Six Flags Is No Bargain Even at a Buck

by: Tyler Mayoras July 06, 2008 | about stocks: SIX    
Tyler Mayoras

Tyler Mayoras

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..or maybe I should call this -- how to do Six Flags for less than 3 bills a day.

I have two daughters and last week I took a vacation day to take them to Six Flags Great America, just north of Chicago. In years past, I have followed the amusement park industry as a potential investment, but I have never pulled the trigger. Good thing I haven't; this industry looks like a disaster and Six Flags (SIX) is the poster child.


I am a frugal shopper and check online and find a buy one admission get one free deal that runs through July 3rd. So with that discount (and a $3.00 delivery fee) my tickets are ONLY $90 (note tongue firmly lodged in cheek).

We get to the park and have two choices for parking $15 for the back lot or $25 for the front lot. Dad alone with his two girls and heavy potential for whining during a long walk to the gate -- I go with the $25.


We stayed at the park for 8 hours (12-8Pm), so we needed lunch and dinner. Again I was frugal and my girls split their lunch and dinner since the portions were huge -- still the bill for lunch and dinner was just over $50!!

Then you have the games -- of course we have to try to win the oversized stuffed animal that will end up in a garage sale 12-18 months from now. I was lucky, I only spent $20 to get to decent sized animals (BTW, go with the guess your weight or age game -- it is the easiest to win).

Of course, dad is a sucker, and I end up buying the animated drawings of each of the girls. The pricing is $15 for just a head in black and white, $20 for head and body and $25 with color. Now who is going to buy just a head -- I mean really...a floating head? Throw in the mats to keep them safe on the way home and we are at $76.


Lastly, there are the incidentals. You have to buy some ice cream, a couple of bottled waters and a churros or two -- call it another $20.

Total ring -- $281. Ouch.

That is ridiculous. Even if you take out the animated head shots, the total ticket was $205 for 3 of us. Surprisingly, we were not the only ones there yesterday. It was quite crowded with waits of at least 20-30 minutes on most rides. There are not many US families that can afford to do that more than once per summer. With food and energy prices soaring, that number is going down every week.

Now here is the truly amazing thing that adds insult to injury...in spite of those prices, this company does not make money. In fact, they lost over $200 million in 2007, and that will definitely increase this year. Now, a lot of that loss can be attributed to debt, but even so, their recurring operating income was only $76 million in 2007.


The Company has over $2.4 billion of debt with revenues of $972 million in 2007. The market cap on the stock at $1 is only about $105 million, but with all that debt the Enterprise Value is about $2.5 billion.

It definitely looks like this company needs a balance sheet restructuring probably through a bankruptcy process. I am not sure how they can charge what they charge and still lose money. Maybe they should consider cutting back on the amount of rides and options to reduce costs and then reduce ticket prices to drive demand. They probably also need to shutter a couple of these parks since there are just too many of them.

Overall the industry looks broken and strained. Consumers just cannot afford a $200 to $300 day at an amusement park!

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This article has 23 comments:

  •  
    Jul 06 08:32 PM
    If you have Redskin season tickets you would know that Dan Snyder knows no limits in ripping you off
    Reply | Link to Comment
  •  
    Jul 06 09:23 PM
    What year was that whine?
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  •  
    Jul 06 09:40 PM
    Mr .Mayoras spent 12 per hour per person and had a wonderful time, two meals included, that his family will never forget. I don't think there are many activities a family could do that would be that much fun for so little money. Disney is packed and cost considerably more. The amazing thing about the article is that Mr. Mayoras states the family had a wonderful time and the park was very crowded, yet he thinks they can not make it. It is also interesting that the coupon the company is promoting is what brought him in the park. It sounds to me as if Mr. Mayoras is doing just what SIX has had in mind with its merchandising the parks. It is amazing that he would write and article that proves them right with a negative slant.
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  •  
    Jul 06 09:51 PM
    Tyler,

