SixFlagsGreatAdv
07-21-2001, 08:48 PM
First Six Flags Arugment
By Rick Aristotle Munarriz (TMF Edible)
June 27, 2001
I'm going to go out on a limb here. I'll bank on my buddy Paul sharing my enthusiasm for roller coasters and the amusement parks that house them. Of course, if we were simply two punks gushing over thrill ride affinity, your time would probably be better spent strolling through the rec.roller-coaster newsgroup.
So let's dig into the meat of the matter. Regional amusement parks have been climbing the equity chain lift all year long. As of last week, the industry's two pure plays -- Six Flags (NYSE: PKS) and Cedar Fair (NYSE: FUN) -- were sporting double-digit stock gains so far this year. It's easy to see why. In these uncertain economic times, leisure, compromised and discounted, is a goldmine.
Unlike exotic destinations or overpriced Mickey Mouse parks, regional theme parks are local outlets begging for much-needed reality escapes. Everything from summer tax rebates to a respite in fuel prices is helping feed an industry that is showing welcome resilience already.*
It gets better. According to the International Association of Amusement Parks and Attractions, park attendance has grown from 253 million to 317 million patrons over the past 10 years. That's decent. But what really needs to be hammered home is that over the same decade, the industry has gone from $5.7 billion a year in revenues to $9.6 billion. Broken down, that means that per capita spending has shot up from $22.53 back in 1990 to $30.28 this past year.
So while the allure of a sector that is growing in popularity may ring obvious, the fact that the average consumer is spending even more at the parks is the real double-whammy bonus prize here. That is why Six Flags rocks.
Sure, Cedar Fair has acquired select properties and tried*its best to enhance the operations. But that's kids' play. Six Flags has gone in, pumped up the attractions, and exploited the Six Flags branding with delicious results. When the company added the Six Flags banner to Kentucky Kingdom, for example, park attendance shot up by 35% the very next season. The turnstiles continue to click even faster now. Last year, the four acquired parks that were rebranded resulted in a 43% uptick in attendance, a 66% spike in revenues, and a doubling of park level cash flow.
Having already gone over the lucrative growing power of each new parkgoer, it's easy to see why Six Flags has gone to such great lengths to expand quickly. Does it mean the company has taken on bucketfuls of debt? Yes. But the leverage is worth it. Over the past five years, gross profits have skyrocketed from $39.9 million to $535.3 million. Yes, Six Flags had more in gross profits alone last year than Cedar Fair produced in top-line revenue.
Is Six Flags profitable? No. Not in the literal sense. But that is mostly due to the amortization and depreciation costs that it has had to write off in its acquisitive pursuits. The company remains cash-flow positive and its operating income has actually shot up ten-fold since 1996.
With 39 different properties, Six Flags is everywhere. Dozens here. A few more in Europe and Mexico. That's not only important from a personal radius to entertainment perspective, but it also keeps Six Flags from riding its success on just one or two parks.
That's the problem with Cedar Fair right now. It's got the amazing Cedar Point. Point given. Literally. If you're into roller coasters, St. Peter is manning the ticket booth at Cedar Point. I made my second trip to this thrill oasis just last week and had a great time. Cedar Fair also*has the all-year Knott's Berry Farm in California. The rest of Cedar Fair's portfolio is knee-deep in mediocrity.*
But even the gems aren't exactly sparkling right now. Last year, Cedar Point could lay claim to having the world's biggest roller coaster as well as the park record for the most roller coasters. Not now. In an industry of perpetual one-upsmanship, Japan's Steel Dragon now looks down at Cedar Point's Millennium Force while Six Flags' Magic Mountain now holds the coaster count record.
Knott's is facing a bigger problem by operating in Disneyland's Anaheim shadow. While the regional parks are banking on a golden season, Disney (NYSE: DIS) is in retreat mode. From staffing cutbacks to watered-down attendance projections, Anaheim just won't be the destination it usually is this time of year. Even worse for Knott's is that the dry well of foreigners at Disneyland has the Mouse gunning for Knott's stronghold -- locals. At Disney's troubled new park, Disney's California Adventure, adult residents of Southern California will be allowed to pay child admission rates and bring their kids for free. Disney? Discounting in the peak summer season? Angling for the Knott's crowd?
Not good.*
That's why it's good not to have all your Easter eggs in one basket. And as for Six Flags' mascot? Bugs Bunny? When he gnaws on his carrot and shoots off one of his "What's Up, Doc?" lines, you'll already know the answer.
