Six Flags, Inc.
Six Flags, Inc.
Incorporated: 1971 as Tierco Group, Inc.
Sales: $1.05 billion (2001)
Stock Exchanges: New York
Ticker Symbol: PKS
NAIC: 713110 Amusement and Theme Parks
Six Flags, Inc. is the world’s largest regional theme park company and the second leading amusement park operator in the United States, Walt Disney Company being the first. The company, which is headquartered in Oklahoma City but also maintains a second corporate office in New York City, runs 39 family-oriented theme parks in the United States, Canada, Mexico, and Europe. Six Flags estimates that nearly two-thirds of the U.S. population lives within 150 miles of one of its parks, and the properties serve 35 of the 50 largest U.S. metropolitan areas. This marks a key difference between Disney and Six Flags as Disney’s parks attract visitors worldwide, whereas Six Flags focuses more on local markets. Six Flags’ parks feature thrill rides, animal attractions, upscale restaurants, shows, merchandise outlets, elaborate picnic areas and kiddie attractions, and water slides. Two of the properties—Six Flags Worlds of Adventure in Ohio and Six Flags Darien Lake Resort in New York—include lodging and camping facilities. The company also has exclusive rights to theme park usage of Warner Bros, and DC Comics characters in most of North America, Latin America, and Europe, with many of the parks featuring such characters as Bugs Bunny, Daffy Duck, Tweety Bird, Yosemite Sam, Batman, and Superman. Six Flags amusement parks host nearly 50 million guests a year.
Twenty-four of the company’s parks are branded with the Six Flags name. Six Flags the company, however, secured that well-known brand only in 1998 when, then known as Premier Parks, Inc., it acquired Six Flags Theme Parks, Inc. The latter traced its origins back to the 1961 opening of Six Flags Over Texas. Premier Parks, which was founded in 1971 and known until 1994 as Tierco Group, Inc., did not enter the amusement park business until the early 1980s. Tierco/Premier became renowned for buying struggling parks and turning them around with expansion and aggressive marketing strategies that targeted families. This strategy has continued at the company under its current configuration, and Six Flags also attempts to maintain a competitive edge by annually adding new rides and attractions to its many parks.
Tierco’s Humble Beginnings in 1971
Incorporated in 1971, the Tierco Group, Inc. was originally an Oklahoma-based real estate company. The company purchased the sleepy Frontier City theme park in Oklahoma City in 1982 for $1.2 million. Tierco had no intention of entering into the amusement park business, however. Company officials described Frontier City, which had opened in 1958, as “beat up” and “run down”; they planned to demolish the park, subdivide the land, and build a shopping center. Given the economic downturns prompted by an oil bust in Oklahoma, however, developers lost interest in the idea of converting the park into a shopping center. So in 1984 Tierco hired Gary Story as general manager of Frontier City and sunk about $39 million into improving the park.
Story began his career in the amusement park business at the age of 16, when he was employed to sweep park streets at Six Rags Over Mid-America. After ten years of service in various capacities there, including that of manager of attractions, Story worked for amusement parks in Mexico and in Australia. As the new manager of Frontier City, he would quadruple that park’s attendance and revenues. Under his leadership, two new rides and a petting zoo were added to the park along with a new ticket booth, sales office, and improved food service.
In the late 1980s, Tierco shifted its strategic direction from real estate to amusement parks. Leading the shift was investment banker Kieran E. Burke, who was hired as president and CEO in October 1989. Tierco sold much of its property during this time, which generated capital to reinvest in Frontier City. Once this reinvestment paid off in terms of increased business and profits, more capital became available, which meant further growth. Tierco purchased Oklahoma City’s White Water water-park in 1991 (the name later being changed to White Water Bay). The company realized the key to boosting a park’s attendance was to add new and exciting rides and make it more attractive to families. It converted White Water’s old gang slide into a dual racing slide where two two-passenger boats raced against each other and the clock. New picnic areas were added, one with a beachcomber theme, and the activity pool was converted into a pirate’s cove. Eventually, Tierco added the Blue Marlin Grill, an upscale sit-down restaurant.
