9-19-05 - Premier Parks went on a shopping spree in the late 1990s that would be the envy of any fun-lover. Among the items: Elitsch Gardens Amusement Park in Denver, Waterworld USA water parks in California and Great Escape and Splashwater Kingdom in New York.
By the time the company gobbled up the Waliby Family Parks, with locations in France, Belgium and Holland, it was pretty clear to some analysts that things were getting out of hand.
Then in 1998, the Oklahoma City-based company acquired the Six Flags chain of parks for $1.9 billion and later took on the Six Flags name. Now it finds itself saddled with more than $2 billion in debt and the company is up for sale in the middle of a proxy battle.
Ned DeWitt, who served as Six Flags president from 1973 to 1982, said the string of purchases didn't make sense.
"I think there was a mania, no question," said DeWitt, who led Six Flags when the company was viewed as the icon of the seasonal theme-park industry. "I did a lot of acquisitions when I was president, but those were all contiguous to the main entertainment of Six Flags.
"This acquisition mania put them into all kinds of properties they just couldn't bring value to."
Washington Redskins owner Dan Snyder, who has bought 11.7 percent of the company, says the company needs to be streamlined. He'd like to increase his holdings and oust the current management team, including Kieran Burke, the CEO and chairman who presided over the buying spree.
For his part, Burke points to reported revenues for the second quarter of 2005 that were 8.4 percent higher than the previous year, and attendance that increased by 6.6 percent. These reports come after years of declines in attendance and sagging revenues.
Analysts largely attribute these declines to operational problems at some parks, including a lack of attention to detail, and to an overexpansion that saw Six Flags purchase some weak amusement properties. These problems were in addition to a general downturn in the amusement park industry after the Sept. 11 terrorist attacks, a downturn that now shows signs of reversing itself.
Burke, who declined requests for interviews, said in a statement that the better recent performance reflects an investment program that has added new attractions in many parks, initiatives to improve services to guests and an advertising campaign featuring "Mr. Six," a dancing elderly man in a tuxedo.
"We are pleased with the broad-based strong performance of our parks during the first half of 2005," Burke said.
Over the first six months of 2005, the company reported revenues of $440.9 million, a nearly 10 percent increase over the previous year, but a loss in net income of more than $167 million.
Under Snyder's plan, ESPN programming whiz Mark Shapiro would come aboard as the company's new CEO and Snyder would become chairman. The proposal _ detailed in filings with the Securities and Exchange Commission _ is to get rid of properties that aren't critical to the management plan, rework the company's advertising and marketing strategies and establish a "clean, safe and fun" image for the company.
"I haven't ever met Dan Snyder ... but it sounds like he's dead on," DeWitt said. Late last month, Six Flags responded with an announcement that it was putting itself up for sale at auction. Its stock was trading at $7.30 on Tuesday, near the top of its 52-week range. That makes its market capitalization around $680 million.
The company was founded in 1961 by Texas oil baron Angus Wynne, who was searching for a cash infusion into an industrial district he was building on the dusty, sparsely populated plains between Dallas and Fort Worth. After a visit to Disneyland, Wynne found what he was looking for _ a clean, family oriented business that would provide some quick cash flow.
Six Flags gets its name from the six national flags that flew over the area that is now Texas: U.S., Texan, Confederate, Mexican, French and Spanish.
"It was a historical theme park ... the whole purpose of the six flags was to portray the architecture and layout of the different countries," DeWitt said. "We focused on natural, environmental landscapes. We really wanted to go for the quality for the kids and the fun of this new entertainment phenomenon."
Six Flags now includes 30 parks throughout North America, including parks in Houston, San Antonio and the Dallas-Fort Worth suburb of Arlington.
DeWitt said Six Flags lost the focus company founders had when they built the first park in Texas.
"It seems like they got caught up in the corporate mania of massive growth," he said. "The basic business of Six Flags is family fun, and it's not part of this crazed acquisition process."
DeWitt also believes the company offers too many discount admission schemes that reduce revenue from entry fees and forces parks to recoup those losses through the sale of gifts, souvenirs and food inside the park.
"You can only do so much of that kind of retailing without cheapening the whole experience," DeWitt said. "When you get into that heavy discounting to attract base attendance, it's leading to disaster."
Dennis Speigel, president of International Theme Park Services, an Ohio-based consulting firm, said Six Flags' emphasis on discounted admission wasn't an attempt to compete with other theme parks, but rather a short-sighted effort to increase attendance.
"In their markets, they have very little competition," Speigel said. "It was a short-term solution to how to build their attendance, but in the long run, discounting has a negative impact."
Speigel, however, said he believes the Six Flags empire can rise again and become a profitable operation and a dominant force on the theme park landscape. What's needed is a major reduction in debt, a marketing overhaul and the addition of experienced theme park operators, he said.
"(Six Flags) operators come from Wall Street and they're bright guys in terms of financing and debt structuring, but I'm not sure they're the greatest in terms of operations," Speigel said. "They do well in the Wall Street and New York investment banking community ... but that's a different playground than operating a theme park."
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