Six Flags international has posted a larger 4q loss than expected.
links
http://biz.yahoo.com/bizj/060308/1237541.html?.v=1
call at
http://biz.yahoo.com/cc/6/66086.html
Comments and Numbers of notable interest from the conference call -
Attendance was 30.1 mil up 4.9% percent without Astroworld numbers, per capita spending was $33.50 up 4% without Astroworld Numbers.
The attendance number was only up 4.6% when you include AW, but per capita increased 4.2% with AW's numbers. So while AW decreased overall attendance, they increased per capita.
Astroworld & Real Estate
Under questioning from Bears & Stearns' analyst and another analyst from SMS, Shapiro and Jeff Speed did say that full demolition of AW is expected to be complete by May. They have a final buyer in negotiations, with an expected price “in the ballpark” of $80 million.
The Oklahoma properties are in preliminary stage with several interested groups.
Shapiro mentions 3500 acres of excess land. When that number is questioned by the SMS analyst – he admits it is a rough number that Staubach Co. gave him during the proxy fight when they were only able to look at public record without co-operation from the former board. Staubach Co. is now on SFI payroll with a complete analysis on all real estate due by 3/24/2006. When asked if the “excess land” includes any land an existing park can expand on, he states that “There is no need to further expand any of the parks. Half of our parks are bigger than Disneyland. There are rides that are old and battered, that no one rides. If I want to put in a new ride I will pull one of those out.”
When asked if SFI would make any attempts to fix a park before deciding to sell it, Shapiro states that some parks may not be worth the amount of money it would take to upgrade, and that it might be a better value to shareholders if the parks were sold. It depends on what the analysis by Staubach Co. reveals.
Employee Costs
It cost SFI $12.6 million to change the management team.
5 GM’s were released. No more GM’s are expected to be released for the remainder of the season. In addition GM bonuses are now tied to Entertainment / Cleanliness / Per Capita spending & EBITA. Previously it was only tied to EBITA which meant a GM could skimp at the parks expense to make his bottom line look good.
Pension plan has been frozen and replaced with 401k. Merit raises for ’06 were discarded in favor of a bonus system and retention system for both yearly and seasonal employees. Universal training standards are now in effect company wide.
Parks in General
Mark Shapiro visited 24 parks in 30 days. It was originally to be 30 parks in 30 days, but he said some parks required more than one day.
He wants to improve the “streetmosphere” a term that he uses several times in the call. He also continues to compare SFI to Disney stating “We are a more convenient Disney”. He believes that by providing a better experience, more families will stay in the park longer, providing more time for them to spend money, thus increasing per capita spending, and giving a more positive perception of the brand.
Wants more variety in entertainment and rides stating the most popular ride at SFMW is the elephants and at SFGADV it’s the dolphins.
Every restroom will have a full time attendant this year.
Last year parks had an average of 1 character a day on the street. This year there will be an average of 30 per hour per day. This includes character breakfasts, character photo ops, character autograph sessions, and character train rides. There will also be a daily birthday celebration. See – revenue for more details
Looking at Partnering with Infiniti / CBS radio to provide more concerts at each park. Also looking into special athlete appearances, and a possible tour of the parks by Matt Hoffman of X-games fame with one week stops at each park.
Fastlane now named Flashpass after DC comic book hero The Flash. VIP passes for preferred seating at shows to be introduced as well to all parks.
Six Flags will concentrate on theming “We are a theme park, not an Amusement Park”
Revenue Generation at Parks –
“Ticket pricing will not raise significantly without significant investment in each park” “Season passes are discounted way too much – especially after we reposition the brand”
Shapiro says that there is a lot of “elasticity” in the current price of a Season Pass, and the company has gotten punch drunk off discounting them so heavily.
Compares the value of Six Flags to the value of a professional sports game, saying that the price increase of a ticket should match the investment put into that source of entertainment. Wants standardization of ticket price chain wide – with different tiers of parks charging the same price within each tier.
Photography provided $15 million in income last year. Shapiro feels this can be expanded on by providing characters for photographs, and by selling “Bugs Bunny frames” and similar add ons to place the pictures in.
There will be an upcharge for Character breakfasts, Daily Birthday Celebrations and Character Train Rides. The Train will shut down for 1 hour each day to allow for those who have signed up to ride the train with their favorite characters.
Wants more coupons in more places, but wants to decrease the amount of disparity between the discount types.
Talks about strategic sponsorships including hamburgers wireless, and the possibility of Internet Cafes. Indicated that surveys showed a high positive response to the idea of this.
Wendy’s will have 2 million tray liners and 60 million soda cups with discounts. The possible Papa Johns deal would have 10-15 million flyers a month on their pizzas. Ticketmaster is in negotiations to sell park tickets with web blasts to 3.8 million people.
