If only saving Six Flags (NYSE:PKS) could be as simple as following the sage corporate turnaround advice offered in the infectious "We Like to Party" song that is attached to the regional park operator's Mr. Six marketing campaign.
Hey now, hey now, hear what I say now. Happiness is just around the corner.
The only problem is that after six years of annual deficits, juggling debt, and a free-falling share price, the company just can't seem to turn that corner.
Dan Snyder? Good luck.
Last week, Snyder launched a gutsy proxy battle to take control of the drifting company, and I wish him all the best. As a Six Flags shareholder, roller coaster junkie, and fan of a good corporate battle, I welcome a firestarter in a company that has neglected its potential for far too long.
Some of Snyder's suggestions make sense. Others seem to be clouded by his successful tenure as the owner of the Washington Redskins. His football team has a season-ticket waiting list 140,000 names long, but it just doesn't work the same way at an amusement park's turnstiles.
Here are the six keys to getting Six Flags back on its feet:
1. Raise season pass prices
Growing attendance at Six Flags isn't as important as improving the quality of that attendance. For far too long, Six Flags has relied on a steady flow of regulars to keep the parks busy during the operating season, but that's not the ideal crowd. They're local, so they have no need for souvenirs. They know the parks too well to pay up for overpriced food and beverages. Six Flags needs to start attracting the right kind of patrons.
"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, operator of the popular CoasterBuzz.com roller coaster enthusiast site, told me earlier this year. "I think what they got instead was a babysitting service, and the babies don't spend the way a family of four does."
He couldn't be more right. That's why suggesting that a company packing $2.3 billion in debt takes a chance by rolling out a new pricing policy that may alienate the local aficionados isn't as risky as it may seem.
2. Lower ticket prices
Yes, to help offset the likely defection caused by higher season passes, cheaper one-day admission prices need to kick in. I'm not talking about giving away the gate. I'm talking about aggressive pricing to win over a new audience that will realize the value of a day of at the park over the many other leisure alternatives that are available. You can still have promotional tie-ins and discounts, but the markdowns won't have to be that sharp if the walk-up ticket price is still reasonably attractive.
A park can make more money off a large family spending a single day at the park than from a tightwad teen who visits every single summer weekend. What's more, it also helps stack the deck in the park's favor when that same family provides a favorable testimonial (read: free advertising) to its circle of family and friends.
3. Manage the excess real estate appropriately
It's not a coincidence that Snyder wants the chairman of homebuilder NVR (AMEX:NVR) on the Six Flags board of directors. He has made it clear that Six Flags is sitting on 3,500 acres of unused land. That valuable real estate on the open market would go a long way toward helping the company scale back its debt load.
There are two problems with unloading the turf. First, if Snyder's aim is true and Six Flags matters again, the parks may find that extra land handy in the expansion process. Just ask Disney (NYSE:DIS) how landlocked it felt when Disneyland became a runaway success and nearby land was hard to come by. The second problem is even bigger. Selling off adjacent land to make room for residential communities and, to a lesser extent, commercial developments surrounds a park with activist homeowners who can stifle an attraction's prospects. Good luck trying to flesh out the parks with more live concerts, nightlife venues, and gargantuan thrill rides. Your new neighbors will fight you every step of the way -- and you'll feel silly for giving them the keys.
A better approach would be to transform vacant land into revenue-generating property. Take a look at what Viacom (NYSE:VIA) did with its Kings Island amusement park in Ohio. Earlier this year, the company agreed to provide some unused land to Motley Fool Rule Breakers pick Great Wolf Resorts (NASDAQ:WOLF) in exchange for a 15% stake in the onsite lodge. The property should provide Viacom with year-round revenue, given Great Wolf's magnetic indoor water parks.
I am not naive, Mr. Snyder. I realize that this 30-park chain may be something like a 25-park chain in five years, with a much cleaner balance sheet and a much higher share price. I'm just asking that you think over every single divestiture with an eye toward its effect on Six Flags' future synergy.
Go ahead and strike some attractive deals -- short-term leases whenever possible -- to draw in area merchants, restaurateurs, and lodging facilities. Milk the real estate in ways that will make the parks even more attractive without relinquishing the deed. You'll regret it if you don't.
4. Dude, fix your website
There is nothing fundamentally wrong with the Six Flags website. The problem is that there is nothing fundamentally right, either. This isn't just a knock at Six Flags. Web development among amusement parks is light-years behind where it should be. Parkgoers tend to be an Internet-savvy lot, yet most parks offer cookie-cutter sites that do little to make a property endearing and even less to make the websites worth multiple visits.
Earlier this year, Holiday World in Indiana started a blog to provide a little behind-the-scenes color at a theme park that is routinely honored as the nation's cleanest and friendliest park. (If you could bottle Holiday World's operating acumen, Snyder would be best served to order himself a crate.) Cedar Fair's (NYSE:FUN) Cedar Point soon followed suit with a blog of its own. Six Flags? The site looks sharp but lacks personality. Each individual park needs to stand out and reach out to its desired audience.
Then again, this isn't just about winning the Miss Congeniality prize. It's about snagging the Most Likely to Succeed tiara, too. Operators like Six Flags spend a ton on marketing through costly conventional media outlets without embracing the power of their own websites. If a park website isn't converting its traffic into regular visitors (and mailing list fodder) through compelling, ever-changing content and the right promotional bait, it's failing. If a park website hasn't exhausted its own revenue-generating possibilities through corporate sponsorships, area lodging relationships, or effective e-tailing, it's failing.
5. Work those sponsorships
Advising Snyder on corporate sponsorships isn't like preaching to the choir. It's more like William Hung auditioning for the Mormon Tabernacle Choir. Snyder bleeds marketing. It's how he earned enough of his keep to buy the Redskins in 1999. Sponsorships have played a major part in the near-doubling of the Redskins' annual revenues to $300 million under Snyder's watch.
With 33 million guests going through Six Flags' turnstiles every year, Snyder has to be tingling over the opportunities to upgrade the park's sponsorships. Let's hope for the best here. Snyder wants, and Six Flags already has, plenty of fast food franchises in the park. Corporate brands are plastered everywhere already.
Now let's see whether Snyder will not only pump up the volume but pump up the pimping too. No mainstream fast food chain should be allowed into the park without offering at least one signature dish that is exclusive to the park. The same goes for beverage providers. A mall food court will never implement a cover charge, so make sure that the establishments inside the parks have something to offer that can't be found elsewhere.
It would be a win for consumers if sponsorship deals involved the brands subsidizing selling prices in the parks, but Six Flags could probably better use those subsidies in its own pockets. Still, there's no reason why anyone should leave the park empty-handed. Family-friendly corporate sponsors always have consumer freebies that they'd love to hand out.
6. Take deliberate steps
For too long, Six Flags has coasted along. You'll never find a business school case study singling out Six Flags for exemplary customer service. The chain hasn't exactly raked in enthusiast raves on operating procedures, safety, or cleanliness.
If Snyder is successful in effecting change at the helm of Six Flags, he needs to make every improvement count. Make every improvement loud. There is too much at stake, and there are too many disillusioned consumers out there who will need to be convinced that there's a new sheriff in town. It doesn't take much to turn a funnel cloud into funnel cake.
Happiness is just around the corner, Mr. Snyder. You just have to know where to turn.
Longtime Fool contributor Rick Munarriz loves to take his family to new amusement parks every summer. He practices what he preaches, since he owns shares in Disney, Cedar Fair, Great Wolf Resorts, and Six Flags. 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.