Tierco acquired the financially troubled Wild World in Largo, Maryland, in 1992 and later changed that park’s name to Adventure World. With a $500,000 investment, Tierco expanded Wild World’s kiddie section and remodeled its buildings to give the park a tropical look and feel. Story was promoted to executive vice-president after the purchase of Wild World. In 1994, he was promoted again to president and chief operating officer (COO). At the same time, Burke became chairman and CEO.
Since Tierco was on its way to becoming a “premier” regional theme park operator, in 1994 it changed its name to Premier Parks, Inc. Burke noted that the new name signified the beginning of a new era for the company. “We hope to acquire several more parks in the next few years and perhaps expand into other areas of the entertainment business,” Burke said in a December 12, 1994 article in Amusement Business.
Growth for Premier Parks in the 1990s
During the next few years, Premier picked up speed. The company acquired the following three parks in 1995 from Fun-time Parks, Inc.: Geauga Lake in Cleveland, Ohio; Wyandot Lake in Columbus, Ohio; and Darien Lake, near Buffalo, New York. In 1996 Premier added the following parks to its portfolio: Elitch Gardens in Denver, Colorado; Waterworld USA waterparks in Sacramento and Concord, California; and Great Escape and Splashwater Kingdom at Lake George, New York.
Premier went public in 1996 and raised nearly $70 million through an initial offering at $18 a share. The company planned to use the money to expand its ten parks and acquire new ones. In 1997, Premier purchased Riverside Park, near Boston; and Kentucky Kingdom, in Louisville, Kentucky. The company also reached an agreement to manage Marine World, near San Francisco. A second public offering at $29 a share raised an additional $200 million. Nearly 8.8 million people visited Premier’s parks in 1996, making it the second largest chain in the world by attendance.
Burke explained the company’s success in the February 24, 1997 issue of Amusement Business: “We built a strong base with Frontier City in the 1980s, and based on that, we were able to raise $50 million in private equity to acquire our first three parks.” Burke said that the success of Premier’s first three parks propelled it into its public offering, which raised the capital the company needed to purchase the additional parks.
In December 1997, Premier entered a definitive agreement to purchase a controlling 94 percent interest in Walibi Family Parks in Europe. Walibi owned three parks in France, two in Belgium, and one in The Netherlands. The transaction was valued at $140 million for all six parks. After the acquisition of the Walibi parks, which was consummated in March 1998, Premier controlled 20 parks with a combined 1997 attendance of approximately 14.5 million and became the third largest regional theme park in the world. Then in April 1998 Premier stunned the amusement park industry by purchasing the 12-park Six Flags chain from Time Warner Inc. and Boston Ventures, a chain whose history dated back to 1961.
Early History of Six Flags
The company that introduced steel roller coasters, log flumes, and Whitewater rides to the world was founded by Angus Wynne in 1961. Three years before the grand opening of his first amusement park, Six Flags Over Texas, Wynne, a Texas oil baron and real estate developer, and his partners held a brainstorming session to try to find a way to finance their latest project, a sprawling industrial park located on 7,500 acres of land between Dallas and Fort Worth. Having exhausted all of their cash and credit to purchase the land, the group needed money to develop their dream, the Great Southwest Industrial District. As the conversation at the meeting turned to Disneyland, which had opened three years earlier, one of the partners suggested to Wynne that he open an amusement park himself to generate the needed funds. Wynne took the advice seriously. Later that year, he paid a visit to the southern California park and returned to Texas convinced that the idea for the project was viable. Construction began in 1960 and was completed on August 15, 1961, at a cost of $3.4 million. Wynne’s original name for the park, “Texas Under Six Flags,” was meant as a reference to the state’s early history. A few proud and zealous members of the Daughters of the Texas Revolution soon objected to the name, however, arguing that the state of Texas was never “under” anything. Wynne quickly agreed and changed the name to “Six Rags Over Texas.”
