To this point, we've kind of avoided getting into the "theme parks are going to open on such and such a date" conversation. And I'm not really going to get into that here. 

I just wanted to do a quick post and tell you why theme park openings are not "imminent", despite 100 articles telling you they are. 

Update 5/20/2020: California Theme Parks

Governor Gavin Newsom signed an executive order on May 6th. This order states that if you report to your employer's worksite between March 19th and July 5th, and get COVID-19, you can file a workers compensation claim. 

So what do I think this means? The VERY EARLIEST parks could open in California would be July 15th. Why do I say that? Because you have to get the parks up and running. And with this order parks aren't going to want to bring in staff to train/get the parks ready until at least July 6th. Workers compensation claims aren't easy or cheap to file. 

You can see all of the details about this executive order here. 

Be sure to check out the rest of my opinions about theme parks opening from April below. 

Imminent: ready to take place - happening soon

Even if parks in (insert state here) got the go ahead to start reopening today there is still a laundry list of things that must be done before they could actually open. 

Rehiring of staff: 
Staff has been furloughed in many cases, let go in others. Anybody with any kind of HR experience will tell you that it's much quicker to tell people to leave than to get them to come back. Some employees may be sick. Some may have gone home to stay with parents (WDW College Program anybody?). Some employees may simply feel that it's not safe for them to do so. 

Hiring of new staff to replace staff that aren't coming back: 
There will be some staff that aren't coming back. Some may have found other work. Others may just choose to stay away. That means hiring new people. Including background checks. Drug testing. You want to know how much stress medical labs are under right now? You think drug testing is their highest priority? 

Retraining of existing staff: 
Do you really want people coming back to work without having done that job for 2 months? What about the new guidelines they'll have to follow in order to actually reopen. That requires training. That means being in close contact with each other before the parks even open. And this doesn't even take into consideration training for the plethora of new attractions that are ready to open. 

Training of new staff: 
In addition to the retraining of existing staff, you have to train all of your new staff. But what if all of your trainers are busy training the existing staff in their new guidelines? Not a whole lot of time to do this. 

Food: 
You want to eat right? Food orders must be placed. But wait, food distribution for commercial businesses needs to restart too. I'm sure you've all seen the reports of crops being pretty much destroyed right now because there is no place to send this stuff. Or of the massive outbreaks of Covid-19 at meat processing plants. That's not something that is just going to ramp up quickly. 

Testing of Rides: 
Depending on the state, and how long the parks have been closed, some may require state inspection. Do you know how many inspectors there are? Are they going to actually be back at work? And what about those new rides? They must go through all of their testing and inspection guidelines prior to opening. 

Minimum Capacity: 
Right now the "preliminary" guidelines that came out for Florida parks are talking about 50% capacity in the parks. Do you know many businesses that can actually survive on 50% of their income? While paying all of their employees? And all of the other utilities that come along with running a theme park? Will it even be worth it for parks to open at reduced capacity? 

Outbreak traced back to theme parks: 
We've gone this far down and haven't even talked about the elephant in the room yet. What if, after let's say, Magic Kingdom opens and a mass outbreak is traced back to them. That is bad for the ENTIRE Theme Park industry. Consumer confidence is low right now. You get bad news out of a theme park and it goes even lower. Theme park companies know this. 

So when do I think parks are going to open? When we start getting emails from parks with dates they will open. That's when. Anything more than that right now is speculation. 

​But even when parks get the go-ahead to open, it doesn't mean they are going to open the next day. There is going to be a delay even then. And I think we all need to be prepared for that. 

Share your thoughts below. Am I totally off-base here or am I making even a little bit of sense? 

Over the past few days, we have seen the annual numbers and reports from the two largest domestic theme park companies in the USA - Cedar Fair & Six Flags Inc.

​(Note: Disney does not qualify as it is a multi-tiered corporation of which the theme parks are only a part of a much larger equation.)

​It is a tale of woe and WHOA.

​Let's look at the two companies in comparison first:

In essence, Cedar Fair is roughly 1/2 the number of parks overall... and yet generating nearly the same operating revenues as Six Flags. In addition, they are making more money per person in the parks that Six Flags is, and with significantly higher attendance per park overall.

​Cedar Fairs numbers for the year were spectacular, featuring attendance, revenue and overall spending leaps across the board. In essence: Almost every park in their chain saw growth in attendance, and more importantly, in long-term overall growth of the pass-holder base. Organic (Ticketed/non-pass-holder) ticket growth was up 12% - a huge leap in itself.

