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Six Flags Looks to Scale Back Expansion

Six Flags is looking to cut back on its capital investments over the next few years, as it slows its expansion and conserves cash to pay off corporate debt.

From Robert Niles
Posted June 30, 2002 at 10:03 PM
Don't expect to see many new innovative rides at a Six Flags park near you during the next few years.

Over the past couple weeks, I've been talking to several sources in the financial industry. And they all tell the same story: Six Flags is looking to cut back on its capital investments over the next few years, as it slows its expansion and conserves cash to pay off corporate debt.

Six Flags' Chief Financial Officer told one investment professional (who also happens to be a member of Theme Park Insider) that the company plans to scale back its annual capital expenditure (the money it spends on new buildings and equipment, including rides) from $340 million last year to $125 million a year.

That amount would buy you just over one Spider-Man ride, and six Xcelerators. Given that Six Flags has more than two dozen theme parks around the world, plus several other water parks, that's not much money per park.

Why would Six Flags do this?

Remember that Six Flags plays to two audiences: Theme park and thrill ride fans, like the folks on this site, and investors. Winning acclaim from roller coaster clubs and theme park Web sites won't keep the company in business if investors don't see a lot of black ink on the bottom line.

Six Flags is a profitable company, according to its annual report. But it is facing substantial debt payments, starting next year. Six Flagts took on several million dollars in debt to finance its purchase and renovation of more than a dozen amusement parks around the world over the past four years. Now, Six Flags must show investors that it will be able to make those debt payments, while still delivering them a profit.

Can Six Flags do it? Maybe. It's projecting $100 million in profit this year, for a 9 percent return. Demographics play into its favor--the Baby Boomlet generation is now in its teens and early 20s, a better fit for Six Flags than the more family-oriented Disney and Universal parks. And analysts believe Six Flags can increase its cash flow by three or four percent a year--if the company keeps its capital expenditures down.

And that's the problem. For theme parks fans, and, ultimately, the company.

"Your revenue's not going to grow unless your capital expenditure is sufficient," our analyst said. "What is sufficient is the question. So you are probably going to have to say $175 to 200 million, in which case you have okay, but not fantastic (income)."

Simply put, Six Flags isn't going to be able to increase its attendance if it doesn't offer any new rides. The company simply doesn't have a line-up of "evergreen" rides, like Disney's Pirates of the Caribbean or Haunted Mansion, that folks will visit loyally year after year after year. Six Flags' young visitors want thrill rides--and the newer and more unusual, the better.

Without a fresh supply of those innovative rides each year, a Six Flags park will not rise to be a "must-see" destination for even casual amusement park fans. It will be, at best, a fall-back for a day's entertainment, competing with movies, the mall and the PlayStation.

A generation ago, Six Flags wasn't the ubquitous amusement park chain it is today. It operated a handful of parks around the country, including the flagship original Six Flags Over Texas, that were well respected and, by some, even thought of as superior to Walt Disney World.

The chain grew over the years, by buying established theme parks such as Magic Mountain in Valencia, Calif. and Great America in Gurnee, Ill. But the explosive growth started in 1998, when a little-known amusement park chain from Oklahoma, Premier Parks, bought the Six Flags chain and its name.

That's how Premier's chain of lightly regarded parks, including Elitch Gardens in Denver and Kentucky Kingdom outside Louisville, came to bear the Six Flags label.

Premier has upgraded some of the sorrier parks in the chain, to its credit. And that's part of the reason why the company's capital expenditures have swelled in recent years. But with its business plan for the upcoming years, now can see what Premier's long-term vision for Six Flags is.

It is not to continue investing and returning Six Flags to its glory years--where it rivaled even Disney for quality and value. It appears more likely that Premier intends for its Six Flags to become the McDonald's of the theme park industry: Simple, basic, everywhere and pretty much the same from location to location. Now that the brand is established in most major markets--it is time to milk it.

Perhaps Six Flags can make this strategy work for itself, and its investors. And maybe those thrill ride fans who don't expect much more than a few stomach-churing coasters. But this strategy won't work for the theme park fan who's longing for something new exciting now that's Disney's fallen asleep. They should, and will, to continue to look elsewhere to spend their hard-earned vacation time and money.