Today, Six Flags is the gold standard of regional theme park entertainment. The parks are bigger and bolder than ever, offering cutting-edge, one-of-kind rides and so much more. A licensing agreement with DC Comics and Warner Bros. Consumer Products allows Six Flags the exclusive theme park rights to many of the world’s greatest super heroes and cartoon characters. DC Comics Super Heroes, Batman, Superman and Looney Tunes Bugs Bunny and all their friends reside at Six Flags —creating a unique experience.
The first Six Flags park, like its Disney forerunner, featured a variety of attractions designed to entertain customers of all ages. For the less thrill-seeking patrons, the park featured a Western venue—including an Indian village, saloon, jail, and a “Fiesta Train“—as well as a petting zoo and a goat ride. More fast-paced rides included the “Astrolift” roller coaster and the “Missile Chaser.” A variety of shows and music presented in an amphitheater rounded out the entertainment.
Wynne’s marketing strategy in those early days was not unlike the approach of Six Flags, Inc. in the early 2000s. He tried to portray his amusement park as a closer and more affordable alternative to his better known Disney competitor. The people of Texas responded positively to his message. Although Wynne projected that 500,000 people would enter the gates at the $2.75 admission price (for anyone taller than four feet), his expectations proved to be too conservative: the park drew more than one million that first year, providing enough cash to pay off all construction costs and still yield a profit. As had been his original intent, Wynne and his partners used the cash to get the industrial park back on its feet. Even after such a successful debut, the park was intended to have a life span of only about ten years, at which time it would be swallowed up by the industrial development. As attendance and revenue continued to increase during those first few years, however, Wynne quickly came to realize that the amusement park itself was of great value.
During the 1960s, the burgeoning amusement park increased its attendance each year as it introduced a number of rides that would form the backbone of the amusement park industry into the 1990s. For instance, on June 15, 1963, Six Flags unveiled the world’s first log flume ride. The first-ever steel roller coaster, Arrow Development’s Runaway Mine Train coaster, opened at Six Flags Over Texas three years later.
- The Frontier City theme park opens in Oklahoma City.
- Angus Wynne and partners open Six Flags Over Texas.
- Six Flags Over Texas unveils the world’s first log flume ride.
- Operation of the first-ever steel roller coaster begins at Six Flags Over Texas; Wynne sells his amusement park to Penn Central Corp.
- Six Flags expands by opening a new park in Atlanta, Six Flags Over Georgia.
- Tierco Group, Inc., an Oklahoma-based real estate company, is incorporated; Six Flags opens a new park in Eureka, Missouri, called Six Flags Over Mid-America (later renamed Six Flags St. Louis).
- Six Flags Great Adventure opens in Jackson, New Jersey.
- Six Flags acquires Magic Mountain in Valencia, California.
- Tierco acquires Frontier City; Penn Central sells the Six Flags chain to Bally Manufacturing Corporation.
- Gary Story is hired as general manager of Frontier City and soon quadruples the park’s attendance and revenues; Six Flags Great America opens near Chicago; Six Flags Corporation acquires theme park rights to Warner Bros, animated characters.
- Wesray Capital Corporation buys Six Flags Corporation in a leveraged buyout.
- Kieran E. Burke is hired as president and CEO of Tierco and leads shift from real estate to amusement parks.
- Time Warner Inc. acquires 19.5 percent stake in Six Flags Corporation.
- Six Flags changes owners again—Time Warner increases its stake to 50 percent and two New York investment firms, the Blackstone Group and Wert heim Schroder & Company, acquire the other 50 percent.
- Tierco acquires Wild World amusement park, located in Largo, Maryland (later renamed Adventure World).
- Time Warner acquires full control of Six Flags Theme Parks, Inc.
- Tierco changes its name to Premier Parks, Inc.; Story is promoted to president and COO of Premier, while Burke becomes chairman and CEO.
- Premier acquires three parks from Funtime Parks, Ine.
- Premier acquires Elitch Gardens in Denver and goes public.
- Premier acquires Riverside Park (near Boston) and Kentucky Kingdom and begins managing Marine World, near San Francisco.
