Six Flags [FUN] Corporate Discussion Thread

[Haymaker]

Think they'll survive this? It'll be terrible for the industry if they went belly up.

 

Why do they always seem to get in a financial mess after they pick up Darien Lake? At least they dont own the place right now so it wouldnt be as bad as the last time they dumped it.

[Rollercoaster Rider]

Think they'll survive this? It'll be terrible for the industry if they went belly up.

 

Why do they always seem to get in a financial mess after they pick up Darien Lake? At least they dont own the place right now so it wouldnt be as bad as the last time they dumped it.

 

Technically, They got Darien Lake in 1995

[Haymaker]

Think they'll survive this? It'll be terrible for the industry if they went belly up.

 

Why do they always seem to get in a financial mess after they pick up Darien Lake? At least they dont own the place right now so it wouldnt be as bad as the last time they dumped it.

 

Technically, They got Darien Lake in 1995

 

 

Well yeah, its just happening quicker this time

[KBrylczyk]

Interesting bit of news regarding financials and all the fun stock market madness -

 

https://investors.sixflags.com/news-and-events/press-releases/2020/03-31-2020-213020263

 

Thanks to all this virus silliness many companies are being tested financially, some moreso than others. Six Flags, in particular, seems terrified that they'll be gobbled up by another entity or entities as their share value continues to go down faster than a Thai hooker.

 

According to this Rights Plan, if any one person, or group of people acting as one, purchase 10% or more of the company's stock (percentage of ownership for the layman) then it will trigger an immediate 50% discount on the remaining shares to be purchased by existing stock holders. The idea being that current stockholders will act in good faith to buy more stock in order to dilute the 10% buyer away from controlling amount of shares.

 

Hypothetical example -

 

Bill Gates wants to dive into the amusement park industry. Disney and Universal are too strong to compete with directly and too expensive to bother buying out. Cedar Fair and Six Flags, however, are much more approachable to a man of his background. Six Flags ($11.41) is trading at about 65% the value that Cedar Fair ($17.05) currently is, making it the more attractive of the two options. He purchases 15% of the company stock at $11.00 (rounded down from the current price for the sake of argument) which then allows any and all existing shareholders to purchase more shares at $5.50. Because of this, on paper Bill Gates' stock is essentially worth 7.5% (theoretically) if this triggers a surge in buyers. Because of this, Bill Gates will have second thoughts about buying Six Flags and might instead look at Cedar Fair because he'll get more bang for his buck.

 

This is an extremely simplified example of what could happen, but this is essentially Six Flags throwing out a lifeline to themselves. It will be very interesting to see what happens a few months down the line. With the current economic climate I wouldn't expect any kind of buyout or hostile takeover but I am fully expecting Six Flags to unload a bunch of their underperforming parks and standalone water parks.

[sfkk]

^ They don't own many of the smaller parks they just re-aquired, so there is not really any money there. Hate to say it, but if it really got that dire Magic Mountain could be on the chopping block again. The property value for housing there is worth basically the value of the entire Six Flags chain rn. Shapiro was extremely close to pulling the trigger on that many years ago. Six Flags America also has high property values relative to its rumored income. I don't expect it to come to this at all though. Spanos has made it clear that the parks are the core business, and at the end of the day they are the only things that are going to keep them afloat. So in that respect, as long as they are all profitable to some extent, more parks is better. With that being said there is a lot of financial stuff under the hood with loans coming due and leveraged spending that I don't understand that could play a role as well. I wish SF would just start a savings fund instead of always using profits for stock buybacks. If they invest in the parks and operate a sound and honest business model, they are likely to see success IMO. Think Holiday World.

[ytterbiumanalyst]

Seems like a solid defence against a hostile takeover.

[Jew]

Cedar Fair, Six Flags, and Sea World all took giant hits to their market caps. There will likely be consolidation somewhere in the industry between those three.

[RaceBoarder]

Is this similar to how things were playing out in 2007-2009?

[Superbatboy]

The amusement industry is going to take one of the hardest hits from this. Sad for the industry we all love

[SoCalJasonland]

Is this similar to how things were playing out in 2007-2009?

 

Well, in the last great recession, oil/gas prices suddenly dropped, the market tanked, interest rates dropped, and people stopped paying their mortgages. So, basically yes, pretty much the same so far but who knows how quickly things will recover this time. Six Flags also has more debt than their properties and depreciated improvements are worth, so a negative price to book ratio doesn't help. My biggest fear is that if their credit rating downgrades too far; they will sell Magic Mountain for the land value.

[Lotologist492]

Is this similar to how things were playing out in 2007-2009?

 

Well, in the last great recession, oil/gas prices suddenly dropped, the market tanked, interest rates dropped, and people stopped paying their mortgages. So, basically yes, pretty much the same so far but who knows how quickly things will recover this time. Six Flags also has more debt than their properties and depreciated improvements are worth, so a negative price to book ratio doesn't help. My biggest fear is that if their credit rating downgrades too far; they will sell Magic Mountain for the land value.

One major difference between 2007-2009 and today is the Great Recession was a financial crisis pure and simple, while this is a health crisis, not a financial one, although the economy is suffering immense collateral damage. Spanos has not really had much chance to do or change anything yet. From what I am hearing, SF parks are investing a great deal in cleaning and freshening up their properties and doing a lot of the little things that really need to be done. The largely lackluster slate of 2020 additions came under his predecessor. He inherited a mess and cannot clean it up overnight. to say COVID19 is hampering his efforts is a gross understatement.

