Six Flags [FUN] Corporate Discussion Thread

[SFOG1991]

I have no doubt the current Six Flags business model will ultimately fail if changes aren't made. It is quantity versus quality for them, and by charging ridiculously low prices, they will bring in a ton of people. Unfortunately, while that works great for them, they haven't done anything to address the capacity issues that come with hoards of people paying way too little for season passes and dining passes. People will get tired of long slow two hour lines for rides and they will get tired of waiting over an hour for their free meal. The only reason I still buy into it is because I am an enthusiast and also really love my home park (other than the mobs of people and terrible operations).

 

Cedar Fair certainly has the better long term business plan. They have acceptable operations and invest in high capacity high reliability rides that last a long time and their infrastructure in general is well maintained and improved consistently.

 

I actually prefer Six Flags overall just because I love my home park, but they really should address their issues more aggressively.

[eugjackson]

I have no doubt the current Six Flags business model will ultimately fail if changes aren't made. It is quantity versus quality for them, and by charging ridiculously low prices, they will bring in a ton of people. Unfortunately, while that works great for them, they haven't done anything to address the capacity issues that come with hoards of people paying way too little for season passes and dining passes. People will get tired of long slow two hour lines for rides and they will get tired of waiting over an hour for their free meal. The only reason I still buy into it is because I am an enthusiast and also really love my home park (other than the mobs of people and terrible operations).

 

Cedar Fair certainly has the better long term business plan. They have acceptable operations and invest in high capacity high reliability rides that last a long time and their infrastructure in general is well maintained and improved consistently.

 

I actually prefer Six Flags overall just because I love my home park, but they really should address their issues more aggressively.

 

I agree. Six Flags is trying to find new revenue streams and it's via their foreign licensing deals. It requires no capital investment. If they ramp up to the 10 parks in China goal and the other 4 foreign license deals already announced, that could be 100's of millions in revenue yearly eventually. I think SF has put themselves in box on pricing b/c people have been so used to deals that they will not likely buy passes if they increase them much. Personally I would be willing to pay more than than $62 for my gold pass. At least make passes so it takes 2 visits to the park to get your money back. CF Platinum takes 3 visits. Also, a point of possible concern to their SF model is that for the 2015 annual report spending per park patron was down $1.50 Interesting to see if it's down again in 2016 annual report. CF in contrast has been going up.

[Rollercoaster Rider]

I have no doubt the current Six Flags business model will ultimately fail if changes aren't made. It is quantity versus quality for them, and by charging ridiculously low prices, they will bring in a ton of people. Unfortunately, while that works great for them, they haven't done anything to address the capacity issues that come with hoards of people paying way too little for season passes and dining passes. People will get tired of long slow two hour lines for rides and they will get tired of waiting over an hour for their free meal. The only reason I still buy into it is because I am an enthusiast and also really love my home park (other than the mobs of people and terrible operations).

 

Cedar Fair certainly has the better long term business plan. They have acceptable operations and invest in high capacity high reliability rides that last a long time and their infrastructure in general is well maintained and improved consistently.

 

I actually prefer Six Flags overall just because I love my home park, but they really should address their issues more aggressively.

 

I agree. Six Flags is trying to find new revenue streams and it's via their foreign licensing deals. It requires no capital investment. If they ramp up to the 10 parks in China goal and the other 4 foreign license deals already announced, that could be 100's of millions in revenue yearly eventually. I think SF has put themselves in box on pricing b/c people have been so used to deals that they will not likely buy passes if they increase them much. Personally I would be willing to pay more than than $62 for my gold pass. At least make passes so it takes 2 visits to the park to get your money back. CF Platinum takes 3 visits. Also, a point of possible concern to their SF model is that for the 2015 annual report spending per park patron was down $1.50 Interesting to see if it's down again in 2016 annual report. CF in contrast has been going up.

 

 

I agree. Raise Gold Passes $30 and get rid of membership renewal rates. I know of someone who because he renews it, Has a SFOG Membership pass for $3 a month. They should also take a look at the free tickets, like blackout on weekends, especially during Fright Fest.

