June 23, 2006
During a conference call with investors Thursday, Mark Shapiro, CEO of Six Flags, Inc. announced that the company is exploring potential strategic options with respect to six properties including its theme park and water park in Los Angeles.
Six Flags said it could not predict when or if any transactions would occur. The company would consider the sale as an ongoing operation or dismantling the park and selling the land for real estate.
"This is part of Six Flags plan to reduce debt and focus on its core assets or biggest parks," said Shapiro.
Last year the company closed a theme park in Houston and said the rising cost of real estate was a major factor in the decision. The same fate could be true for Magic Mountain if the company decides to proceed with a sale.
Six Flags is taking into consideration three factors with regards to the six properties. Does the park align with the company's new strategic vision; Is their significant value in the underlying real estate; and has their been sufficient interest in the property in the marketplace.
The Southern California real estate market has boomed in recent years and the price of land has sky rocketed in the Santa Clarita valley. The 250-acres the theme park resides on could be an attractive parcel for redevelopment.
The price for the real estate may present a problem for potential buyers who may be interested in the theme park. The land may be too costly of an investment for someone to continue to operate it as a theme park.
During the call Shapiro mentioned that some may question the decision to consider the possible sale of the Valencia parks.
"Both parks generate meaningful cash flow and attendance," said Shapiro.
With specific reference to Magic Mountain, Shapiro said that the park does not fit well with Six Flags' mission of repositioning as a family brand considering the current ride offerings.
"Magic Mountain has been successful since its been marketed as a thrill park," said Shapiro. "As a family park you're up against some stiff competition with Knott's, Disneyland and even Universal. The park doesn't have enough family offerings."
If they decide to close the park, Six Flags may relocate some of the park's rides and attractions to other properties.
Just this year Six Flags spent $25 million to open Tatsu, the world's largest flying roller coaster at Magic Mountain. With this new attraction the park's arsenal of roller coasters now totals 17.
Shapiro reminded investors that the money spent on the new roller coaster at Magic Mountain was the decision of the past management, not his team.
If Six Flags decides to keep Magic Mountain, Shapiro said they will need to spend money to build new attractions to align the park with the company's new focus on families.
See related: www.sixflags.com
Six Flags Considering Selling Six Theme Parks June 22, 2006
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