SFNO May Never Re-Open...

[[jonrev]]

This doesnt surprise me.


Read full article here:
http://www.nola.com/newslogs/tpupdates/ ... tml#157149

Experts say reopening Six Flags senseless
By Rebecca Mowbray
Business writer

The company that owns Six Flags New Orleans does not want to re-open the flood-ravaged eastern New Orleans theme park, and has sent a proposal to the city that would allow the amusement company to walk away from its 75-year lease, according to documents.

Six Flags Inc. has offered to pay the city $10 million to cover rent to the city, give the city 66 acres of land the company owns adjacent to the park, and give the city 20 percent of its insurance proceeds above $75 million. The amusement parkhas been closed since Hurricane Katrina.

News of the proposal marks a change from Six Flags’ public stance so far. Until this disclosure, the company said that the park would be closed for the 2006 season, but that it hoped to reopen the property and was working with its insurers. The company now says it wouldn’t make sense to open the park, which was not successful even when the city had nearly a half-million residents.

“It’s clear that the people of New Orleans weren’t embracing the park” even before the storm, Six Flags spokeswoman Wendy Goldberg said. “We think it presents a mutually beneficial solution to both of us. We thought it was a win-win. The city would get land it could use for other purposes, as well as liquidity.”

But Mayor Ray Nagin says that the city plans to hold the New York company to its agreement to operate the park.

“They’re not excited about coming back into the market right now. If any company is trying to figure out an exit strategy, they are,” Nagin said this week in an interview at the Times-Picayune. “We have a pretty solid agreement with them [requiring them to operate the park for 75 years]. They’re claiming they can exercise out of it, but they’re going to have to pay us.”

Six Flags bought the $135 million park at the discount price of $22 million out of bankruptcy, but even after the company installed five new rides backed by a major advertising push, the park failed to deliver financial results.

While Six Flags refuses to detail the damage at the park, its rides and buildings sat for weeks in an estimated 12 feet of brackish water and the park is located on the side of the city that suffered the greatest wind damage. The park now sits idle, overgrown with brush, while a security guard watches the gate.

“They’d be absolutely out of their minds to try re-open that park,” said Dennis Speigel, president of International Theme Park Services, a consultant who has followed the Jazzland saga and the corporate troubles at Six Flags. “That has been a marginally performing park since day one.”

If the park closes, it will be a headache for the city, which is on the hook for the $20.4 million that remains on a $25.3 million loan used to build the park through the U.S. Department of Housing and Urban Development’s Section 108 loan program.

In each of the three years that Six Flags operated the park before it closed, revenues were less than $29.4 million — the amount necessary for the percentage formula to exceed the $1.4 million base payment.

The park generated $24.5 million in revenue in 2003, the year that Six Flags installed $25 million in new rides and heavily advertised their arrival. It generated $18.1 million in 2004 and $15 million last year, when the season ended in late August instead of at Halloween.

With the prospect of revenues even worse for the park now that it’s located in a flooded and gutted area in a city with half its pre-storm population, it’s unlikely the Six Flags would ever pay rent on the park.

But HUD says its hands are tied. Because the money was actually loaned by investors and guaranteed by the city through the Section 108 program, HUD has no authority to forgive the loan. If the park never re-opens, the city will be required to repay the remaining $20.4 million debt.

Six Flags notes that it has an obligation to rebuild the park, but only to the extent of the insurance proceeds received, and it’s unclear how much money the park will get.

The company has received no insurance proceeds to date and believes that its claim may ultimately require litigation. It’s fighting the same flood versus wind battle that many homeowners around New Orleans are fighting: the park has $180 million of “named storm coverage” with full replacement cost value, but only $27.5 million in flood coverage.

Six Flags proposes giving the city 20 percent of its insurance proceeds for property damage beyond $75 million. Goldberg said the $75 million figure represents Six Flags’ total investment in the property to date.

The letter notes that it does not think it would be “a prudent use of resources” to rebuild and repair the park. “It had been a disappointment in terms of its performance even before the storm, and the factors impeding its performance have only worsened,” the letter reads. “As a public company with responsibility to our shareholders, we could not therefore justify investing anything more than our minimum legal obligations.”

In other words, Six Flags wants to get rid of anything that does not show good potential for profit, and that doesn’t bode well for resurrecting the New Orleans park.

Speigel, the Cincinnati theme park consultant who has followed the saga at the New Orleans park and the slow decline of Six Flags as a company in recent years, said that New Orleans won’t make the cut to survive.

Speigel has heard that there was “incredible deterioration on the equipment and the buildings and the facilities” because the park sat in water for so long. “I do not think it is possible to salvage it. Too much damage,” Speigel said.

Plus, Speigel notes that the park is now located in an area with no population to go to the park or work at the park, and there are no nearby services for park patrons. With people relocating along the I-10 corridor to Baton Rouge or on the I-12 corridor between the Northshore and Baton Rouge, Blue Bayou Waterpark and Dixie Landin’ Family Theme Park in Baton Rouge are better situated to pick up the business.

Speigel said. “In my opinion, the best thing that could happen is to just let the park die rather than to resurrect it.”

[Stickmassacre]

Well, can't say we didn't see this coming.

[zjohn1988]

GOOD

[EagleFan344]

Its not like theres any good rides there that I need to ride.

[shockwave guy mark]

well it just was a brand new park in a bad area. Thats the problems with theme parks near the ocean, they can easily be destryed bad hurricanes, and storms. Well at least it had a good life to people that live near there.

[CoasterDude12-2]

I actually got to go there and ride the rides...it sucked then and 12 feet of flood water doesn't make it any less suckier.

[EagleFan344]

^You have some rare credits now

[iluvthebullforever]

never been there but i heard its not that fun!

[Sedir]

Well at least it had a good life to people that live near there.

Well actually the article says that another reason of why to never reopen that park again because even locals didn't go to it often.

[zjohn1988]

^they'd rather spend their money on sex changes...

[iluvthebullforever]

i know! give me a break!

[ragingbullchick]

It's really sad why it closed, but it was a crappy park.