Six Flags is getting off its wild ride just in time for the start of the theme-park season.
One of the biggest theme-park operators, the newly named Six Flags Entertainment will emerge from bankruptcy protection in May with a lighter debt load and a plan to boost profits.
“This year is very much about stabilizing the company and keeping it on the rails while at the same time pursuing growth avenues on the marketing and international front,” said Six Flags CEO Mark Shapiro.
Luring more visitors to the company’s 19 amusement parks is key to its turnaround. Attendance fell almost 6 percent to 23.9 million in 2009, hurt by the recession, rainy weather, swine flu fears and negative publicity around the bankruptcy.
With the economy still recovering, one of Six Flag’s biggest challenges will be weaning customers off discounted tickets, particularly in a recession, analysts said.
“These park groups have bastardized the front gates with discounts,” said Dennis Speigel, president of International Theme Park Services, a consulting firm. “The last two years the discounts have been deeper and longer and have started earlier for the entire industry.”
Shapiro has remade Six Flags into a more wholesome, family-oriented entertainment experience, rather than relying on ever bigger and more expensive roller coasters to draw thrill-seeking teens. He has cleaned up the parks, bolstered security and improved customer service.
However, he couldn’t overcome the massive debt the company had accumulated during an acquisition binge that ended in 2005, when Washington Redskins owner Daniel Snyder led a proxy fight for control of the company.
Six Flags, which is expected to win approval for its reorganization plan at a hearing on April 28, will emerge from bankruptcy with about $1 billion in debt, down from $2.7 billion.
Massive consolidation and mounting debt in the theme-park business have made it a playing ground for private-equity firms. Apollo Group walked away from a bid to acquire Cedar Fair, which runs Knott’s Berry Farm, and is said to be eyeing Six Flags. Shapiro dismisses such talk.
“There is nothing to it,” he said in an interview at his Times Square office.
Shapiro is busy trying to wring more money out ofsponsorships and licensing deals. He has brought some ESPN sales vets on board to help position Six Flags as a major out-of-home marketing solution for brands and advertisers eager to get their messages across to a captive audience.
In addition, he is pursuing international licensing deals to set up parks overseas. Despite the financial meltdown in Dubai, the company is collecting licensing fees from a deal for Six Flags Dubailand. Shapiro is in talks with developers in China, South Korea and India.
Six Flags expects revenue from licensing and sponsorship deals to total $52 million this year, compared to $60 million in 2008, before the ad market tanked. With advertising recovering along with the rest of the economy, Shapiro believes he can hit $100 million three to four years from now.
“It’s actually a pretty good strategy,” said Nima Samadi, an industry analyst at IBIS World. “It’s not subject to the variability like attendance. Those contracts are set ahead and can accurately project revenue.”
Shapiro makes no secret of his desire to put the past year behind the company. He points to signs of a rebounding economy and strong spring sales as evidence this year will be better for the theme-park business.
“We’re coming out so it’s going to be a gradual recovery,” he said. “But we’re having a terrific spring right now.”