- Walibi Family Parks, which owns six parks in Europe, is purchased by Premier; Premier Parks acquires Six Flags Theme Parks and its 12 parks in a $1.86 billion deal; Premier begins transforming some of its parks into Six Flags sites, the first being Six Flags Kentucky Kingdom.
- Adventure World is rebranded Six Flags America; Premier acquires its first Mexican theme park, Reino Adventura, which is renamed Six Flags Mexico, as well as Warner Bros. Movie World in Düsseldorf, Germany.
- Geauga Lake park is renamed Six Flags Ohio, Riverside Park is transformed into Six Flags New England, and Walibi Flevo becomes Six Flags Holland; Premier Parks changes its name to Six Flags, Inc.
- Sea World of Ohio is acquired and is combined with Six Flags Ohio to form Six Flags Worlds of Adventure; Six Flags expands into Canada through the purchase of La Ronde, located in Montreal; Walibi Wavre is renamed Six Flags Belgium.
In 1966 Wynne sold his amusement park business to Penn Central Corp. With the new owners came a more abundant supply of capital for geographical expansion and park additions. In 1967 Six Flags made its first move beyond the Texas state line, opening a Six Rags Over Georgia, in Atlanta. A future president and CEO of the company, Larry Cochran, who began his career with Six Rags as a part-time draftsman helping to design and build the first park, was appointed vice-president and general manager of the new facility. By the end of the decade, Penn Central was in need of funds and so ownership of both Six Flags Over Texas and Six Rags Over Georgia was sold to two different limited partnership groups.
The Six Flags company, however, continued to manage both parks under long-term contracts.
The 1970s: An Era of Expansion and Innovation
As theme parks became more popular with the American public, evolving into a full-scale, nationwide industry, Six Flags continued to expand its operations. The 1970s saw the company add five parks to its stable. In 1971 the company built a new park in Eureka, Missouri, called Six Flags Over Mid-America (later renamed Six Flags St. Louis). Four years later, Six Flags opened its second park in Texas, AstroWorld/WaterWorld, located in Houston. In 1978, the company made its first entrance into the East Coast market, opening Six Flags Great Adventure in Jackson, New Jersey. Magic Mountain, in Valencia, California, purchased in 1979, brought the company to the other coast.
As the decade drew to a close, Six Flags began developing another first in the industry: the Whitewater rapids ride. Bill Crandall, manager of the Astro World park, discovered the idea for the ride that would later become commonplace in theme parks across the country while watching the kayak competition in the Munich Summer Olympic Games in 1972. Fascinated with the artificial river used for the kayak competition, he believed that a ride simulating the fast-paced action of the event would provide a unique experience for his park patrons. Crandall enlisted the services of Intamin, a top Swiss ride manufacturer, to design and build the first ride of its type in the world. The product of their efforts, Thunder River, opened for business in Houston in 1980 and has since been emulated in amusement parks throughout the world.
The 1980s: A Decade of Transition
With the new decade came an era of revolving-door ownership for the company. At least four corporate entities held a significant stake in the company (then known as Six Flags Corporation) between 1981 and 1990. The first major change came in 1982 when Penn Central sold the company to Bally Manufacturing Corporation. Under the direction of the new owners, Six Rags added its seventh park, opening Six Flags Great America in Gurnee, Illinois, in 1984. Three years later, Cochran and Wesray Capital Corporation, a group of New Jersey investors that included former U.S. Treasury Secretary William Simon, took the company private through a $617 million leveraged buyout. The unstable combination of junk bonds and bank loans used to finance the purchase gave what Larry Cochran, who took over as president and CEO, called a “lousy capital structure,” according to an interview with Tim O’Brien of Amusement Business. As a result of such short capital reserves, the company accumulated a massive debt load and was forced to pay shareholders the 16 percent interest on their notes in additional bonds in lieu of cash payments, a move that would cut substantially into profits for the remainder of the decade.