    Wow! $300.00.
    Have you ever considered why the park charges you to park your car, get in, eat, play games, etc? Maybe you ought to. Lawyers who advertise to anyone who might have a bogus claim (Amusement parks are hit hard always), insurance in general, cost of rides, cost of park maintenance, always having to have new capital rides and shows (the latest and greatest is always expensive), limited operating seasons, cost of fuel and utilities - the list goes on and on. As I recall, getting into a Six Flag's park in 1985 was at least $29.00 and everything else associated with the park was just as reasonable. Have you ever been to a Six Flags park before this visit – why was this such a surprise Tyler?
    It is easy to complain about your lousy day at the park and be proud you did not invest - but for those of us who have made a life within this industry I say we stretch the budgets are far as they will go and then some to satisfy our guests.
    Six Flags in general has always been the target of buyouts and takeovers by large companies simply wanting to make a quick profit and then find it is not so easy to do - examples include Time Warner, Bally, Penn Central - but I can say "let up on Snyder and company." They inherited this grand mess and are trying to fix and shore up the company in the worst of economic times. In short, the current group of Six Flag Execs did not make the debt – they are simply dealing with the debt.
    In fact, they have reached out to as many revenue streams that do not impact guest satisfaction as possible. Streams such as sponsorships, diversification of product, content, and selling under performing assets.
    Tyler, what did you expect to pay? Let's review - tickets for three people $100.00. – was that too much? Meals - $50.00 bucks - did you think the food at a theme park was going to be less than that? Have you ever gone to a park or fair before? What about a movie - have you not noticed Pop Corn and Cokes are expensive there as well? I don't know about you but it would cost $25.00 a meal at similar restaurant. My suggestion to you is pack a lunch next time if you are that worried about what two meals will cost.
    Next, you moan and groan about the games - then don't play them! No one forced you to play them. Instead, take that money and keep it. As for parking, how much does it cost to park at Navy Pier? I think about $25 as well. If $25.00 is too much for parking then pay $15.00 and walk. To me it sounds as though you made the decision to enhance your visit – then come away and write this experience for all to see.

    I bet if you went to Six Flags in 1990 you would have paid about $300 then as well for the same experience. Go to Disney and you will pay $600.00 for a similar experience. You will also wait longer in lines at Disney. Tell me Tyler, how long did you expect to wait in lines for the rides? You should do the math in advance if you are that concerned with wait time (people have always complained about wait times – but parks can only do so much throughput – period.) - and there is limited throughput on these Six Flags Rides and Shows. A basic time motion study will render similar results as you experienced.
    Times are tough and Six Flags Stock is in the tank - but it is not the result of Snyder’s team - it is a legacy result of years of various owners, inconsistent capital programs, legal issues, and America in general spending their entertainment dollars in venues other than wholesome family theme parks. Venues such as Casino's, the internet, and malls. I know America is changing at a rapid pace - but the total loss of the Six Flags would be a huge "Americana" loss to the nation. Where would the average American family go who could not afford Disney? Pretty much nowhere as a family. –
    Steve Guy / Six Flags Stock Holder / President, EDG – a Six Flags Vendor.
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  •  
    Jul 06 11:05 PM
    nice try Tyler,what are you trying to get in at 80 cents ya dork
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  •  
    Jul 06 11:14 PM
    As a father of two, I agree that it can be very expensive for a family outing these days,but I disagree with you that Six Flags is not worth the cost. I have been a theme park season pass holder (four actually.One for each member of the family,though not Six Flags) for several years now. My kids will spend several days at the park over the course of the summer. I will often drop them off (hence no parking) with a packed lunch (saving again), and pick them up in time for dinner. They stay entertained several times a year,making the season pass a great value.They will often go with other friends, or we go as a family. But if you still think that is is over priced, then I suggest trying another venue that can offer eight hours(or more) of quality entertainment for less. Honestly, I find it difficult myself. Try a day at a ball game, especially a football game. You can barely get in the stadium for the same $300. No food or souvenirs included. And you are out in just a few hours.
    And with todays gas prices,more families than ever are choosing to vacation close to home. Gone are the long road trips of the old days. Long trips to the favorite family camp site, visits to uncle Bucks house half way across the country, or those great flights to grandmas house are just too damn expensive these days. People simply cannot afford to go far. I think we will find that as gas and air travel continue to go up in cost, those theme parks are going to look more and more attractive.
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  •  
    Jul 07 05:33 AM
    This guy is out of touch. Taking the family of 4 to Tom Petty a couple weeks ago was $450 (buy nothing in venue). Ten years ago it was about $150. Lift tickets at Heavenly are now about $80 ($320). We are heading west next week. $160 gets us into Magic Mountain. We will not buy food in the park, nor play games, nor waste on the drawings. We did buy Flash Pass so we can get out of there fast if there are lines. By contrast, Ricky Jay at the Geffen Playhouse is costing us $340, and a mule ride to Phantom Ranch is about $300 each. We travel a lot. You do the math. Six Flags is cheap. Of course, the problem is that they just don't seem to be able to make money at it!

