Six Flags Could Dust Itself Off in Dubai

Just when you thought that Dubai had brokered way too many deals to import stateside amusement park concepts into the United Arab Emirates, along comes Six Flags Dubailand.

Dubai Holding's Tatweer is forming a strategic alliance with Six Flags (NYSE: SIX) to bring the chain's signature brand of scream-machine thrills to the Arab world, with the first park set to break ground in Dubai next year.

The Dubailand project is starting to turn into a haven for theme-park lovers. Universal Studios and DreamWorks Animation (NYSE: DWA) have already inked deals for licensed parks in the Dubailand complex that will include theme parks, eco-tourism projects, shopping malls, restaurants, and residential units. Even Marvel (NYSE: MVL) has a licensed superhero park going up in Dubai.

Just last week, Anheuser-Busch (NYSE: BUD) announced that it had licensed its four theme-park concepts -- Sea World, Busch Gardens, Discovery Cove, and the recently christened Aquatica waterpark -- as a stand-alone concept called Worlds of Discovery Dubai.

Six reasons to wave six flags
The Dubailand project promises to be breathtaking. It's not just the American properties that are getting an Arabian spin. The venture features things like an indoor snow dome and an enclosed park that features life-sized replicas of the seven wonders of the world.

Six Flags will have company in targeting the tourism bucks, but there are several reasons to get excited about this park.

Many of the parks will parallel their sister parks closer to home, but Six Flags Dubailand may prove to be even more ambitious. A debt-laden Six Flags won't have to appease its creditors in mapping out the Dubai project. It will simply collect royalties after it conceptualizes and oversees the attraction, leaving Tatweer to bankroll the actual construction. In other words, this will be the gray matter canvas that CEO Mark Shapiro and his associates always wanted. They're dreaming on someone else's dollar, so it won't be a matter of simply slapping a Tony Hawk theme on a spinning mouse coaster.

The strategic alliance with Tatweer will also seek to expand the concept beyond Dubai, including branded restaurants, hotels, and retail outlets. In short, the park in Dubai may be what the rest of the Six Flags chain aspires to become. It's more than just found money. It's an incubator that pays for itself.

If you build it, they will sum
With $2 billion in debt, Six Flags rarely gets the chance to dream out loud. Rivals like Disney (NYSE: DIS) and Cedar Fair (NYSE: FUN) have spent the past few years opening or acquiring new parks, tacking on adjacent hotels when possible. But Six Flags has sold its smaller parks and mostly come up short on the hospitality tie-in.

Six Flags opened Great Escape Lodge, complete with an indoor waterpark for resort guests two years ago, next to its amusement park in upstate New York. It could have been the start of something special. Lord knows that the company's popular Great Adventure is dying for an adjacent resort given the lack of nearby hotels. Magic Mountain in California is surrounded by hotels, but none of them company-owned.

However, Great Escape Lodge proved to be the old regime's last hurrah. It was one of the few things that the old brass at Six Flags did right before Shapiro and Dan Snyder succeeded in shooing them out the door. The lodge pointed the company in the upscale family-friendly direction that Shapiro is championing, but it remains a stand-alone venture.

Six Flags never became the next incarnation of Great Wolf Resorts (Nasdaq: WOLF). Disney is doing so well with its lodging business that it has been selling upscale Disney Vacation Club timeshares for years. Keeping guests at their destinations for days is important to Disney. Six Flags settles for entertaining the locals for hours.

The line starts here
Six Flags Dubailand is awesome, but it isn't a near-term solution. The royalty streams won't begin trickling in for several more years. The overseas brand-building will have a positive impact, especially as Six Flags continues to build out its entertainment division, but the company is going to have to master its cash flow demons between now and then just to get to that pot of gold.

It's a long and bumpy rainbow until then. Let's hope that Six Flags is tall enough to ride.