Financing problems aside, Six Flags Corp. managed a strong performance at the gate in a decade that saw the megaparks, such as Disney World and Epcot Center, rise to the forefront of the industry. Six Flags attempted to carve out a profitable niche by offering an entertainment experience that was less expensive and closer to home than the Disney giants—a marketing strategy an increasing number of young families found appealing.
To increase its appeal with this segment of the market, the company in 1984 had acquired the theme park rights to Warner Bros, animations, Looney Tunes, including such popular characters as Bugs Bunny and the Roadrunner. By the end of the decade, combined annual attendance at the parks had grown to nearly 17 million, generating revenue of around $400 million.
1990-97: Growth Spurt Under Time Warner
In June 1990, Time Warner Inc., owner of Warner Bros., acquired a 19.5 percent share of the financially strapped amusement park company, at a cost of $19.5 million. The partnership grew out of an extensive campaign to promote the 50th anniversary of the legendary Looney Tunes character Bugs Bunny at the Six Flags parks. The entrance of the entertainment and communications conglomerate not only gave the company a much needed influx of new capital but also a chance for increased usage of the Warner cartoon characters as well. Time Warner’s family of magazines and cable television programs also represented avenues for new advertising.
While Six Flags attempted to strengthen its appeal to younger patrons with the help of Bugs Bunny and friends, it also directed much of its energy toward cultivating its longtime relationship with the older, thrill-seeking crowd. As the company ushered in the new decade, it opened new coasters at six of its seven theme parks in an attempt to keep up with the industrywide push toward taller, faster, and more thrilling rides. Chief among the new additions was the $5.5 million Texas Giant, a 4,920-foot-long wooden-track coaster that featured a top speed of 62 miles per hour and a top lift of 150 feet, making it one of the tallest coasters in the world. With at least 12 of the nation’s 40 most popular roller coasters, according to a 1990 edition of the trade newsletter Inside Track, Six Flags soared to a record-high $431.3 million in revenues, a record 10 percent jump from the previous year. Interest charges stemming from the 1987 bond issue, however, resulted in a net loss of $25.4 million for the year.
In December 1991, Six Flags again changed owners. This time, however, the transition was aided by an infusion of more than $150 million, courtesy of Time Warner and two New York investment firms who acquired the theme park chain for an estimated $710 million. According to the terms of the agreement, Time Warner paid $31.5 million to up its stake in the company to 50 percent, and the Blackstone Group and Werth-eim Schroder & Company contributed $150 million to acquire a 50 percent share. The deal brought what had long been the missing ingredient to the company’s bottom line success: financial stability.
With a steady flow of cash and most of its long-term debt retired, the company (now known as Six Flags Theme Parks, Inc.) could now, as Cochran told O’Brien of Amusement Business, get back to what it did best, “managing the parks and growing them to their potentials.” Toward that end, Six Flags and Time Warner joined forces to develop the $8 million “Batman—the Ride,” which combined the latest in coaster technology with the thematic backdrop from the popular movie Batman Returns, released a month after the ride opened. As guests approached the ride, which first opened at Six Flags Great America in May 1992, they found themselves in the middle of “Gotham City Park,” complete with flowers, beautiful landscape, and an audio track playing sounds of children playing and birds chirping. As they continued their journey, though, patrons entered the dilapidated section of the simulated city, the air filled with unpleasant sounds, including distress signals from a police car that has smashed into a fire hydrant. Their only escape can be found in the batcave, where they are whisked away, with their feet dangling, on a car suspended below the tracks on a ride described as a high-speed chair lift that completes a series of loops. According to some industry experts, the looping, suspended coaster represented the biggest technological breakthrough in more than 15 years.
“Batman—the Ride” was typical of new President and CEO Bob Pittman’s attempt to live up to the Six Fags tradition of ride innovation and, at the same time, give the regional chain of parks a more recognizable national identity. Between 1991 and 1995, Time Warner invested more than $200 million toward reaching that goal, developing several new thrill rides with themes borrowed from among the communications conglomerate’s many businesses. (Time Warner also spent $70 million in September 1993 to gain full control of Six Flags Theme Parks.) Coasters themed with movies such as The Right Stuff and children’s rides featuring the Warner Bros, character Yosemite Sam represented a few of the more prominent examples of this crossover campaign.
