What was Dan Snyder thinking? No, I'm not referring to the whole Steve Spurrier fiasco. This has nothing to do with his Washington Redskins team -- though one can argue that it's a reasonably brisk jog between FedEx
Earlier this week Snyder got shares of Six Flags pumping when it was revealed that he had amassed a 9% stake in the struggling theme park operator and wanted to unleash the value of the company's thrilling assets.
That got two particular camps excited. Park enthusiasts began wondering about the many ways that Snyder would enhance operations by pumping money into new rides and improving its customer service. Creditors began wondering which of the chain's beefy parcels of land would be the first to be razed of rides and sold off as commercial property and residential development.
At some point the two camps probably turned to each other and shouted out, "You want Six Flags to do WHAT?"
Investors shouldn't expect that having a celebrity as a fellow shareowner will help save the day. Lord knows how many people are walking around all starry-eyed these days with worthless Planet Hollywood stock certificates rolled in their pockets. Besides, Six Flags already has a celebrity. Bill Gates, through his private investing fund, has had a better than 10% stake in the company for ages and, believe it or not, Microsoft
I don't see Snyder buying the company whole either. Unless Six Flags can hurl the pigskin -- and I'm not talking about some guy frying up pork rinds at Magic Mountain -- Snyder may have little interest in what Six Flags can do beyond maximizing the return on his investment. Unfortunately, that's something that has yet to happen with Gates. His cost basis in Six Flags is in the low teens. And while Gates is now trying to shake his tag as a passive investor, it feels more like a firing shot to let Snyder know that he's not the only rich guy trapped in this cash-poor company.
By nature, regional amusement parks prefer to be within a reasonable drive of major metropolitan areas, usually within coaster-screaming earshot of a major expressway. That is why the land that many of the company's parks rest on is so valuable. Six Flags can redistribute the rides of an emptied park to its surviving siblings while commanding a princely sum from a new landowner who will be able to utilize the turf all year round.
But there's a problem here. Earlier this year Six Flags sold off some of its parks, including Geauga Lake to rival Cedar Fair
Granted, Six Flags has had a rough year with its remaining parts. Despite the excellent Mr. Six advertising campaign, it has come up empty. I have my theory as to why brilliance in marketing was denied.
You can't have a knee-jerk reaction without a jerk -- and I'm about to become that jerk. That's because I'm about to say something that is low and vile, yet I challenge anyone to argue otherwise. Got it? Good. Let me clear my throat and look for the easiest escape route. OK. Spotted. Here goes. Over the past few years, Six Flags has become the Juliette Lewis of amusement parks.
My apologies to Juliette. The statement is more an indication of the campy roles that she has chosen to portray rather than the actress herself. Yet Six Flags isn't acting. It's taken the low-rent and trashy approach to running its parks and tried to pass it off as a viable business model. By practically giving away its season passes and then scaling back on operations as a knee-Rick reaction once per capita spending dried up, it was doomed to fail.
Do you know why Mr. Six dances? It's because Six Flags can't sing. So does that make Six Flags the William Hung of amusement parks? I won't go there. I've offended plenty already. Yet Six Flags needs an extreme makeover. It has a serviceable collection of rides -- even in its smaller parks. But the Mr. Six campaign promised a smile and merriment factory while the assembly line was in fact rusting away.
Earlier this week I argued that the chain should take a page out of the Holiday World playbook. Four years ago the refreshingly vibrant Indiana theme park hiked its daily admission price by four bucks while rolling out a new signature coaster and implementing a free soda strategy. It worked in every possible way. Sure, the company saw its typical guest spend $1.40 less in food and beverage products that first year. Of course. But not only did it make that up -- and then some -- with the higher prices at the gate, those same guests also shelled out more in games and souvenirs. Satisfaction surveys shot through the roof. Guests stayed longer. Word-of-mouth drove attendance higher with double-digit annual percentage gains while Six Flags is still bellyaching about slow turnstiles.
Regional parks live off the locals. This isn't Disney
One can argue that the season pass holder will try to milk as many trips to the park as possible, making up the lack of spending in volume, but there's a fatal flaw to the summer smorgasbord. With every subsequent visit driving down the average cost that the guest spent to enter the park, the perceived value is its diving buddy. There is little wonder in that seventh July visit. That proves to be contagious with park employees and other guests.
That is why higher admissions can work if it's accompanied by intelligently aggressive staffing moves and guest-friendly perks such as free refreshments and other sponsored freebies.
Can you already picture the 2005 season playing itself out? The ad campaign would bring back Mr. Six -- only this time being romanced by the equally nimble Mrs. Six. Touting free sodas and the benefits of playing Roller Coaster Tycoon in the real world with more employees plunked down to assure cleaner parks, friendlier customer service, and more ride uptime, do you think guests will even notice that the gate prices inched higher? Mr. Six and Mrs. Six would dance the ad away with a simple tagline such as "Fall in Love With Six Flags" or "Six Flags: Love It or Live It" to evolve a great campaign in 2004 into a promise that this time the chain can keep.
Oh Juliette, where art thou Romeo?
Longtime Fool contributor Rick Munarriz really does love his amusement parks. True to his word, he has one of those dirt-cheap Six Flags season passes, even though he lives about 600 miles away from his nearest park. He was at Six Flags Magic Mountain over the summer. He owns shares of Disney as well as units in Cedar Fair. The Motley Fool is Fools writing for Fools.