​Six Flags had nearly the opposite: While there was a <very> modest growth overall in attendance (less than 2%) they were hit with a double-whammy of lower per-capita spend, and even lower renewal of season passes and in their membership programs. Overall, their attendance was down at many parks, notably in part due to the delays in opening several key attractions in their chain, as well as lack of new-attendance spending in other markets. Organic (Ticketed/non-pass-holder) ticket growth dropped by 4% overall.

​As I had said a few weeks back, the situation at Six Flags Inc is in seriously bad shape. Facing some fiscal indigestion that is getting worse by the year, as well as all new leadership at the company, we are seeing a frustrating and almost impossible to deal with future growth position. Their new president, Mike Spanos has been handed the reigns of a company which has some severe problems from the ground up - and has been forced by the previous administration there to make some very difficult calls - such as slashing the dividend payouts by 75%, and looking at a future which at best will see the company shrink to try and stave off bankruptcy filing.

​Cedar Fair on the other hand has paved a road of gold and is looking to immerse guests further in the next few years. Richard Zimmerman's changes overall have been beneficial in growing the base, as well as growing the future of the company via more guest-friendly experiences, and to bring a new personality to each of the regional parks in the system. While their 2020 park spend is primarily in re-inventing their water parks at most of their parks, clues are already dropping that 2021 will see some new blockbuster attractions at some of their parks - notably Kings Dominion. In addition, the arrival of two new wholly-owned water parks (formerly Schlitterbahn parks) gives them new facing in Texas - a market currently dominated by Six Flags Inc & Sea World Entertainment. A very strong revenue growth in their hotel properties - and the addition of hotels at both Carowinds and Canada's Wonderland is showing very promising growth in non-core revenues, further stabilizing the company fiscally.

It is clear that both companies are on very different courses - and that one has paid out handsomely and the other brought the company to the brink of failure.

I won't go into the course changes needed at SFInc. I covered that in my previous analysis of the company a few weeks back. I will say this: Looking at their current vision for 2020, the outlook is not pretty. Spanos has predicted a soft year financially, and a challenging one due to the mistakes of the past. He has a job on his hands which will require extensive re-think of the company, a revisiting to their roots, and an ability to turn the company around with little on hand to do it with. They need fresh ideas and new concepts, and not re-hashes of what they've been staring at for the past decade.

(I have a long list, Mr. Spanos, of things which you need to be doing right now... you know where to find me.)

​ R.D. Dewberry 2/22/20

This morning, a series of events has caused Six Flags to issue a red-flag warning about the near and long term future of the company, and that the financial situation there is finally coming to clearer view in 2020.

If you've read some of my analysis of the issues at SFInc. for the past few years, I've issued some warnings based up on their fiscal situation, and the issues carrying forward. Their debt situation, the gambling on foreign growth, and the lack of forward investment in their existing parks has been a background cause-effect push that is now showing the results.

In the long-term, the future is not clear, and nearly impossible to completely figure out a due course on. However, there are some things which are clues to the future and to what the next steps for SFInc. are.

DEBT:
​
SFInc's debt picture has never been very strong - in fact, under Jim Reid-Andersen's leadership, the company has racked up a rather stunning $3.6 BILLION in direct debt. At the same time, the spending and paying out of dividends for the company have been nearly all of the operational profits in the company for the better part of five straight years. This, combined with an unwise stock buyback program has kept the stock price artificially high. Where other companies (more wisely) will take portions of the profit and re-invest them back in the company's interests, the company chose to give the money back to the investors and shareholders, of which a good chunk of the board of directors at SFInc. The result is the assets owned now are exceeded by the debt of the company, with a nearly $1.0 BILLION negative equity ratio. What that means is that there is more debt to assets at SFInc, and that the situation is not getting better.

FOREIGN PARK LICENCING/MANAGEMENT:
​
SFInc. has been busy trying to grow the brand by licencing out their parks overseas. Operations in the Middle East (Dubai/Abu Dhabi) and China (Several parks) would have granted additional cash flow into the company with little investment directly. SFInc. was to have made profits off of operating and licencing the parks, as one estimate under J.R.A. was as high as nearly $400,000,000.00 per year.

The bubble burst here. In fact, as of the notice this morning, the Chinese projects have defaulted in payments to not only SFInc. but also to several major ride builders. This alone will cost the company directly (The actual figures are not known at this point - but will be soon.) In addition, the Dubai/Abu Dhabi projects died in progress - leading to an even bigger deficit on the financials of SFInc.

LACK OF PARK INVESTMENT:
​
For years now, SFInc. has relied on the duplication process within most of their parks. Standardized rides such as Justice League, SkyScreamers, RMC rebuilds and other projects have taken center stage while the addition of unique experiences to other parks has become the driving force behind Six Flags's expansion strategy.

It didn't work.

