why not Starbucks, Coke, Pepsi or Seagrams?
Anybody, just not Disney, competition please, Disney is already big enough as it is.
Can't see Disney going for this. Nor do I want them to, considering the current state of WDW. As far as Six Flags goes, anyone remember Six Flags Ohio, part of which included the former Sea World Ohio? Nuff said.
I think i will buy it, I will ride the dolphins into the sunset every evening while all of you look on in jelousy.
I've always wanted to see a Starbucks park. Considering that the Sea Worlds and Gardens were owned by a beverage manufacturer for 30 years, I'd consider Starbucks, Coke, Pepsi or Seagrams.
Anon Mouse said "I selected Disney. Disney's own parks are doing quite well and they are constantly expanding to new markets"
SeaWorld Ohio was a failure before Six Flags purchased it. If it hadn't been, Anheuser Busch would've probably not sold the park. It's hard to operate a seasonal marine animal park. The operating costs (feeding, maintaining and training animals) continue year-round and yet the money only comes in when the turnstiles are open. SeaWorld was happy to rid themselves of that property while holding on to the only prized asset that park had- the orcas.
I honestly can see Disney going for them this time around. Especially Busch Gardens Willamsburg and the Seaworld parks. Busch Gardens Tampa could be sold off to another company since Busch in Tampa is close. Only time will tell with this one.
i have worked for ceder fair and its not that bad of place to work if cf buys sw and bg it would give cf 2 more year round parks but the bad thing is there gs needs a lot of work to get to uso/ioa and disney gs for me six fags oh i mean six flags would hurt orlando six flags safety for the guest and sea life will hurt the parks and money cf dont know any thing about sw and sae life six flags the same uso/ioa dont know mouch about sea life but they can learn like disney ak did
Busch Gardens Tampa is not what it used to be after the acquisition by Blackstone. Blackstone sucked money from the park every year cutting Budgets and giving papers to 120 experienced employees thinking it would make a difference. Profit! Busch Gardens has gone down in quality and still survives with the good ole boy system from the 1980's. Blackstone is known to invest and run with profits at 5 years or less. Good luck to whomever buys Busch Gardens Tampa that is located in a high risk area of Tampa.
Didnt disney buy mgm studios and change the name to hollywood studios? meaning they have bought other theme parks before
Even Jeopardy allows misspellings...when the rest of an answer makes sense. I know there's people on here who will call me the "grammar police" and say it's not important, but to me it is, and reading that previous post was like reading a foreign language.
patrick moore - We all make spelling errors on occasion that can be excused, but there is no excuse for being unable to use the shift key to capitalize the first letter of a sentence or even your name or to be able to form a sentence which makes sense. I can hardly comprehend what you wrote. In fact, I don't understand it at all.
Eric, I didn't even pick up the "Fags/Flags" thing.. i guess because my eyes were hurting so much from trying to read the rest of it. Where have you gone, Manny? Come back...all is forgiven!! :)
"six flags safety for the guest and sea life will hurt the parks "
I love visiting Six Flags but I don't know if Six Flags would keep Sea World/BG as-is. I'm afraid they'd turn it into another Six Flags where almost everything is the same, same rides, same themeing. I'm afraid they'd tear down nostalgic rides like Loch Ness Monster, or take away the animal acts, etc. just to put up an SLC clone or another 'standard' SF ride, etc.
I selected Discovery Communications. This will ensure that the parks stay true to what the represent. It's the perfect thematic fit.
A SF purchase would be awful. I would hate to see BG Williamsburg turn into the same kind of rotten hole that is now the SF in MD. BGW is beautiful and nice for attendees of all ages. It is family friendly. None of these things describe SF MD.
SeaWorld Ohio was NOT a failure! To call a park that operated for 30 years a failure is ridiculous. There are two main reasons BEC decided to sell, 1). Previous land agreements with Geauga Lake prevented them from building major thrill rides, and 2). Six Flags offered BEC 2x what the park had been valued at, an offer too good not to take. However there were some top executives in BEC who thought that sale was a terrible mistake, and I agree.
Anonymous poster: "Didn't Disney buy MGM Studios and change it to Hollywood Studios?"
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