    BTW, I am not sure Six Flags lets you bring in food and drink. I will have to check to make sure. I know Cedar Point does.
    Reply | Link to Comment
  •  
    Jul 07 09:18 AM
    You don't get out much, Six flags even includes a water park which would be another $ 20.00 a piece at any other park. Like the above said go to a baseball game or spend a day downtown Chicago with parking and lunch.. You got off easy. You even mentined the big portions of food, for those prices you still aren't guaranteed big portion at any other event. Why don't you go to a local carnival? They are less safe, no security, dirtier, and the food is about the same price with way less quality. Why don't you write about things that are truly wrong instead of hammering a company that does most things right!
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  •  
    Jul 07 09:21 AM
    Follow the link to Mr. Mayoras' bio and you'll see that he is in the finance/investment business. I didn't sign up to see his portfolio but I'm really curious as to whether he's shorted SIX. I agree with almost everything previously posted. The man has an MBA for goodness sake and yet he's surprised that food within an entertainment facility is expensive? Here's an idea---he said that his experience began at noon (12-8) and that he and his girls ate lunch and dinner in the park--stop at a burger place before you begin your day at Six Flags. I notice that he conveniently didn't include in his calculations the price that those stuffed animals will bring in 12-18 months at the garage sale. And come on.......who buys animated drawings? I agree with the notion that Mr. Mayoras went to Six Flags with a preset agenda to spend as much money as possible and then write about how expensive it is. This reminds me of Casablanca when it was "shocking" to discover that gambling was taking place.
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  •  
    Jul 07 11:18 AM
    I hope to heck Six Flags survives. Its parks draw in thousands of people to tourist areas across the country each year. I think if they closed down, we'd see a very unfortunate downward spiral for so many tourist businesses in those areas.
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  •  
    Jul 07 11:36 AM
    I'm sure there must be other blogs out there to review vacation experiences. The author is wasting our time here. Perhaps he would like to post some home movies of his experiences too?

    That said, his major critics here are not offering much by way of repost. As an investor I don't care if the current owners are getting a raw deal or if amusing guests day after day is just so hard! (cue violins). Don't know about you but I'm in this for the money. And I don't see any here. The authors figures are right. In a labor intensive industry like amusement parks, $972 million in gross revenue cannot service $2.4 billion in debt. The economy will limit attendence in the short and medium term and there are no rabbits left in this hat.

    I haven't heard anyone who has dumped on this author suggest how Six Flags is going to bridge the gap. I would like to.

    Reply | Link to Comment
  •  
    Jul 07 12:54 PM
    Mike, I'm with you. There's a chasm between debating if one can have fun for 2 or 8 hours at an amusement park, v. whether the stock is a good buy or sell, and whether the business plan (including debt) is working in a post-bubble de-leveraging world.
    I saw a similar disconnect in other blog/posts about Steve & Barry's. Yes, they have great bargains and have saved many a family a lot of money. Yes, they have a failed business plan with 200+ exploding commercial leases to boot.