[CaptainCrush]

I truly don't get how they make money on Dining Passes. I got it for $85 and this year I've already consumed $120 worth of food, not including next year which its good for!

[larrygator]

I truly don't get how they make money on Dining Passes. I got it for $85 and this year I've already consumed $120 worth of food, not including next year which its good for!

 

They make money in two ways:

 

Because the food doesn't cost that much to begin with, their profit margin per burger, drink, or chicken strip might be lower but they are making money.

 

For example: that $5.00 coke only costs $0.25, your $12.00 meal only costs the park $3.00, that $7 funnel cake costs the park only $0.75. The park's overhead in the form of salary and utilities does not change whether you use the meal pass or pay full price.

 

Not everyone that buys the pass ends up making as many trips to the park the they planned.

 

While you might only need to eat 7-8 meals to break even over the year, the park probably makes money on anyone eating less than 15-16 meals over the season for the park.

 

My figures are speculative, and my break even comments are presumptive, but directionally I think the point I'm making is fair.

[eugjackson]

I truly don't get how they make money on Dining Passes. I got it for $85 and this year I've already consumed $120 worth of food, not including next year which its good for!

 

They only really make money if you don't go to the park much. The $13 meal you get,if paid out of pocket, costs them 1/4 to 1/3rd of that, including the approximate cost of food workers. Typically 25 to 33 cents of every dollar for prepared food is what it costs the vendor. So, for your $85 dollar dining pass you need to eat $255(33 cents on the dollar) to $340(24 cents on dollar) worth of food at list price, before they lose money. For someone like me that went to several parks and a total of 13 days, they barely lost money. 26 meals at $13 is $338 plus whatever the snacks I had. Snacks cost essentially nothing as I ate pretzels, funnel cakes or italian ice on hot days. But, not everyone goes as much as I do. I know people that buy passes b/c they are cheap and only go 3 or 4 times a year. Also, you have to figure part of SF plan even if you're a high volume visitor is that you will bring friends on discount 19.99 days or free days, that will be purchasing purely out of pocket. Again, I think CF plans are better priced as a business model(not as a consumer..lol) at $90 for single park pass or $113 for all parks dining pass. I have SF Season Gold with dining and CF Platinum with all park dining.

[ytterbiumanalyst]

I truly don't get how they make money on Dining Passes. I got it for $85 and this year I've already consumed $120 worth of food, not including next year which its good for!

 

They make money in two ways:

 

Because the food doesn't cost that much to begin with, their profit margin per burger, drink, or chicken strip might be lower but they are making money.

 

For example: that $5.00 coke only costs $0.25, your $12.00 meal only costs the park $3.00, that $7 funnel cake costs the park only $0.75. The park's overhead in the form of salary and utilities does not change whether you use the meal pass or pay full price.

 

Not everyone that buys the pass ends up making as many trips to the park the they planned.

 

While you might only need to eat 7-8 meals to break even over the year, the park probably makes money on anyone eating less than 15-16 meals over the season for the park.

 

My figures are speculative, and my break even comments are presumptive, but directionally I think the point I'm making is fair.

This is a very good point. When we've had Six Flags passes, we've typically made about 7-8 trips throughout the year, so they probably did still make money from us. And that's not a bad thing at all.

[eugjackson]

Update on Saudi Parks

 

Six Flags aiming to open first Saudi park by 2021

http://www.reuters.com/article/us-saudi-leisure-six-flags-entmt-idUSKBN13A2Q1

 

Six Flags Entertainment Corp's (SIX.N) expansion into Saudi Arabia will probably include three parks, with the first to open in 2020 or 2021, its executive chairman said on Tuesday. The first park is tentatively planned for Riyadh, Saudi Arabia's conservative capital city, he said. Others may follow in Jeddah and at a resort elsewhere on the western Red Sea coast.