RELATED LINKS:

  • Theme Park Insider's Six Flags Ratings and Reviews
  • X's Failure Threatens Many in Theme Park Industry


    Comments in chronological order. Most recent at the bottom. Scroll down to respond.

    From Carey Lynn Holtsclaw
    Posted July 1, 2002 at 10:11 PM
    I see this as sort of a large version of Paramount. Dew to the investment cutbacks, like Paramount, Six Flags Parks will begen to get flat rides that challenge how many times the human body can be spun upside down without vomiting.

    From Kevin Baxter
    Posted July 2, 2002 at 3:08 AM
    I don't mind flat rides. Heck, MM NEEDS about a dozen of them right now. Besides, apart from carnivals, you can't find some of the more exciting types of flat rides anywhere but at a nearby Six Flags.

    My fear is that SF will just turn into a cloning machine, even worse than Disney. That, and they will clearly just give up on what little theming they bother with now.

    I don't see this plan lasting for long, though. Like I said on another thread, Six Flags is hurting at some parks already because there are no new rides this year at those parks. Maybe if we get lucky SF will choose to focus on a fewer number of parks and sell some of the smaller parks to Busch and then those parks can get some BG-level theming. And the SF parks can get back to adding innovative rides on an annual basis.

    From Michael Ragon
    Posted July 19, 2002 at 9:32 PM
    I saw this problem comming a long time ago. I wish Premier Parks saw the same thing. Why bother trying to have lots of theme parks everywhere if they're poorly run and maintained!

    Not only that but in the past 7 or 8 years six flags has watered down all of their top thrilling rides, adding trim breaks or dercreasing the height of hills. What reasoning do they have for this? Its obviously not for medical precautions because jet pilots experience many Gs. I think its cause six flags can't afford to hire people to check and test the rides like they should. I mean look at Islands of Adventure. They have people who come in after hours everynight to fix every ride and REPAINT EVERY NIGHT! Six flags hasn't repainted in like 5 years now.

    I think six flags should simply use its alloted budjet and add more flat rides and fix up its parks some more. Cause eventually people will choose QUALITY over QUANTITY!

    From Luke White
    Posted July 21, 2002 at 2:00 PM
    I agree!!

    I just went to Six Flags Great America and it was horrible!! 4 rollercoasters were closed throughout the day and about 1/4 of the other rides were closed.

    Also their is no creavity in their parks! Yeah you can paint a rollercoaster black and call it Batman but can't you do more??

    From Bill Bickford
    Posted July 21, 2002 at 8:49 PM
    I am not a SF buff but I have enjoyed SF over Georgia many times. I also went to MM and EG with MM clearly the best. However, years ago, I remember SF over Georgia actually had a theme to it. They had many rides and shows that appealed to all family members as well as a few of their coasters. Now, it seems that's all they're focusing on and have given up on the cleanliness, theming and overall attraction of the park. They'll never compete with Disney when it comes to theming and neatness but they could at least make a claim to being decent instead of the bottom line for amusement parks.

    From Carey Lynn Holtsclaw
    Posted July 21, 2002 at 10:51 PM
    After looking at the Georgia/Texas deals, Six Flags is required to put at least 46 million into Six Flags Over Georgia and Six Flags Over Texas together yearly, until they have the option to buy. This means that these parks will not be effected that much, or not at all.

    From Denny Mac
    Posted July 29, 2002 at 9:37 PM
    this is a bad idea for six flags!

    From Anonymous
    Posted July 30, 2002 at 8:20 AM
    where did you get the deal details for Six Flags over Georgia and Texas?

    PS- My password hasn't come through from the server, sorry for the anonymous?

    Dave Mitchell
    davemitch007@cs.com

    From Anonymous
    Posted August 2, 2002 at 5:55 PM
    this scaling back is bad news to all Six Flags junkies. But I personally think that maybe SF should take the next year off of building new scream machines and put the$100million+ towards seriously fixing up the older more run-down rides, and adding some great theming to the parks. Now, my home park-SF Great America, is closing a classic (the Whizzer) for a new thrill. I'm looking forward to that new ride, but this park does need some serious help with the scenery and theming...and I know this goes for all the SF parks.