An unnamed candy company is offering millions to have their product favorably placed in retail stores in the park.
Retail Per Capita last year was $2.21. Shapiro feels this can be changed by providing more “current” “pop-culture” items instead of the current out dated stock. He wants the focus to be on Looney Tunes and Justice League.
When asked about outsourcing concessions, Shapiro states that two companies are reviewing the parks kitchen facilities and staff, but he is not sure he wants to outsource. He says there is a lot of value in food. He mentions standardizing food prices saying that the price of Pizza is different in SFOG than SFMM. He also refers to SFGAM as “Six Flags Chicago”.
In addition, there will be more food and beverage carts this year to avoid long lines at the eateries. Shapiro wants more carts with more offerings “like they do at Disney”. Says that if a kid sell 3 bottles of water an hour – he has paid for himself.
Currently group sales are already up single digit % and per capita is up double digit % over last year at this time.
Families Teens Coasters -
The four new coasters this year cost $90 million. Shapiro mentions the Montreal coaster costing $19 million, saying “Not in a million years would I spend $19 million on a single coaster”
The final cost on KK will be north of $50 million after repairs. “This can’t be done at the expense of overall park atmosphere”.
“The arms race is over” Focus will be on paint, theming, family, security, and “Streetmosphere”.
$5 million of this years capital expenditure was diverted to pay for the new family initiatives.
Last years attendance was a 50/50 mix of teens to families, but anecdotes suggest there is more of a teen presence. He wants to use the “45th Anniversary Celebration” as a marketing vehicle to get families to come out to the park – Compares it to Disney’s 50th.
Under questioning from Wachovia – “We will not abandon teens, but paying $20 mil for a coaster is no more. There are several thrill rides I can get for single digit millions”
Final remark of the meeting – “The Chicago park is a great example of where we are heading with this company, especially the water park built within the theme park”
Sorry for the length. I’ll let you guys digest this, then I’ll chime in with my thoughts on this meeting.
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SFI post 4Q loss - Interesting Call
27 posts
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It's the most fun in the park when your laughing in the dark.
Thank you ihauntu2. Great report as usual from you.
Did any of the coasters at Great America cost $20 million?
I see season pass price going up. I like everything Shaprio has said to date, and it is clear as day that he is going to try to turn the Six Flags chain into Disney style parks, which isn't a bad thing considering the amount of money that Disney parks bring in every year. I think he is doing the right thing to SFI, in trying to get the chain out of the financial mess that it is in. I think that we are going to be in for a surprise come opening day at all the changes that are going to be made.
Raging Bull and Superman cost 25 million each and Deja Vu cost 20 million I beleive. 
Already you can tell that Great America is going to be one of those parks that will recive significant investment.
Why did S:UF cost more than Tatsu?
R.I.P. Deja Vu 10/07/01-10/28/07
I especially love the closing remark.
This guy says that these parks will not get expanded for the fact that there is no reason to. This puzzles me for the fact that our park expanded last year, and the crowds soon poored in. He also says that some rides are battered, and thus need to be replaced. Previously, he said that SF rides are the "best" rides on the planet. What ride is battered at SFGAm??? I'm really sure he has ridden all the rides at all the parks.
Lastly, he complains about the high roller coaster prices, but yet these rides take in the (thousands range) people an hour. I see in SF's future no more B&Ms, so stop wishing about those Floorless coasters or 4 dimensions types. I think he might try to substitute the roller coasters for rides like Revolution and King Chaos. Do this rides bring in more teens, or do rollercoasters (especially the battered ones). I heard that Superman cost 14 or 15 million. Are you positive Deja Vu cost 20 million? A regular Vekoma boomerang costs 4 million. Raging Bull would make sense considering that Goliath costs 20 million. Last edited by Ilovthevu' on March 8th, 2006, 6:42 pm, edited 1 time in total.
"I've been staring at the world, waiting. All the trouble and all the pain we're facing. Too much light to be livin' in the dark. Why waste time? We only got one life. Together we can be the CHANGE. So go and let your heart burn bright"
Where did you get this information? I would put both Raging Bull and Superman's numbers more around the 15 million range, and Deja Vu's initial cost is probably more close to 10 million, although with all the repairs, I'd say 20 million isn't a bad guess. I just think your Superman and Raging Bull numbers are way too high, especially because a coaster like Millenium Force, which is much bigger and more elaborate, cost 25 million. Top Thrill Dragster costed 25 million as well. '' If u commited suicide, u wouldn't be here anymore'' - Gangsta Fruit
Nice article it makes sense what he wants to acomplish for the company. Still some people and guest wont like it. I just hope he dont get rid of the bring a friend for free coupon, discount tickets from Jewel or the cans from coke that have discount for tickets I saw a lot of people using them. As for coaster he said thrill rides less than two digits mllions maybe will still see SF put in thrill rides and coasters that costs them less than 9 million dollars too bad no more new B&M coasters for SF unless they can make one for less than 9million. Will have too wait and see what SF will do in the future and how Shapiro will run the company and why did he call GA, SIX FLAGS CHICAGO it should be SIXFLAGS GURNEE the parks not located in CHICAGO.