    Are American workers/employees ...investors too?...not realizing that great customer service, value, smiling faces, etc, can not save a business plan built on yesterday’s over-leveraged assumptions?
    Reply | Link to Comment
  •  
    Jul 07 03:05 PM
    In response to Mike on how Six Flags is going to bridge the gap:

    "Steve guy" above actually mentioned a few but I'll add to it. First they have removed rides that are frequently broken or too expensive to maintain. This helped out balance sheets while also improving guest satisfaction (yes, removing a commonly broken ride is better than seeing it standing there not operating all season long). They have bumped up in-park advertising through various means, brought in popular and recognizable brands such as Papa Johns, Johnny Rockets and Cold Stone Creamery to let them do all of the work while still getting a piece of the pie. They have restructured the debt which turned out to be a good thing now that the economy is where it is. But most important, they have BIG TIME improved their image at the same time by having all rides running all of the time, increasing throughput to reduce wait times (20 - 30 minute wait is outstanding!) adding character initiatives to leverage the brands they have the rights to use, and they have added many great areas for children to play which has helped in bring in the families which tend to spend more. This is already evident when you look at how much the per-guest spending has gone up in the past year or two.

    The issue at hand here is whether or not shareholders are willing to give Mark Shapiro the chance to right this sinking ship. Bankruptcy would be bad for everybody. It would impact so much more than the parks themselves that I actually get sick just thinking about it.

    They are on the right track and articles such as this one continue to undermine all of the hard work that folks have put into saving this company.
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  •  
    Jul 07 05:45 PM
    Bankruptcy may be the only way out. You have to ad new rides to keep up. It is impossible to service the debt with the revnue that is coming in. Everybody will have to give for this to survive. A sale to someone else will only create a higher debt.
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  •  
    Jul 07 10:38 PM
    You should be greatful that you have children that give you an excuse to go to a place like SIX. Try to say to yourself, 20 years from now, all 3 of us will recall the great day we had. You kind of remind me of my dad, who only considers things like bragging that he has met Sam Zell to be fun. But, perhaps you didn't have a good enough time.............
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  •  
    Jul 08 12:40 AM
    I think loosing SIX would be a slap in Americas face. I grew up taking trips there, and season passes were the best years of my life. I would consider keeping it open to keep it open. In my city (Milwaukee) the brewers took our tax money or they would leave (with there taxes too) so they could get a new stadium. They didnt need one, id rather they subsidized a prize like Great America. I was shocked to see their stock so low, as this is the first year in a while I got to go and wanst familar with any loss of business. It seemed busy when I was there. I decided to buy $500 right away at Scottrade with my liquid money and am going to roll over a small portion of my 401k into it. I see this as a big risk, but big potential. The new management may take time to turn it around, but the people love it. They are also being wise about how much and who they give deals to. The suviners are very lightly priced with season pass holder discounts. This way people advertise, in addition to sponsership, good ticket price (with an upgrade flash pass for enthuseist or impataince). Ultimatley if you want to spend alot, their is alot of money to spend, but if you want to go cheap it can be a very cost effective one day trip! You can buy season passes and get many one day mico vacations. I so beleive in Great America I am putting my money were my mouth is. I hope this works out, I am only willing to put so much money in a single stock, but it would be a financial and social loss for me to see anything bad happen to them. I truely hope everyone just buys some stock and season pass tickets. Have fun while making money! S.O.S Save our season! I think they have enough rides for a while, let em catch up on dept especially if in a few years when things (hopfully) get better (or everythings done) then they can spend new monies. I understand their maybe transitional costs into lower overhead activities. But, I have to beleive with all the people, advertising, food, suviners, candy, characatures, painted shirts (also for chacature), prize games, locker storage, pet hotel (If I remember correctley), foot massagers, DRINKS (for the 99% of people that refuse to drink free water), remote controll boats and trucks, dick clark productions and building in the Arab world (money), coming into their business during "lean times" , they will alway be at least ok, and probably a whole heck of alot better. Who goes to Disney? I've been once, yah its cool, but Great America is cheaper closer and I like it! Car pool and have fun. I'll see you there.
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  •  
    Jul 08 09:22 AM
    I have to say we visit Six Flags in NJ often and have never spent money on some of the things listed in the article . I hardley ever play games , Have never gotten my picture drawn and have no need to . I may suprise the kids with an ice cream once in awhile but not all the time. SF is a great place to spend the day for a small price . With a family of 5 and a vacation to Disney and Universal in Florida on the way I know a good deal when I see one and SF is a great local trip. My kids ALWAYS have fun there and once there they don't want to leave. Buy a season pass and go more then once it is a great deal.
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  •  
    Jul 08 01:36 PM
    $300/day is a lot for an amusement park? You haven't been to Disney lately, have you.