While a handful of the parks got new and creative expansions (West Coast Racers, Wonder Woman at Six Flags Fiesta Texas, MAXX Force at Six Flags Great America), other parks and smaller parks simply got the runaround, and a series of duplicated flat rides with various DC Universe names on it. Some creative new flat rides ended up being duds and were expensive flops; other rides failed to generate the needed buzz and excitement. Even some of the largest (and more profitable) Six Flags parks did not gain much over the years, despite their ability to generate higher profits for the company.

And lest we forget Six Flags St. Louis. SFinc. certainly has. It has been many years since any serious investment in the park has happened.

​The result is that the asset base (the owned parks and the attractions therein) has actually SHRUNK - leading to less property equity on the balance sheet, and further eroding the fiscal state of the company.

LACK OF PASSHOLDER/MEMBERSHIP GROWTH:
​
It was revealed today that the company's plan to grow forward and increase the passholder base over the years has in fact failed - with a negative growth rate in 2019. Passholders generate quite a bit of revenue overall, and the gamble was their higher return rate to the parks would generate additional revenues overall.

In effect, this was a HUGE mistake.

With the rise of the dining plan, and the higher-tier membership plans, once those tickets are paid for, revenue per head drops drastically per visit. If you are a frequent flyer, you will cost the company more money per head than what they expected. This was a fallacy that has been many years in progress. In addition, these value based tickets were priced at bargain basement prices - ones that are unprofitable at almost any price level.

​If you compare the annual prices for a Cedar Fair Season Pass vs. a Six Flags Season pass, you see the prices for Cedar Fair are FAR higher. Even higher than that is a pass to a Herschend Park - at nearly 4x the price of a Six Flags pass. In effect, they are pricing the passes for profit - not for attendance drives. In turn, they are making more money per park entry than others are.

THE FUTURE:

Six Flags has been dancing on the financial knife now for many years. The new CEO who took over from Jim Reid-Anderson is now seeing the financial difficulties that the SFInc. is entering - and now has a situation that is going to be painful and long-lasting.

Over the next seven years, SFInc. will face financial obstacles including their long and short term debt issues, in addition to several very large payments due from 20 plus years ago. This includes issues with both the Texas and Georgia properties (neither of which are owned outright by SFInc, but rather owned by private lease-hold groups and managed by SFInc.) in addition to land leasing issues with a number of their parks (Six Flags Discovery Kingdom and Six Flags Great Escape). These will be expensive to renegotiate, and potentially could mean further cuts and price increases.

The solutions are out there - the question remains how to make the best out of a very rough situation. SFInc. has some good strengths - but must capitalize on them to make right course changes in their company path.

First, they must SHRINK.

By this, it is time to let go of the Texas and Georgia properties, and sell them for what they are worth to new owners. These two parks will need nearly $500,000,000.00 in system and physical upgrades over the next 10 years - namely as these two parks are well into their 50's. Infrastructure upgrades are necessary to maintain these aging parks in addition to new attractions and restoration/revitalization of older ones.

Second, they must INVEST.

SFInc. needs to realign their spending and instead of pumping out massive dividends to keep their stock price afloat, they need to put money into all the parks in their system - both owned and leased. The Xerox machine needs to be thrown out, and creative minds without the expensive licencing agreements need to become standard again. Not every park needs Magic Mountain rides, but ALL parks need new attractions to stay fresh and creative - and to draw more people into their gates more often. Duplication failed - it's time for a new approach. At the same time, they must increase ticket prices - in some cases doubling the prices on some season pass/membership levels to reflect the appropriate level of visits and services expected.

Third, they must FOCUS.

Instead of trying to be the biggest name everywhere through management-leasing parks in addition to the owned chain parks, they need to FOCUS on making what they have work, instead of building a network of so-so (or worse...) parks. People will not visit other parks in the system regularly if they have no need to because their existing park is crap.

Fourth, they need to learn TREATMENT.

One of the biggest complaints I know from talking to people working at SFInc. is the treatment of the employees - and in return, the treatment of the guests. Customer Service in the parks is consistently inconsistent, and can vary from exceptional down to absolutely awful (Sadly, for some parks, the latter is more common than the former.) A return to friendlier policies and more guest-centered ideas should be a primary focus. Instead of looking at the guests as a nuisance, look at each one as a friend, a family member, a loved one. A better attitude and a better experience = more guests returning and spending money there.

Over the next 90 days, Six Flags Inc. will be coursing a very narrow and dangerous path. Financially speaking, the bad deeds and bad habits of JRA's past are now coming visible, and SFInc. is now in a dire situation. It will take creative leadership and creative re-design of the company to emerge again ready to compete.

Or there will be one hell of a fire-sale on used rides shortly.

R.D. Dewberry 1/10/2020