Because people know where Chicago is. Except for people in the north suburbs, no one knows what Gurnee is.
I heard those numbers in various boards, and For a time i thought that info was on RCDB.com.
I wonder how this will turn out. I like the idea of having all of the character gatherings and train rides and such, and if people are willing to open the wallet, then they may as well jack that price up!:P
Now that turned out to be a wonderful investment. I think Six Flags would have been better off splitting that $50 million five ways and giving nice additions to parks that needed it.
Good. I'm sure not all people are happy about the "coaster wars" being over, but I'd rather ride a wonderfully themed attraction than Parking Lot: The Ride. There are a handfull of rides at GAm that could really use a fresh coat of paint.
Sweet  Finally Coaster Season!!
Alright my computer is up for the moment (Hard Drive is failing
 ).
Rb1 - Don't worry about discounts disappearing. He said he wants more outlets for discounts, and he even mentioned the coke cans as a great example. He is worried about the different levels of discount depending on the program, so he wants to bring them all to similar levels. Yeah the 20 million remark pretty much kills all hope of any more B&M's, but it leaves the door open for Vekoma, Premier, smaller Intamins? Ilovethevu - I believe the old and battered comment applies to some parks, not neccessarily SFGAM. He stated more than once in the call that they have no intention of raising front gate prices until the new rebranding takes full effect. This makes me think that the '06 pricing structure may have been set by the outgoing board as part of financing for the new rides? Also in this vein, it is pretty clear that Season Passes will increase significantly. If he had his way for '06 prices, I'm pretty sure we would have seen way higher prices. The add-on sales for the photographs should have been a no brainer for the previous owners. Having managed a retail store for a few years, I can tell you add-on sales make a huge difference in bottom line. It should also be noted that 4Q results included a $22.4 million loss as a result of discontinued operations. This is the cost of losing SFNO, and demolishing / moving SFAW. They also made a point of stating that their target fiugures for '06 take into account the continued loss of SFNO. They do anticipate SFNO adding to FY '07 numbers. They also tend to think that the benefits of their branding plan will not be fully realized until the '07 season. Personally that sounds like they were giving themselves wiggle room if their initiatives go bust. Stock closed @ $10.40 today down .07 from yesterday. It opened $10.23 and plunged heavy today going as low as $9.70. It had a huge rally bouyed by large institutional investors mid morning to afternoon. This should tell you something about what "smart money" thinks of the plans for SFI. It's the most fun in the park when your laughing in the dark.
^ Some rides do need to be repainted. V2 needs it, not desperatly, but the sides of the track need to be repained because you can see where the wheels have been running on the track. Also, the supposts need to be repainted dark blue. Like they were when V2 opened. The additional supposts don't match the main ones. Like I said though, no biggy.
It's green. It's blue. It's all over you! Enjoy your ride on Déjà Vu
What I also found interesting about this call, was how Shapiro blasted Kingda Ka.
He said something to the effect of "The infamous Kingda Ka ride, that was down 75% of the year and cost us 50 million dollars." Another quote was "Not in a million years would I spend 20 Million dollars on a rollercoaster." Shapiro thinks that Great America is how SF should be, and i think thats a testiment to the hard working people in Gurnee. With people going into shock about the comments Shapiro said about coasters, Logical thinking about say that If Six Flags is trying to gear everything toward the family, Parades, family attractions etc.... Wouldnt that mean shorter lines for the rollercoasters? Of course it would... but still
Yet another gloom and doom forecast from someone that doesnt know how business works. As i have said before, Rollercoasters are a band-aid solution that only brings modest Returns. Families, Bugs Bunny, Little kids are what makes the money. Thats why Shapiro is hell bent on making these changes.
You are right on the money (no pun intended). As I have stated before Familes =$. $= new rides, and improvements. Lets not forget, that spending $20-$50 million on a new coaster, every year to atleast 2-3 parks, is what got SFI in the mess that it was in.
First off, I don't think he was referrning to any rides at Great America. Second, I am sure, and SFMM comes to mind, that there are rides at other Six Flags parks that just go to hell for whatever reason, simply because the former regime over at SFI thought the solution of getting more guest in, is spening money on a coaster that they couldn't afford, and let the older rides get worse. In example our former Z-Force at MM.