Pittman, who took over in December 1991, combined this synergistic strategy with a direct assault on the industry leader, the $2.8 billion Disney, through an aggressive $30 million advertising campaign launched in 1992. The media blitz centered around what Pittman, the then 36-year-old founder of MTV, called a “classic second-place strategy.” As he told Forbes magazine’s Lisa Gubernick, “We know we aren’t Disney, but we want people to think of us on the Disney scale so they understand we’re not some dinky kiddie park.” Accordingly, the new broadcast and cable television ads boasted that the company’s seven parks were “bigger, faster, closer” than Disneyland. With six of the seven parks larger than the 80-acre home of Mickey Mouse and Donald Duck, 84 percent of the country within 300 miles of a Six Flags park, and an average roller coaster speed of 65 miles per hour, Pittman’s claim was not without strong evidence.
As Six Flags Theme Parks entered the mid-1990s, it looked to boost its appeal as a regional destination resort by broadening its entertainment package. Although it continued to develop innovative roller coasters and theme rides for the thrill seekers among its potential customers, it also tried to complement its traditional business with new attractions and services. In 1995, for instance, Six Flags opened a new waterpark called Six Rags Hurricane Harbor located adjacent to Six Flags Magic Mountain, and the company also purchased the Wet ’n Wild water-park in Arlington, which was sited near Six Flags Over Texas. There were now three company parks that had a separate-gate, company-owned waterpark attraction as a neighbor. Such deals gave the company added marketing power and strengthened the appeal of a multiple-day ticket.
In April of that same year, Time Warner sold 51 percent of its share in the company to Boston Ventures for $1 billion. The deal, as Six Rags spokesperson Eileen Harrell told O’Brien, was heralded as a “best of both worlds” decision, enabling the company to “become a self-financing entity” while maintaining its “access to the large inventory of Time Warner properties.” Although Time Warner remained as the largest single stockholder of the company and planned to comanage the company with Boston Ventures, Pittman, who helped the company to raise annual attendance levels to 22 million, soon left the company. Larry D. Bouts, former president of Toys ’R’ Us International, was named chairman and CEO of Six Flags Theme Parks in September 1995.
In early 1996 the company entered into an agreement to manage Fiesta Texas, a San Antonio amusement park majority owned by US A A, an insurance and financial services firm based in that city. The ten-year management deal also gave Six Flags Theme Parks an option to buy the park, which was soon renamed Six Flags Fiesta Texas. One year later, the Wet ’n Wild waterpark in Arlington was rebranded Six Flags Hurricane Harbor, making it the second waterpark bearing that name.
There were also important developments with the two company parks that were owned by limited partnerships and only managed by Six Flags Theme Parks. In March 1997 the company reached an agreement to manage Six Flags Over Georgia through 2026. The company also offered to acquire the Georgia park for $250 million but only about 25 percent of the partners sold their shares. Six Flags Theme Parks did, however, gain the right to offer to buy out additional partners on an annual basis and to buy out any remaining partners in 2027. In December 1997 the company reached a similar agreement with the partnership that owned Six Flags Over Texas. About one-third of the Texas partners sold their shares to the company after Six Flags offered to buy the park for $400 million. The series of negotiations that led to the Texas agreement was a drawn-out affair and eventually involved Premier Parks, which made a bold bid to take over management of Six Flags Over Texas. Although the bid did not succeed, during the negotiations the management of Premier became enamored of the Six Flags chain, leading directly to Premier’s acquisition of Six Flags Theme Parks.
Premier’s 1998 Acquisition of Six Flags
Premier’s $1.86 billion purchase of Six Flags Theme Parks in April 1998 was the largest acquisition in amusement park history. In addition to paying $765 million in cash and $200 million in securities, Premier also agreed to assume a daunting $890 million in debt to purchase the parks. Some observers worried that Premier had grown too large too fast and wondered whether the company could generate enough profits to cover its debt.