    From Anonymous
    Posted August 2, 2002 at 6:00 PM
    I know that people have always made up rumors about a Six Flags in Orlando...but maybe if they were smart enough to actaully take a good look at their competitors Universal, Disney, and Busch, maybe they'd realize that a highly-themed cross-bred Warner Brothers Movie World-Six Flags Xtreme park could really increase their profits. I mean, look at how people flock to parks with super scream-machines, and to parks with highly themed family fun attractions....put tons of these together, and your super park could become the biggest thing in Orlando...even overthrowing the Mouse and his Magic Kingdom! Mickey has begun to show his age, and Universal has been trying to fill Disney's shoes ...but maybe a brand-new face to the area could spice things up for everybody. I've heard all about "why Six Flags won't ever build a park in Orlando"...because of the competition. What? Afraid of a bit of healthy competition? Come on! Building a park down there could GREATLY increase their profits. First off, the park could be open year-round. Also, the park would almost be guaranteed to bring in at least 5 million people a year. Every park in Orlando brings the guests in, and a new park with the familiar Six Flags or Warner Brothers name could definitely draw people. Six Flags has parks all over America, and as someone stated earlier, many of these parks are beginning to look like clones. The same rides, the same thrills, nothing too new and phenominal. I say mix the thrill with the theme and build yourself a few GOOD parks in big competition areas.

    From MICKY WINKS
    Posted August 20, 2002 at 9:49 PM
    i recently visisted a sixflags property in oklahoma city. FRONTIER CITY was the name of the property. i had visited this park on several occasions during my youth when it was privately owned. sixflags has made an overwhelming improvement on the cosmetics of the park. the themeing was great and done in the usual sixflags quality. but... behind the pretty themeing....most of the rides were in need of a much needed pait job. this park has the potenetial to be a great theme park but sadly it seems to be a major victim of sf's ride exchange program. not that it's a bad thing. ive worked in the industry since 1987 and i have seen traveling shows with better looking epuipment. im not totally dogging this park....but a ride's appearance seems to relate to overal safety in the eyes of a guest. there where several rides where the lighting was either not working or missing alltogether. c'mon sixflags...is it hard to change a few hundred lightbulbs. the mindbender(chance inverter) had black grease smeared all over the gondola not to mention the entire ride it's self. the grand wheel(chance giant wheel) had several gondolas with bare fiber glass and bondo showing where repairs had been made and had not been re-painted. the silver bullet (which had been closed on my last two visits) looked rusty and run-down. (note....the foam padding on the handrails was secured with plastic wire ties). not too mention that four other rides were closed for the day. the wildcat woodie had only one three car train and could not keep up with the demand in the que line. the sidewinder (eli scrambler) had about 1/3 of its flourescent lighting missing. this park has the potential to be a major draw-string for oklahoma. but...it seems that it needs a major overhaul. the only other park that i know of in ok is bell's in tulsa. and from what i can gather ....it is in a bad state of dis-repair as well. is this just and oklahoma thing or what?????
    FRONTIER CITY had a very nice staff and appearance ... but underneith it all...it needs alot of work. it has really grown since i was a kid but.....back then it seemed that the rides were better maintained. this is sad considering the fact that the sixflags HOME OFFICE is on the same property.

    From Anonymous
    Posted August 3, 2003 at 5:44 PM
    I've been going to SFOT since I was a baby and remember as a child how neat and clean and brand new everything looked. Just the other day I continued the tradition of taking my son to SFOT and was happy to return but a little sad at the shape the park was in. For a park that makes millions off it's patrons (three dollars for a coke???) could SFOT really not afford to paint or try to keep a modicum of cleanliness? I was sorely dissapointed with the SFOT of today compared to the happy childhood memories of yesteryear. The theme park workers of my time smiled and acted like they truely loved their job and was happy to be there for you were now you get the moody teenage angst of workers who would rather be anywhere but there for you. My family did have a great time at SFOT and I will always enjoy going there but I see room for improvement. SFOT needs to bring back the pride they once had in the park that has so many memories to so many people.