[eugjackson]

INVESTOR PRESENTATION NOV 2016.

 

http://investors.sixflags.com/~/media/Files/S/SixFlags-IR/reports-and-presentations/ir-pres-november-2016.pdf

 

Some interesting tidbits IMO:

 

56% of total attendance from season pass holders

 

Foreign License deals..China, Vietnam, Dubai

– $5-10MM EBITDA per park per year pre-opening

– $10-20MM EBITDA per park per year post-opening

Means foreign deals could be a cash cow..talk of 10 parks in China, 3 parks in Saudi, 2 in Vietnam, 1 in Dubai

 

Admission per cap below others at $24.09 compared to FUN $28.12 and SEAS $37.69.. 5 step plan includes increased ticket prices

 

 

Capital Investment Plan 9% of Revenue split with 60% towards rides, 15% in park, 25% asset management.

[Rollercoaster Rider]

INVESTOR PRESENTATION NOV 2016.

 

http://investors.sixflags.com/~/media/Files/S/SixFlags-IR/reports-and-presentations/ir-pres-november-2016.pdf

 

Some interesting tidbits IMO:

 

56% of total attendance from season pass holders

 

Foreign License deals..China, Vietnam, Dubai

– $5-10MM EBITDA per park per year pre-opening

– $10-20MM EBITDA per park per year post-opening

Means foreign deals could be a cash cow..talk of 10 parks in China, 3 parks in Saudi, 2 in Vietnam, 1 in Dubai

 

Admission per cap below others at $24.09 compared to FUN $28.12 and SEAS $37.69.. 5 step plan includes increased ticket prices

 

 

Capital Investment Plan 9% of Revenue split with 60% towards rides, 15% in park, 25% asset management.

 

 

I'd be fine with raised season passes + getting rid of membership renewal prices.

I also think every park needs a new haunted house every year and they need to do Food & Beer events at all parks.

[eugjackson]

 

I'd be fine with raised season passes + getting rid of membership renewal prices.

I also think every park needs a new haunted house every year and they need to do Food & Beer events at all parks.

 

It's good to see they see they need to increase prices, it's another thing to execute it. People have been very used to the cheap prices which is what has driven the increase in season passes from 30% to 56% since 2010. The question is how much can they increase it and how many pass holders could they lose. Increases price with less holders is fine with me, they just need to keep increasing revenue. I think passes should be like $100 for regular and $150 for gold as the sale price. Increase it by 25% as non sale price. Stop having sales that are virtually continuous.

 

 

The investment breakdown shows why the ride additions have been cheap clones. 1.24B revenue with 9% capital investment is 108M and 60% of that is for rides means just 64.8M in rides across all the parks. That's how you get 8 cheap superloop clones, some parks occasionally getting just a VR, and no big coasters. It's virtually impossible to build a 20-25M coaster unless you screw a bunch of parks that yr. Revenue would have to explode to get to the 150M and 175M CF has invested the last couple years. SF would have to get revenue near 1.9B. Then, there is the fact stuff they should clone like Sky Rockets III they don't, should have been in 2 or 3 parks besides SFMM. Very cost effective and good ride.

[Rollercoaster Rider]

 

I'd be fine with raised season passes + getting rid of membership renewal prices.

I also think every park needs a new haunted house every year and they need to do Food & Beer events at all parks.

 

It's good to see they see they need to increase prices, it's another thing to execute it. People have been very used to the cheap prices which is what has driven the increase in season passes from 30% to 56% since 2010. The question is how much can they increase it and how many pass holders could they lose. Increases price with less holders is fine with me, they just need to keep increasing revenue. I think passes should be like $100 for regular and $150 for gold as the sale price. Increase it by 25% as non sale price. Stop having sales that are virtually continuous.