    SIX's problem isn't price. It's quality. Fix the long lines problem. Get better rides. Make the experience _worth_ $300/day - people clearly are paying it - just make it worth the money.

    (Disclosure: I have a position in SIX.)
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  •  
    Jul 08 08:21 PM
    There seems to be no end to the parade of ego-fueled acquisitions of Six Flags. Shapiro has some good ideas but is a very inexperienced CEO, he has mishandled communication with investors and gives the impression that if all his initiatives were really successful they would still be losing money. He has no experience dealing with a large base of service employees and appears to be out of touch with them, and his quarterly calls are full of dramatic yet irrelevant excuses why they aren't doing better. (The brand was more damaged than we thought, we had incredible unprecedented weather events, etc.)

    Six Flags has let themselves get distracted with too many executives working corporate sponsorship deals (which are profitable but a tiny portion of their revenues) , purchasing and running Dick Clark Productions, and commissioning questionable 'original creative content' like "Spy Girls" instead of concentrating on training and hiring, improving their systems, executing solid promotion, pricing and group sales plans, or coming up with the needed product and capital improvements.

    Particular to the blogger's visit, if Six Flags had more visitors like you they would not be in trouble! You generated a $90 per cap, the average guest spending across their system I believe is under $40 (excluding their misleading 'revenue per cap' which includes advertising and sponsorship revenue.) There are many more visitors who use season passes and spend hardly anything when they visit to balance out single day visitors who have more urgency to spend since they are not planning to return right away. So you are quite correct that most visitors cannot afford the type of visit you took.

    I agree that their balance sheet issues are quite serious but they were obviously well known at the time Snyder made his investment, he thought he was smarter than all the other owners but he is looking like just another statistic.
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  •  
    Jul 09 05:40 PM
    I would like to point out to ubu_ibi and others above who are investing in this stock for sentimental reasons that NO ONE is talking about Six Flags dissolving. Your dreams and memories are safe!

    Six Flags is an eminently cash-profitable enterprise with simply too much debt. If it with does enter bankruptcy it will reemerge debt free and under new management. The only thing about Six Flags that will disappear is the stockholders' money!

    ubu_ibi I strongly urge you to take your 401K money out of this stock. Even those who are bullish on this stock must agree that it is a risky investment and no place to put retirement funds.
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  •  
    Jul 12 12:21 PM
    I feel that the there is money to be made with parks, it requires a new way of thinking! The time has come to show how it can be done and we are about to do just that.
    Danny R Rogers
    President / CEO
    Southern Star Amusement Inc.

    Danny.Rogers@southerns...
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  •  
    Jul 28 01:40 PM
    I really don't have a commit about the above. But would like to ask a plush vendor that sells to parks if he or she would be interested in buying a inventory of plush puppies. I am no longer in business and need to sell this inventory. you can reach me at katherine06@sbcglobal....
    Reply | Link to Comment
  •  
    Jul 28 01:46 PM
    katherine06@sbcglobal....
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