With the Six Flags parks in its possession, Premier was the largest regional theme park chain in the world and the second largest amusement park operator in the United States. The acquisition was considered second in industry importance only to the opening of Disneyland in 1955, an event that redefined the future of the amusement park industry. The combined attendance base for Premier and Six Flags in 1997 was nearly 40 million—Disney’s was 86 million.
In a key part of the Six Rags transaction, Premier inherited Six Rags’ long-term licensing agreement conveying exclusive theme park rights in most of the United States and Canada for all Warner Bros, and DC Comics animated cartoons and comic book characters, including Bugs Bunny, Batman, Superman, Daffy Duck, and the Looney Toons characters. The company also gained the worldwide rights to the Six Flags moniker—the most recognized theme park brand name in the world next to Disney. Premier officials felt the Six Flags name was the common thread that would unite all of its parks. Premier converted Kentucky Kingdom to a Six Flags park in June 1998, as well as four more parks in 1999: Six Flags Marine World, Six Flags Elitch Gardens, Six Flags Darien Lake, and Six Flags America, formerly Adventure World. Any park without Six Rags as part of its name was designated “Six Flags Properties.” The company hoped to convert more parks to Six Flags in the future. “It has been proven that the addition of the Six Rags name helps grow business,” Story told Amusement Business in November 1998. Although Premier did not immediately change its corporate name, the company’s domestic operations began operating as Six Flags Theme Parks late in 1998.
Although Premier’s value was rocketing skyward, its journey was not without a few twists and turns. A few months after the purchase of Six Flags, rumors spread that the company’s cash flow for the parks was below expectations, and Premier’s stock tumbled 35 percent. Premier executives referred to the stock drop as a “huge overreaction” and pointed out that the original 13 Premier Parks were exceeding expectations. They claimed that the problems with the Six Flags parks were a result of missteps made by previous management. Prior to its acquisition by Premier, Six Rags had started to languish as part of the Time Warner conglomerate. According to the 1997 year-end issue of Amusement Business, only two of the nine Six Flags amusement parks had an attendance increase from 1996. Premier believed that a lack of capital growth had stagnated Six Rags and the company had mistakenly targeted most of its advertising toward teens when it should have focused on families. “We know in this business, mothers tend to be the gatekeepers for seven out of ten of our visitors,” Story said in an article in the Fort Worth Star-Telegram. In response, Premier redesigned the Six Flags marketing strategy so that its ads also targeted women aged 18 to 49.
To remedy the troubles at Six Rags, Premier planned to cut costs and expand and improve its new parks. The company shut down Six Flags’ Parsippany, New Jersey, headquarters, eliminating 450 full-time positions. Premier had only 35 employees at the corporate level, most of them at its headquarters in Oklahoma City, although there was a small staff at a New York office handling financial operations. Known as a lean corporation with a risk-taking mentality, Premier’s small but efficient corporate staff believed that the company’s trim managerial structure, with only a few levels of management, helped streamline communication between upper management and consumers. Premier also cut staff at the park level. Since amusement parks are seasonal, management did not see the need for a large, year-round staff.
In 1999, Premier announced that it was going to invest $200 million in improvements for its 25 domestic parks. Some of the beneficiaries included Six Rags Great Adventure in Jackson, New Jersey; Six Rags Fiesta Texas in San Antonio, Texas; Six Flags St. Louis; and Six Flags Over Texas in Dallas. The largest expansions took place at Six Rags Great Adventure. Its $42 million in renovations there represented the largest single-year investment ever made at the park. The addition of 25 new rides increased the number of rides at the park by 50 percent. Premier unveiled “Medusa,” the world’s first “floorless” roller coaster, at Six Flags Great Adventure in 1999. The high-intensity thrill attraction was a giant “supercoaster” that plunged through twists, turns, and sudden drops at more than 60 mph. Unlike traditional roller coasters in which passengers ride above or below the track, riders on Medusa were suspended between tracks with nothing above or below them. With the addition of Medusa, Six Flags Great Adventure had 13 roller coasters, more than any other park on the East Coast.
