The Shapiro Report

[DerekRx]

Someone sent me this article from the Los Angeles Times.

 

Markets; Six Flags CEO Faces Tough Climb to Put Theme Parks Back on Track; Complaints have fallen amid a big makeover, but Mark Shapiro sees much more work ahead.

 

Kimi Yoshino

Times Staff Writer

1,278 words

7 July 2006

Los Angeles Times

Home Edition

C-1

English

Copyright 2006 The Los Angeles Times

 

New Six Flags Chief Executive Mark Shapiro isn't having much fun this summer at the company's 30 theme parks.

 

"This product isn't close to where we want to be," Shapiro said during an unusually candid assessment of Six Flags Inc., which may sell six parks, including Magic Mountain and Hurricane Harbor in Valencia.

 

The company is $2.1 billion in debt. Its stock price plummeted 25% immediately after Shapiro's harsh review late last month during a call with investors. Standard & Poor's and Moody's Investors Service lowered their outlooks and credit ratings on Six Flags.

 

"I'm not going to get on a call and lie to people or mislead people," Shapiro said in a subsequent interview. "I think it's important that people know what we've inherited. This is a long-term investment. This stock isn't for short-timers."

 

Six Flags' shares fell 12 cents to $5.46 on Thursday.

 

Since taking over as CEO in December -- after shareholders overthrew the New York company's previous management during a nasty proxy battle -- the 36-year-old former ESPN executive has launched a massive makeover to transform Six Flags from thrill parks overrun by teens into family-friendly destinations.

 

It may not be as easy as Shapiro thought.

 

In the middle of a second tour of company parks, this time during the busy season, Shapiro said he had witnessed unfriendly, slow-moving seasonal employees, poor maintenance and popular rides with a single train running at a time.

 

One parent wrote him a letter detailing a visit marked by long lines, closed rides, rude employees, rowdy teens yelling racial slurs and a couple having sex on the Ferris wheel. Shapiro declined to identify the park.

 

"This is the best example I have of what we're up against," Shapiro said. "We're going to win this guy back."

 

In the process, he's winning fans.

 

Shapiro's tough assessment of his company and willingness to unload troublesome properties brought cheers from industry experts even as some fretted about the potential loss of Magic Mountain's unmatched collection of thrill rides if real estate developers were to end up with the land.

 

"It's difficult to see much more room to disappoint," Bear, Stearns & Co. analyst Glen Reid wrote in a note to shareholders. "This remains a long-term turnaround and we continue to be optimistic."

 

Even Six Flags' competitors are happy with the recommitment to the parks, said Dennis Speigel, president of consulting firm International Theme Park Services Inc.

 

"Shapiro took a body that was on the table that didn't have a heartbeat after the other management team left and he's got the heart beating again," he said. "Morale has never been higher."

 

But Shapiro said that Six Flags' reputation had been "squandered away" and families were not returning at the pace he had hoped. Attendance is down 12.5%.

 

To speed progress, he has instituted major changes: a no-smoking policy at the parks and new characters, parades and entertainment. To strengthen finances, the company has sold assets and brought in a new management team, replacing six park general managers.

 

"We have a lot of work to do here and we're going to do it," Shapiro said.

 

"I'm confident that the audience and the guest is going to be very pleased with the product once we're done."

 

Previous management brought no stockholder value, lost money seven years in a row and allowed the parks to deteriorate, Speigel said.

 

Shapiro agreed. They "put their heads in the sand," he said, and stopped conducting research.

 

Although Six Flags' reputation varies from park to park, at Magic Mountain, "it's downright bad," said Jeff Putz, editor of Coasterbuzz.com, a website for amusement park enthusiasts.

 

"If you do show up at the park ... half the rides are closed," Putz said. "The park is messy, trash is lying around, ride operators don't care, service at food stands is bad. It adds up to people not having a favorable impression of the park."

 

Shapiro acknowledged Magic Mountain's problems during the conference call with analysts and investors.

 

He recounted receiving a letter last month from a visitor who described a "despicable" day that was "one of the worst reports I have ever seen." Food lines weren't open, roller coasters were on limited operation and "the park wasn't as clean as it should be." It turned out that 42 seasonal workers didn't show up that day, he said.

 

Despite the challenges, Shapiro said signs of a turnaround were apparent. Although attendance at the parks is down, reflecting a decision to stop giving away so many season passes, spending per visitor is up 14% and visitor satisfaction is on the rise, he said.

 

According to survey results he received last month, complaints about Magic Mountain dropped 60% compared with last year. Numbers on cleanliness and friendliness also improved. Magic Mountain is home to some of the world's tallest, fastest, steepest and most thrilling rides and is considered the coaster capital of the U.S. It accounts for about 10% of Six Flags' overall attendance and is one of the company's marquee parks.

 

To pay down a huge chunk of debt, Shapiro said, Six Flags must consider selling a lucrative asset such as Magic Mountain.