    From Stephen Tuday
    Posted October 8, 2003 at 12:08 AM
    I think you hit the nail on the head with that McDonalds analogy. I have complained for years that Six Flags over Georgia is not as well run as it used to be. Six Flags is concentrating on quantity and forgetting all about quality. And in doing so, they are alienating themselves from the guests. It is extremely difficult to get a human being on the phone when calling the administrative offices with a complaint or request.
    I have been a long-time fan of Six Flags with 12 years as a season passholder and have had the pleasure of visiting eight different parks. Some parks are better than others. But I can't help but feel frustrated after watching the Discovery Channel and Travel Channel theme park specials, knowing that Six Flags does not have any of the cutting edge rides featured on many of those shows. At this point, I feel Atlanta, GA is a big enough city where some other theme park chain or entrepreneur with big investment $$$ could at least think about giving Six Flags some competition. They need it!

    From Anonymous
    Posted October 10, 2003 at 1:33 PM
    I agree that it would be very nice to have courteous staff and clean parks with SFOT once again. It seems like there aren't that many places for *family* to go nowadays. One of the great things about SFOT in the 60s and 70s is that they used quite a bit of interior creativity, such as more unique park mascots, theming (not a bunch of Warner Brothers stuff that really isn't that new or unique), etc. They brought in Sid and Marty Krofft in the late 60s, who really added an extra touch of magic to the park. If you look at the Fiesta Train ride, it was really well done, and was isolated enough within the park, that it really made you feel as if you were in another world. So, I think that Six Flags cannot put their all into this many parks, unless they have very trustworthy design teams or something who can run a small number of parks and add something special to them.

    I hope they can somehow rescue the original parks and maybe sell the others to successful regional companies. Regioinal themes are very strong in theme parks, and for example, in the northeast, Kennywood does very well with its parks, whilst in the south, Six Flags originally did very well. So...it will be interesting to see which way Six Flags turns in this crucial period.

    ~Lewis

    From James Haluska
    Posted November 3, 2003 at 4:07 PM
    I also agree with the Six Flags/Mcdonald's analogy. I do remember the old days of the early 1990's when customer service was not a lost art. Time Warner understood that a courteous english speaking staff, discounts, safe, and a well kept park went along way in bringing customers to their parks.

    From Jimmy Cron
    Posted November 6, 2003 at 1:59 AM
    I dont see what the problem is, you californians should be thankfull, i live in Sydney and the only park that is still open around us is Wonderland, it has 3 coasters
    Bush Beast
    Demon
    Beastie

    Bush beast is a short woodie, Beastie is an even shorter one and the Demon which they bill as their premiere ride, is a standard Vekoma Boomerang

    and you say you have it tough, the people that work at Wonderland have no charisma, are boring and the only person who could tell me the time when i was there was a helpful park administrator, please be thankfull that you have a great park like Magic Mountain, even though it has a lot to live up to, and is supposed to be a world class park, at least you have a Good park near you all

    As to all the other Six Flags parks i cant imagine them being worse then wonderland.

    From Anonymous
    Posted November 6, 2003 at 8:05 AM
    I think the grass may be greener on the other side of the fence..although, Six Flags Over Texas could sure do with a spiral lift Schwartzkopf speed racer coaster like Big Bend again. Its layout was just ingenious...It didn't hog one big chunk of the park, but traveled around two distinct sections..really a classic. There's really something about that one that no other has come close to.
    In a way, it's like cars...I mean, sure the new models are undeniably the result of the latest technology, but when we talk "fun" that's highly subjective, and sometimes a good cruise in a '57 Chevy with the cool interior is just as much fun, if not more.
    I'll meet y'all at SFOT with the wrecking ball for a little "reorganization.." haha. j/k
    ~Lewis

    From dan mith
    Posted May 18, 2006 at 7:12 PM
    Six flags orlando?? yes

    hey, i stayed at a hotel with a timeshare thing, and well, my parents had to attend this meeting thing where the people try to but you into something, and the hotel people told my parents that six flags is going to build a park in orlando. Its true! They are going to build it.
    the rumors were true.

    From Gareth H
    Posted May 19, 2006 at 7:46 AM
    Is there really a market for a six flags in Orlando?
    If they need to show a profit can they really invest the millions & millions (Or billion) in location, rides and advertising just to compete with an already bursting market in this area?

    Maybe a location outside of Orlando, further north perhaps, towards the Panhandle. At least that way they have an oppourtunity to catch a wider spectrum of fanatics who arn't so willing to drive though tourist countie to get to Orlando.

    Still, can't see it happening.

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