 

 

The investment breakdown shows why the ride additions have been cheap clones. 1.24B revenue with 9% capital investment is 108M and 60% of that is for rides means just 64.8M in rides across all the parks. That's how you get 8 cheap superloop clones, some parks occasionally getting just a VR, and no big coasters. It's virtually impossible to build a 20-25M coaster unless you screw a bunch of parks that yr. Revenue would have to explode to get to the 150M and 175M CF has invested the last couple years. SF would have to get revenue near 1.9B. Then, there is the fact stuff they should clone like Sky Rockets III they don't, should have been in 2 or 3 parks besides SFMM. Very cost effective and good ride.

 

 

How about $80 for Regular and $100 for Gold? I would also not give away free tickets during Fright Fest. Also every park in the chain needs to add 1-2 new haunted houses every year to boost those Fright Fest bands.

 

I also wouldn't be surprised if Six Flags added a Mardi Gras event to all their parks in 2018. Make more revenue from food and alcohol sales.

 

Final Idea: Parks that are open on New Years Eve... Be open until New Years Eve. Why some parks close at 9pm is confusing to me. I'd have them open until 2am personally.

[eugjackson]

 

I'd be fine with raised season passes + getting rid of membership renewal prices.

I also think every park needs a new haunted house every year and they need to do Food & Beer events at all parks.

 

It's good to see they see they need to increase prices, it's another thing to execute it. People have been very used to the cheap prices which is what has driven the increase in season passes from 30% to 56% since 2010. The question is how much can they increase it and how many pass holders could they lose. Increases price with less holders is fine with me, they just need to keep increasing revenue. I think passes should be like $100 for regular and $150 for gold as the sale price. Increase it by 25% as non sale price. Stop having sales that are virtually continuous.

 

 

The investment breakdown shows why the ride additions have been cheap clones. 1.24B revenue with 9% capital investment is 108M and 60% of that is for rides means just 64.8M in rides across all the parks. That's how you get 8 cheap superloop clones, some parks occasionally getting just a VR, and no big coasters. It's virtually impossible to build a 20-25M coaster unless you screw a bunch of parks that yr. Revenue would have to explode to get to the 150M and 175M CF has invested the last couple years. SF would have to get revenue near 1.9B. Then, there is the fact stuff they should clone like Sky Rockets III they don't, should have been in 2 or 3 parks besides SFMM. Very cost effective and good ride.

 

 

How about $80 for Regular and $100 for Gold? I would also not give away free tickets during Fright Fest. Also every park in the chain needs to add 1-2 new haunted houses every year to boost those Fright Fest bands.

 

I also wouldn't be surprised if Six Flags added a Mardi Gras event to all their parks in 2018. Make more revenue from food and alcohol sales.

 

Final Idea: Parks that are open on New Years Eve... Be open until New Years Eve. Why some parks close at 9pm is confusing to me. I'd have them open until 2am personally.

 

$80 is too cheap for Regular unless they changed regular to only good at your home park. The fact regular for SF is good at all SF parks has to be monetized. CF in comparison, you need platinum to get into all CF parks. Also, many people are getting Gold for like $62, which is the price during the flash sale, that includes free parking at all parks,etc... SF is literally giving away the store with their pricing.

 

The pricing for regular should vary by park more than it does, SF and GAdv can price at like $120. The yr round parks and those not yr round, but have HITP should cost more b/c there is more opportunity for usage. Gold passes should have a uniform price across parks, like CF does with platinum. SF also could add another level to dining plans that costs like $20-25 more if you want it to be good at all parks.

[DirkFunk]

If Six Flags was planning to, at any point in the near future, increase pricing, they wouldn't have advertised the membership based season pass pricing by promoting "pay the same price for life!" Beyond 2018-2020, I'm not sure any real plan exists aside from "cash stock, disappear."

[eugjackson]

If Six Flags was planning to, at any point in the near future, increase pricing, they wouldn't have advertised the membership based season pass pricing by promoting "pay the same price for life!" Beyond 2018-2020, I'm not sure any real plan exists aside from "cash stock, disappear."

 

SF Memberships are an ill conceived idea. They should kill memberships and just offer the same pricing on passes just with payment plans like CF.