 

Time will tell. Once parks begin opening up again, Americans and theme park fans, having been pent up for so long may very well re-energize the industry. But - there are so many what-ifs and variables to what is happening, nobody really knows. All we can do is hope and pray for the best possible outcome.

[KICoasterkev]

No, this is not a healthcare crisis, it is another financial crisis the nation is going through. This is even a bigger crisis then the 2007-2009 crisis, with a ton of companies needing bailed out, or loans from the gov. Banks are needing a direct link to the Fed to supply them more money... The media and gov is telling us its a healthcare crisis, while Anthony Fauci says the fatality rate is being estimated by him to be 0.1%. Gold was up $50.00 an oz yesterday, and the government is printing tons of money, much more then all of the prior QE combined. Moody's placed the US corporate debt pile to 'negative' from stable. Yum Brands was also placed on negative watch, they own Pizza Hut, Taco Bell and KFC. This is terrible for the US economy, spending is out of control. Expect some parks to close or be sold off.

 

https://www.cnbc.com/2020/03/30/moodys-cuts-outlook-on-6point6-trillion-us-corporate-debt-pile-to-negative.html

[Jew]

It's both. Both will need to be solved before we can move forward.

[jconsolmagno]

Everyone on his forum really needs to put their money where their mouth is if the parks open this year. They need us.

[ytterbiumanalyst]

^ Agreed. I for one plan to be down at my local Six Flags the weekend it opens.

[sfkk]

Keeping your membership going if it at all works in your financial situation wouldn’t be a bad idea either.

[LegendLover]

I’ve never had a Six Flags membership, but I think I’ll get one this year. The day the parks reopen, I’ll go to Six Flags St. Louis (my closest one) and then maybe Frontier City two days later. Even if I can only hit two, three, or four Six Flags parks. I’ve always preferred Six Flags parks over Cedar Fair (I don’t know why).

[Kemotblue]

Frontier City is my home park and when they do open I will make sure I'm first in line to the park. I kept my membership active during this time. My park is a small park the need some type of income feeding the park. I still have friends employed at the park they had their hours reduced but were not furloughed because they are regular full time employees.

[Lotologist492]

It is nice to hear some of us supporting our SF parks during this crisis. I know Six Flags is not perfect, perhaps far from it, but they provide us with many good times and support our fantastic hobby. It is understandable that SF is continuing to collect membership dues. Just like most other shuttered businesses, they really need the cash flow to stay afloat. I will just leave my membership alone and keep paying. The extra months at the end may be useless but the added perks we will eventually get are really nice. And yes - I will be at the gates on opening day 2.0.

 

At the end of the day, we all want our local parks to reopen and for them to return to profitability.

[coasterbill]

I love Six Flags but also don't plan on treating a multinational publicly traded company like a charity case. Most of their problems are of their own making before Covid-19 was even a thing.

[WolfBobs]

I chose to take the free upgrade and keep the membership going for now.. Luckily I work in an essential business and can keep it going. I haven't given up on 2020 yet, but if parks open/re-open before July I would be shocked at this point.

[sfkk]

I love Six Flags but also don't plan on treating a multinational publicly traded company like a charity case. Most of their problems are of their own making before Covid-19 was even a thing.

 

While I wholeheartedly agree with you, I also would go out on a limb and say that you and I care about these parks much more than the average person. Businesses are not charity cases, but in the current capitalistic environment the high ups are going to take their lofty salaries no matter what. Whatever is left goes to the parks. I’m sure the people of Houston Texas wish corporate greed and mismanagement didn’t take away their park for life.

[ytterbiumanalyst]

I love Six Flags but also don't plan on treating a multinational publicly traded company like a charity case. Most of their problems are of their own making before Covid-19 was even a thing.

Agreed, but they've also upgraded my membership to Diamond (after a year ago upgrading it for free to Platinum). I'm now paying $6/mo for the second highest tier they have and I feel like encouraging this behaviour.

[Lotologist492]

I love Six Flags but also don't plan on treating a multinational publicly traded company like a charity case. Most of their problems are of their own making before Covid-19 was even a thing.

Although I do not consider any publicly traded company a charity case, we must be mindful that there can be terrible 2nd and 3rd order effects of a company going bust. Suppose for a second, if Six Flags' value descends low enough, certain investors can attempt to buy out the park chain. And if that happened, who is to say that entity is even interested in the theme park business, but rather the land underneath? It would be pretty crummy to wake up and find out our town has become the next Astroworld case. Although SF has announced their 'poison pill' strategy to lower that risk, it could still happen if things do not turn around. It would be a devastating blow to many of our summer coaster trips.

 

Also - it reminds me of how many folks despise Wal-Mart. What if these individuals got their wish and the chain just magically went away? You better believe there would be 2nd and 3rd order effects. This does not mean pass the charity hat, but be careful what we wish for.

[WolfBobs]

I love Six Flags but also don't plan on treating a multinational publicly traded company like a charity case. Most of their problems are of their own making before Covid-19 was even a thing.

Agreed, but they've also upgraded my membership to Diamond (after a year ago upgrading it for free to Platinum). I'm now paying $6/mo for the second highest tier they have and I feel like encouraging this behaviour.

 

So what you're saying is I can threaten to cancel my membership all the way up to Diamond Elite if I do it enough times?