Six Flags (NYSE:PKS) appeared to be on the road to overcoming its troubles when Washington Redskins owner Dan Snyder accumulated a nearly 9% stake in the regional amusement park operator last year. He joined Microsoft's (NASDAQ:MSFT) Bill Gates, whose Cascade Investment group owns a meaty 11.5% stake in the company.
Yet before anyone could get around to making the obvious "you must be this rich to buy" jokes, one of the billionaires announced that he was abandoning the swinging ship. That was last month, and I took Snyder to task for bailing on the company when his cries for change went unheeded.
The thing is, just about anyone who's been to a Six Flags park more than once knows that the company's problems are obvious and the fixes easier than Six Flags is willing to admit.
"Six Flags has banked on a cheap gate to get butts in the door and hopes that they'll spend like crazy once inside the parks," says Jeff Putz, who runs the popular CoasterBuzz.com roller coaster enthusiast site. "I think what they got instead was a babysitting service, and the babies don't spend the way a family of four does."
Indeed. As a regional park operator, Six Flags relies on repeat business from the locals to keep the turnstiles clicking. That finds the company resorting to selling dirt-cheap season passes for just a little more than what a visitor would pay for a one-day admission ticket. Yet it's a flawed premise because frequent visitors are less likely to load up on park souvenirs or even eat at the park.
Putz claims that Six Flags' reputation for spotty customer service is also holding it back. That's a common complaint, but I'm not entirely sure that it needs a solution different from the pricing dilemma. After all, if parkgoers stretch the value of their cheap season passes to the point where a few hours at Six Flags every week becomes more economical than hitting up the local multiplex, wouldn't that belittling, devaluing attitude prove to be contagious to the front line of ride patrons and customer-service personnel?
In Florida, Disney's (NYSE:DIS) annual passes will run you just over $420 for an adult guest. That's nine times greater than the $47.99 (plus tax) pass that Six Flags Magic Mountain is pitching on its site. While Disney is in a unique position, with the vast majority of its guests arriving from out of town, a season pass to Cedar Fair's (NYSE:FUN) flagship Cedar Point park will cost you more than twice as much as the Magic Mountain ticket, while General Electric's (NYSE:GE) Universal Orlando resort is charging nearly four times as much as Six Flags Magic Mountain for its year-round pass.
Naturally, raising season-pass prices would hurt attendance at Six Flags. But it would also lead to a spike in per capita spending -- and no doubt per capita pleasure -- among those who do visit the park. Besides, if Six Flags' goal has been creating an amusement park experience that's attractive only to those who can make it up in volume, then let it work without a net. It was a flimsy net, anyway -- one in which coins would fall through the net's gaping holes. Let Six Flags earn every turnstile click. When every guest will contribute more to the park's financial health, every guest will be valued, and just watch to see whether that turns around the customer-service approach.
I'll be back Friday with some more suggestions for Six Flags. The company doesn't have to listen, but now with Snyder leaving and Gates staring at a loss on his substantial stake, the company had better not wait until its non-billionaire investors start to bail as well.
Can Six Flags be saved? Here are some recent Foolish stories on the park's struggles:
- Six Flags: It's Fly or Die
- Bill Gates to Upgrade Fun
- Redskins, Redmond, & Red Ink
- Six Flags Grows Up
Longtime Fool contributor Rick Munarriz did manage to go on some fascinating coasters this past summer -- including Top Thrill Dragster at Cedar Point in Ohio and X at Six Flags Magic Mountain in California. He owns units in Cedar Fair and shares in Disney. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