[coasterbill]

If Six Flags was planning to, at any point in the near future, increase pricing, they wouldn't have advertised the membership based season pass pricing by promoting "pay the same price for life!" Beyond 2018-2020, I'm not sure any real plan exists aside from "cash stock, disappear."

 

SF Memberships are an ill conceived idea.

 

How do you figure? As a consumer I think they're amazingly convenient and given the price points they make a little more on those each year than a standard pass. I happily pay more though because it's so damn convenient.

 

The fact that it's convenient for the consumer doesn't disprove what you're saying, but I'm curious what your basis is for saying it.

[DirkFunk]

If Six Flags was planning to, at any point in the near future, increase pricing, they wouldn't have advertised the membership based season pass pricing by promoting "pay the same price for life!" Beyond 2018-2020, I'm not sure any real plan exists aside from "cash stock, disappear."

 

SF Memberships are an ill conceived idea. They should kill memberships and just offer the same pricing on passes just with payment plans like CF.

 

They're an illconceived idea from a perspective of "what about 5 years from now?" Many executives with the company will be gone by then and have cashed in their shareholdings.

[coasterbill]

Where is this "same price for life" promotion? Now THAT is a truly terrible idea, but I want in on it.

 

To be fair, Disney used to sell lifetime passes too and we used one this year and saved like 60 bucks, but those are single day tickets, this seems like more of a commitment and therefore a much worse idea.

[Superbatboy]

I think they should keep the membership and just gradually increase the fee over the next couple years and do away with free parking completely. Maybe possibly offer $5-10 reduced price parking for gold and platinum members.

 

I also wonder how long they will continue to avoid installing $20-30 million attractions. SFGAM particularly needs a true marquee ride. I'm sure Goliath is solid in all but it's no Kingda Ka, El Toro, X2, Tatsu, or T. Colossus. At the very least the 3 big SF parks should have gigas. When I'm at CP I'm always in awe of how popular MF is after all these years. It is the true gem and achor of CP and one of the reason people come back year after year. I don't see any reason why the big 3 couldnt get a return on a giga.

[eugjackson]

If Six Flags was planning to, at any point in the near future, increase pricing, they wouldn't have advertised the membership based season pass pricing by promoting "pay the same price for life!" Beyond 2018-2020, I'm not sure any real plan exists aside from "cash stock, disappear."

 

SF Memberships are an ill conceived idea.

 

How do you figure? As a consumer I think they're amazingly convenient and given the price points they make a little more on those each year than a standard pass. I happily pay more though because it's so damn convenient.

 

The fact that it's convenient for the consumer doesn't disprove what you're saying, but I'm curious what your basis is for saying it.

 

It's a horrible business idea as it's priced lock. The original point I was discussing with the other poster was increasing revenue. Memberships where people can get a locked in $6/mth is not good business. SF in their own corporate investor presentation acknowledge they need and plan to increase prices and per visitor revenue. Memberships don't help.

[Password121]

The way I interpreted it was increased *ticket* prices, not season pass prices. Which it actually seems like they've been doing the last few years--I recall buying single day tickets for $40 anyday a few years back for Great Adventure, whereas now that's really only possible the occasional weekday/off peak season, with weekends and Fright Fest being $50 at the minimum.

[eugjackson]

 

I also wonder how long they will continue to avoid installing $20-30 million attractions. SFGAM particularly needs a true marquee ride. I'm sure Goliath is solid in all but it's no Kingda Ka, El Toro, X2, Tatsu, or T. Colossus. At the very least the 3 big SF parks should have gigas. When I'm at CP I'm always in awe of how popular MF is after all these years. It is the true gem and achor of CP and one of the reason people come back year after year. I don't see any reason why the big 3 couldnt get a return on a giga.

 

They don't have the money. Based on current revenue they have about 65M per year on rides. You can't build 20-30M coasters at 1 park unless you give every other park virtually nothing additions. SF back in the day was building multiple big coasters yearly, though revenue didn't support it and it ended poorly. Their debt went out of control. leading to bankruptcy.

