Six Flags' ambitious plans to license dozens of theme parks outside the United States appear close to collapse.
Last year the amusement park chain lost its partner in Dubai, when Dubai Parks and Resorts cancelled its plans to build a Six Flags Dubai to accompany its Motiongate, Bollywood, and Legoland theme parks. And late last month we told you about problems that Six Flags' development partner in China was having, threatening the future of those parks, too.
And yesterday Six Flags filed a report with the US Securities and Exchange Commission declaring that the company has filed a formal notice of default with that development partner, Riverside, which has stopped making required licensing payments to Six Flags.
"While the Company continues to work with Riverside and each of Riverside’s governmental partners, the eventual outcome is unknown and could range from the continuation of one or more projects to the termination of all the Six Flags-branded projects in China," the report said.
Six Flags took a negative $1 million adjustment to its revenue due to the loss of international licensing money in the final quarter of its 2019 fiscal year. Unrelated to the issues with Riverside, Six Flags also warned that its season pass and membership sales in the final quarter were lower than expected, leading to expected $8-10 million decline in revenue for the quarter relative to the same period a year earlier.
Six Flags had planned more than a dozen theme parks in China, including new park concepts aimed at various market demographics. Do keep in mind that Six Flags was not paying to build any of those parks. It simply was licensing its brand name, concepts, and site plans to Riverside, which was assuming all the development risk in building and eventually managing the parks.
But Six Flags was expecting several millions dollars in licensing fees from Riverside, so analysts and traders have been battering Six Flags' stock after learning that money wasn't likely to be paid. With the Chinese real estate bubble deflating around the world, it's hard to see how Riverside turns things around, and Six Flags' stock drop reflects that.
All this leaves Six Flags only with the planned Six Flags Qiddiya project in Saudi Arabia as its most viable expansion project outside North America right now. Again, that's another licensing deal, but it's still money to the company that it very much would prefer not to lose.
But at this point, Six Flags is batting .000 on its international expansion plans, so you can't blame anyone for skepticism.Tweet
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