Six Flags. That's what's up. And that's all folks!
By Rick Aristotle Munarriz (TMF Edible)
June 27, 2001
I'm going to go out on a limb here. I'll bank on my buddy Paul sharing my enthusiasm for roller coasters and the amusement parks that house them. Of course, if we were simply two punks gushing over thrill ride affinity, your time would probably be better spent strolling through the rec.roller-coaster newsgroup.
So let's dig into the meat of the matter. Regional amusement parks have been climbing the equity chain lift all year long. As of last week, the industry's two pure plays -- Six Flags (NYSE: PKS) and Cedar Fair (NYSE: FUN) -- were sporting double-digit stock gains so far this year. It's easy to see why. In these uncertain economic times, leisure, compromised and discounted, is a goldmine.
Unlike exotic destinations or overpriced Mickey Mouse parks, regional theme parks are local outlets begging for much-needed reality escapes. Everything from summer tax rebates to a respite in fuel prices is helping feed an industry that is showing welcome resilience already.*
It gets better. According to the International Association of Amusement Parks and Attractions, park attendance has grown from 253 million to 317 million patrons over the past 10 years. That's decent. But what really needs to be hammered home is that over the same decade, the industry has gone from $5.7 billion a year in revenues to $9.6 billion. Broken down, that means that per capita spending has shot up from $22.53 back in 1990 to $30.28 this past year.
So while the allure of a sector that is growing in popularity may ring obvious, the fact that the average consumer is spending even more at the parks is the real double-whammy bonus prize here. That is why Six Flags rocks.
Sure, Cedar Fair has acquired select properties and tried*its best to enhance the operations. But that's kids' play. Six Flags has gone in, pumped up the attractions, and exploited the Six Flags branding with delicious results. When the company added the Six Flags banner to Kentucky Kingdom, for example, park attendance shot up by 35% the very next season. The turnstiles continue to click even faster now. Last year, the four acquired parks that were rebranded resulted in a 43% uptick in attendance, a 66% spike in revenues, and a doubling of park level cash flow.
Having already gone over the lucrative growing power of each new parkgoer, it's easy to see why Six Flags has gone to such great lengths to expand quickly. Does it mean the company has taken on bucketfuls of debt? Yes. But the leverage is worth it. Over the past five years, gross profits have skyrocketed from $39.9 million to $535.3 million. Yes, Six Flags had more in gross profits alone last year than Cedar Fair produced in top-line revenue.
Is Six Flags profitable? No. Not in the literal sense. But that is mostly due to the amortization and depreciation costs that it has had to write off in its acquisitive pursuits. The company remains cash-flow positive and its operating income has actually shot up ten-fold since 1996.
With 39 different properties, Six Flags is everywhere. Dozens here. A few more in Europe and Mexico. That's not only important from a personal radius to entertainment perspective, but it also keeps Six Flags from riding its success on just one or two parks.
That's the problem with Cedar Fair right now. It's got the amazing Cedar Point. Point given. Literally. If you're into roller coasters, St. Peter is manning the ticket booth at Cedar Point. I made my second trip to this thrill oasis just last week and had a great time. Cedar Fair also*has the all-year Knott's Berry Farm in California. The rest of Cedar Fair's portfolio is knee-deep in mediocrity.*
But even the gems aren't exactly sparkling right now. Last year, Cedar Point could lay claim to having the world's biggest roller coaster as well as the park record for the most roller coasters. Not now. In an industry of perpetual one-upsmanship, Japan's Steel Dragon now looks down at Cedar Point's Millennium Force while Six Flags' Magic Mountain now holds the coaster count record.
Knott's is facing a bigger problem by operating in Disneyland's Anaheim shadow. While the regional parks are banking on a golden season, Disney (NYSE: DIS) is in retreat mode. From staffing cutbacks to watered-down attendance projections, Anaheim just won't be the destination it usually is this time of year. Even worse for Knott's is that the dry well of foreigners at Disneyland has the Mouse gunning for Knott's stronghold -- locals. At Disney's troubled new park, Disney's California Adventure, adult residents of Southern California will be allowed to pay child admission rates and bring their kids for free. Disney? Discounting in the peak summer season? Angling for the Knott's crowd?
Not good.*
That's why it's good not to have all your Easter eggs in one basket. And as for Six Flags' mascot? Bugs Bunny? When he gnaws on his carrot and shoots off one of his "What's Up, Doc?" lines, you'll already know the answer.
Six Flags. That's what's up. And that's all folks!