 

CBS Corp. recently sold its five Paramount Parks to Cedar Fair for $1.24 billion, an indication that Six Flags could garner high prices for its theme parks. Six Flags had begun receiving inquiries even before executives raised the possibility of a sale, spokeswoman Wendy Goldberg said.

 

"On the Paramount Parks deal, it was a feeding frenzy," Speigel said. "Bids were going up $50 million, $100 million. It was unbelievable."

 

As for Magic Mountain, "I could see it being snapped up very quickly," he said, because "it's worth it" and "there's money out there."

 

Based on what Cedar Fair paid for Paramount Parks, Magic Mountain alone could sell for more than $500 million, Speigel estimated.

 

Shapiro said there was a double demand for Magic Mountain. Not only would it be a strong lure for another theme park operator, but it also would be sure to draw interest from real estate investors who believe the 250-acre parcel is more valuable as a site for houses and businesses. It could be a year before any deals are completed, and Six Flags has not decided whether to sell.

 

"We absolutely wouldn't walk away" from Magic Mountain unless the offer was too good to turn down, said Shapiro, who plans to continue improving all the parks.

 

Shapiro declined to identify any potential bidders for Magic Mountain.

 

Although coaster enthusiasts support the new management, Putz said many believed selling parks -- including one as viable as Magic Mountain -- might be too radical.

 

"Ever since the takeover, I think most people have been rooting for them," Putz said.

 

Still, he added, "most enthusiasts don't want to see any park closed. But you don't necessarily adhere to logic or business reasons."

 

I agree with the article, and honestly am a supporter of Shapiro if he can get the parks turned around. At least he sees the problems. The only thing I don't like about the article is interviewing Jeff "CP Rulz" Putz. Like the guy has even been to SFMM lately, alone outside of Ohio.

[Dailey Enterprizes]

Yea, I'm happy to see Shapiro doing good with the Six Flags chain. Even if he has to sell Magic Mountain because you gotta do what you gotta do.

[Gnome]

sex on the ferris wheel? My my.......

[Robbie]

Why the heck did they interview putz? Robb would have done a much better job

[Guest]

sex on the ferris wheel? My my.......

 

I think that the song "Don't rock the boat" has much more meaning now....

[ECZenith]

That story sounded like a typical day at SFA until they mentioned the ferris wheel thing. (which they don't have)

 

I'm going to reserve judegment on Shapiro until he has a full year to play with his parks. If he's going to pull the plug entirely on adding new thrill rides, and JUST add family stuff, I'm not going to be too fond of him... but I am looking forward to not having to drink everytime I visit a SF park in the future.

[rollocoast]

A couple things...

 

"One parent wrote him a letter detailing a visit marked by long lines, closed rides, rude employees, rowdy teens yelling racial slurs and a couple having sex on the Ferris wheel. Shapiro declined to identify the park.'

 

I've got a $1000 riding on Great Adventure!

 

"Based on what Cedar Fair paid for Paramount Parks, Magic Mountain alone could sell for more than $500 million, Speigel estimated."

 

HA!

[Screamomatic]

They weren't very specific on the type of Sex... I'm trying to get a mental picture of seeing a couple doin' it on a Ferris Wheel, I imagine it would be very uncomfortable for the both of them... I should try it Sometime.

 

Are Six Flags parks really that bad? I want to go to SFGAdv at the end of Summer(El Toro...) And if the place is a Dump, I don't want to go.

 

Although, Seeing "a couple having sex on the Ferris wheel" Would make the trip worth it for me... That whole sentence just doesnt make any sense to me, I understand the motivation, but... on a Ferris Wheel?

 

It could have been two chicks... Now that's Hot!!

[ParkTrips]

I still hope it was Great Adventure!!

 

- Joe, who says that would mean someone had sex on a Schwarzkopf.. awesome.

[ECZenith]

Um, if you say it must be uncomfortable why would you want to do that? I suggest just staying indoors for that sort of thing, I wouldn't want to be the poor bastard that got into the car after them.

 

 

::also thinks its Gr. Adv. only because SFA doesn't have a wheel::

[lexington]

A couple things...

 

"One parent wrote him a letter detailing a visit marked by long lines, closed rides, rude employees, rowdy teens yelling racial slurs and a couple having sex on the Ferris wheel. Shapiro declined to identify the park.'

 

I've got a $1000 riding on Great Adventure!

 

"Based on what Cedar Fair paid for Paramount Parks, Magic Mountain alone could sell for more than $500 million, Speigel estimated."

 

HA!

 

I was just there yesterday, everyone was friendly, the lines werent that long since the DJ made it fun, teens were having fun, I dont see how it could be SFGADV.

[ilostpod]

People love to rip of SFGAdv .....when they wish their Six Flag's park had what it has. Even at it's worst, it blows away pretty much any other park in the chain. That being said, it most likely was SFGAdv where this occured LOL jk.

[ParkTrips]

I don't know, I saw it at least near its worst the other day, and I was not impressed!

 

That was easily one of the crappiest theme park moments of my life.