Yes they did, but, Shaprio's main concern right now, is changing the image that Six Flags parks have, and more importantly, getting the company out of debt. If you want to get out of debt, you don't go out an spend more money. You work your way out of debt, and then you worry about getting the things you want.
I guess the problem with him is that he is kind of inconsistent. He says that SFGAm is the best park, and thus other parks should be shaped after it. How many other parks have 4 B&M coasters? That alone shows you a big difference between many other parks. He says that he doesn't want anymore high costing roller coasters.
So, how can you shape other parks the same way if you don't want them. Flats are a good thing, but you still need to balance things. Our park has the goods in both flats and rollercoasters. Many Vekomas are really rough (except for the main one), and Premier seems to be stuck on speed coasters such as Mr. Freeze. It's going to be SFMouseWorld pretty soon  . You can't even get a smaller version of an Accelerator coaster for under 10 million (13 million). I don't seeing more V2's at parks that fulfill this requirement (8.5 million), but people usually complain that it doesn't go fast enough, and it is not a complete circuit.
Thus the coasters under 10 million are not complete circuits, kiddie coasters, really rough, and are mouses. Believe it or not, I'm not concerned that our park may not be getting a rollercoaster for awhile (even though I would be happy if it would happen), but these other poor parks are just going to get worse, and worse. Characters don't change how the rides are, and there needs to be enough for people to do in the park. The big three all have the most B&Ms (trend or not) and are also the most crowded (SFGAm, SFMM, and SFGAdv). The other SF's don't seem to be anywhere in the top thirty. I'm just curious if you think SF will spend less money next year then the years previous do to his philosophy, and how much do you think he would reduce it by. "I've been staring at the world, waiting. All the trouble and all the pain we're facing. Too much light to be livin' in the dark. Why waste time? We only got one life. Together we can be the CHANGE. So go and let your heart burn bright"
I think you missed the point with that statement. What he meant is the way the park looks, and how it is ran. It didn't have anything to do with coasters.
Ilovethevu, Your just a lost cause...
Do you even read anything? once again Rollercoasters, DO NOT repeat DO NOT bring in the revenue that family orintated attractions bring in. Christ son, what more do we have to say?
Honestly, someone should pave 10 acres with bare concrete, no theming, and just plop a bunch of roller coasters down to keep the diehard enthusiasts happy. I'm an ACEer, but seriously, there is more to my life and the theme park experience than roller coasters.
To all the teens out there that think otherwise (*cough*Ilovthevu'*cough*): Q: Who has more money, Mom and Dad, or their kids? A: Mom and Dad Q: Who does Six Flags want inside their parks to spend their money? A: Mom and Dad Q: Who will Six Flags keep happy so they come into the park in the first place? A: Mom and Dad
Well, Kings Island and Canada's Wonderland have no B&M coasters, yet they are constantly two of the most visited seasonal parks in North America. These two parks have gone for almost six years with one coaster addition each, and they look like they are doing pretty darn good. If you were Six Flags, wouldn't you try doing things their way and see if you can capture the same success? It's amazing what kiddie land expansions, waterpark expansions, a dark ride, and a Zamperla Volare can do for your attendance.  Last edited by Mr. SFGAm on March 9th, 2006, 8:54 pm, edited 1 time in total.
Finally Coaster Season!!
FYI: Canada's Wonderland isn't located in the U.S.
^ Are you serious? I thought it was by WDW.
 i'm rocking the suburbs, just like quiet riot did...
Based upon what I heard Shapiro say in the past and what he has done, I will say that he will bring in mega million dollar coasters. Not many, but he wil eventually.
He has changed his mind about things in the past before about things. Don't think he will not change his mind about bringing in B&M's. He likes to talk about what he wants to change he will say things that he really truly beieve what he should do. To help keep market value up. Then he goes and does his research and some things he finds is wrong and should be done a different way. I think he is smart and is willing to take the time to help make the theme park business rolling. He will find that you need a mixture of great entertainment (which I think he is trying to estabilish) and great rides to equal a great park chain Crystine
"...and enjoy the rest of your day at Six Flags"
New coasters will not disappear at the parks Im sure well probably see another record breaking coaster at the park in the future even if Shapiro dont want it because the public knows that six flags is well known for its coasters. Spending more on improving parks and making it family friendly is a good idea but teens are family too they pay for adult admission not childrens discounted tickets so attracting them would be a good idea for the park too. He should start focusing on attracting all types of guest not just families and also making park improvements like ride repainting, cleaner parks etc. which is what he is trying to accomplish for the company I hope.
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