[scottiemon]

If Six Flags was planning to, at any point in the near future, increase pricing, they wouldn't have advertised the membership based season pass pricing by promoting "pay the same price for life!" Beyond 2018-2020, I'm not sure any real plan exists aside from "cash stock, disappear."

 

SF Memberships are an ill conceived idea.

 

How do you figure? As a consumer I think they're amazingly convenient and given the price points they make a little more on those each year than a standard pass. I happily pay more though because it's so damn convenient.

 

The fact that it's convenient for the consumer doesn't disprove what you're saying, but I'm curious what your basis is for saying it.

 

It's a horrible business idea as it's priced lock. The original point I was discussing with the other poster was increasing revenue. Memberships where people can get a locked in $6/mth is not good business. SF in their own corporate investor presentation acknowledge they need and plan to increase prices and per visitor revenue. Memberships don't help.

 

It is only price locked for a year. I have had a membership now for about 3 years. They raised the price on me. I logged on to cancel. They offered a better price. I kept it.

 

Memberships are not a bad idea at all. They are pretty much the exact price of a season pass.

[kenban]

They don't have the money. Based on current revenue they have about 65M per year on rides. You can't build 20-30M coasters at 1 park unless you give every other park virtually nothing additions. SF back in the day was building multiple big coasters yearly, though revenue didn't support it and it ended poorly. Their debt went out of control. leading to bankruptcy.

 

They are spending a LOT more than 65 million in capital expenditures annually. These numbers are for all capital expenses not just rides. Except I have not seen numbers which separate attraction spending for any chain.

 

2014 - $108 Million

2015 - $114 Million

2016 - $123 Million

 

I will admit this is still a lot lower than Cedar Fair which is spending around $150 - $175 million annually. But enough money is being spent every year to afford at least one or two major coasters in addition to all the flat rides and 4D coasters. Six Flags has decided instead of building large expensive coasters to go a different route and is spending the money on Battle for Metropolis. Which I have never seen an official number but based on the cost of other Sally attractions Battle for Metropolis will cost $10+ million each, and it is being installed at 3 different parks next year.

[eugjackson]

They don't have the money. Based on current revenue they have about 65M per year on rides. You can't build 20-30M coasters at 1 park unless you give every other park virtually nothing additions. SF back in the day was building multiple big coasters yearly, though revenue didn't support it and it ended poorly. Their debt went out of control. leading to bankruptcy.

 

They are spending a LOT more than 65 million in capital expenditures annually. These numbers are for all capital expenses not just rides. Except I have not seen numbers which separate attraction spending for any chain.

 

2014 - $108 Million

2015 - $114 Million

2016 - $123 Million

 

I will admit this is still a lot lower than Cedar Fair which is spending around $150 - $175 million annually. But enough money is being spent every year to afford at least one or two major coasters in addition to all the flat rides and 4D coasters. Six Flags has decided instead of building large expensive coasters to go a different route and is spending the money on Battle for Metropolis. Which I have never seen an official number but based on the cost of other Sally attractions Battle for Metropolis will cost $10+ million each, and it is being installed at 3 different parks next year.

 

Read the investor reports. You're citing total capital investment. As I posted those are the capital investment numbers which they say are about 9% of total revenue. The capital investments are 60% rides, 25% asset management, and 15% in park(non rides) So take 60% of the number...that's how you get 65M from 108M. 68M from 114M. Haven't found 123M but take your word for it making 74M for rides

 

Tally up the 2017 additions:

3 Jl's at 10M is 30M

3 4D's at 6 -7M is 18 to 21M

2 Zamperla Discoveries at 3M each is 6M

1 Mega Disko at 1.4M

1 VR at 1M

1 skyscreamer - 5 to 6M

1 water coaster....never seen a price but high guess 5m

1 bonzai pipeline.....never seen a price but high guess 5m

 

That totals 75M and the cost estimates of the water rides may be high.