 

- Joe

[okinawaboy11]

All this is SO true. And if they sell Tatsu, fine by me. Ha I don't even live by the park

 

Well, Shapiro HAS been working some magic over at SFA. I dunno if it was him, or this employee. But the main op on superman was YELLING at the other opps to move faster. She said the shorter the line, the longer lunch break you get. So I guess he is doing some good for the park.

 

Sex on the faris wheel is just absurd, WAY to far with that one.

[Jon Sabo]

Great find Derek!

 

I actually am a shareholder (cough) in Six Flags stock and get reports on shareholder going-ons and such. I think I'll sell it all off now..lol

 

I really hate to even post this, but I honestly believe Snyder has big plans for the park chain. He will sell the projected parks listed and then focus on the remaining ones (don't expect N.O. to be on the 'saved' list). I think it will take roughly 5-6 years to get the remaining parks to satisfy the shareholders, the stock (in general) and the parks running smoothly.

 

Then, when things look good, Snyder is going to drop the bombshell (again) and sell the remaining parks to the highest bidder (or close a couple of more parks and sell it as real estate-similar to the proposed MM scenario). I doubt Shapiro will hold out for 4-5 yrs. before he actually moves on. He has a history of doing this with other businesses and his renegade management style in operating/ownership duties with his 'beloved' Redskins football team really puts a dry taste in my mouth.

Conspiracy theory? No, just a strong gut-instinct from his past business practices and management/ownership style.

[larrygator]

Kumba9 - don't sell now, as the guy at Bear Stearns said it can only get better. I sold mine a while back and will buy back in if it goes under $5.

 

Even though SFGAdv was deplorable on July 4th.

[Eunuch Provocateur]

Um, if you say it must be uncomfortable why would you want to do that? I suggest just staying indoors for that sort of thing, I wouldn't want to be the poor bastard that got into the car after them.

 

 

This whole thing reminds of that scene from the Sandlot where they're on the ride... and puking all over...

[PhishyBrewer]

couple having sex on the Ferris wheel

 

I know ferris wheels freak me out. Maybe the guy just needed to relax some.

[pvcoasterguy]

^ It would be a lot easier if they were riding the Whizzer at Great America.

[cfc]

Hmm--interesting how many posters have focused on the "ferris-wheel-sex" question. Tsk, tsk, tsk . . . (Perhaps this couple thought they were at Six Flags Bangkok or something. Mind out of the gutter, Chuck!)

 

I've yet to set foot in a Six Flags park, even though SFA is only about three hours away (from what I've read here, maybe that's the one to visit now--perhaps this summer, if I can meet some TPR folks there).

[Token Yankee Guy]

I support Shapiro with his ideas on making the parks a much better place, but I have a personal belief that changes don't happen overnight. A lot of people are expecting changes overnight, which did happen a bit but still, takes a while for the idea to get through the thick skulls of some of the employees.

 

Also, SFI should really crack down more on the rowdyness of the teenagers in the parks like kicking them out and issuing maybe a temporary ban from the park. Maybe that will prevent them from coming back. Of course, families will need to do their part in helping in the reporting of bad behavior of other patrons.

[arrowfanman]

I sugguest a dress code....no, provided uniforms, for all of the guests! As well as a sniper in the skytower.

 

"Look, that guy just littered in the Riddler's queue" *bang*

 

 

 

Honestly though, I cant think of the best way to get rid of the problem. I know SFMM could REALLY improve they're security....they usuallly just sit around in our breakrooms, and ask to ride the rides. If we call them, they take 20+ minutes to respond. I mean, I have met some really nice guards, but they are the most over-paid lazy-asses in the park. Well....in the park.

 

-Jahan

[swami2302]

Lake Winnie had a problem a few years ago when a huge fight broke out in the park. Soon after they implemented a new policy. No one under 21 was allowed in the park without an adult. I know 18 is considered an adult and the policy seems extreme, but the park hasn't had any problems that I know of since the policy was put in place. Perhaps the Six Flags parks should implement a similar policy. The policy would certainly cost the park some patrons but I believe this would be offset by the number of families that would attend because of the new family friendly atmosphere. Just a thought.

[Jon Sabo]

It's not just MM, but all amusment/themeparks in general are really struggling to tap into the market to get employees (good or bad). Not only is it becoming increasingly difficult to hire for park positions, but quality-management positions as well. Times are really changing in the market (for themepark operators) and the figures are backin up that trend as well as written/posted reports across local media markets.

 

Many parks are agressively using "job fairs" to tap into the search for employees and some parks are even offering sign-on bonuses just to hire them. BGE is a good example of having a hard time to just tap the local market (as compared to when I worked there). Look how many "foreign" workers are there now.

[CoasterFanatic]

No one under 21 was allowed in the park without an adult.

 

One of my favorite policies of all time, but I don't think that it is neccesary everywhere. At some parks, it seems that younger adults don't seem to have much problem behaving themselves. It all starts with the parks operations and policies and then just snowballs from there.