Even as it digested its acquisition of Six Flags Theme Parks and worked to overhaul these latest additions, Premier did not shy away from adding still more properties to its growing portfolio. Late in 1998, Premier exercised the purchase option on Six Flags Fiesta Texas, acquiring the San Antonio park, which it would now both own and manage. During 1999 four more parks were acquired. Three of the acquisitions occurred in May. The partnership that owned Six Flags Over Georgia acquired White Water Atlanta Water Park from Silver Dollar City Inc. in a deal that also included a related entertainment park called American Adventures. The combined complex, located about 20 miles from the Atlanta Six Flags park, was subsequently renamed Six Rags White Water Atlanta. As had been the case in other markets, having both a theme park and a water park in Atlanta would provide Premier with opportunities for synergies in such areas as season passes, sponsorships, and advertising. Premier gained its second waterpark in Houston, meanwhile, by buying Splashtown Water Park, which was later renamed Six Flags SplashTown. In the third May 1999 purchase, Premier expanded south of the border for the first time by acquiring Mexico City-based Reino Aventura, which opened in 1962 and was considered to be Latin America’s largest paid-admission theme park. For the 2000 season, Reino Aventura was renamed Six Rags Mexico, a substantial amount of capital was expended to update the park, and the Looney Tunes and other Warner Bros, characters were introduced. The final 1999 acquisition came in November when Premier bought the European division of Warner Bros. Movie World. This division had opened a theme park in Düsseldorf, Germany, called Warner Bros. Movie World in 1996 and was developing a second such park in Madrid, Spain. As part of the deal, Premier gained exclusive theme park usage rights in both Europe and Latin America to the Warner Bros, and DC Comics characters.
Six Flags, Inc. in the Early 21st Century
For the 2000 season, Premier changed four more of its properties into Six Rags sites. In addition to the creation of Six Flags Mexico, Geauga Lake Amusement Park was transformed into Six Flags Ohio, Riverside Park became Six Flags New England, and Walibi Revo in The Netherlands was renamed Six Rags Holland. The company spent $170 million on the four parks in 2000 to add 13 roller coasters and more than 60 rides. All of the parks would now feature Warner Bros, and DC Comics characters. In mid-2000, Premier Parks took the rebranding to another level by changing the corporate name to Six Rags, Inc. in recognition of the increasing importance of the Six Flags brand. In December 2000 the company expanded into the Pacific Northwest for the first time through the acquisition of the Wild Waves and Enchanted Village park in Federal Way, Washington, near Seattle. Built in the late 1950s, the park, which was acquired from owner Jeff Stock for $19.3 million in stock, was primarily a water park and did not have the full complement of rides that a typical Six Rags outlet featured.
Acquisition activity continued in 2001. In February, Six Flags acquired Sea World of Ohio, a 230-acre marine wildlife park located adjacent to Six Flags of Ohio. The two parks were combined for the 2001 season into Six Flags Worlds of Adventure, a combined theme, water, and marine wildlife park. In May 2001, Six Flags entered the Canadian market by buying La Ronde from the city of Montreal for $20 million. Located near downtown Montreal on the 146-acre site of the 1967 World’s Fair, La Ronde was the largest theme park in Quebec. To help fund these acquisitions and to provide further capital for park upgrades, Six Flags completed a convertible preferred stock offering in January 2001 that generated $287.5 million. Also during 2001, Walibi Wavre, the flagship of the Walibi chain, was rebranded Six Flags Belgium. To prepare for the makeover of the Brussels theme park, $30 million was spent to add 15 rides. The move followed the phenomenally successful debut of Six Flags Holland, which according to Amusement Business, increased its attendance from 680,000 in 1999 to nearly 1.5 million in 2000, its first year under the Six Flags banner. Back in the United States, Six Rags Over Georgia tested an electronic queue management system produced by U.K.-based Lo-Q. Guests at the park were given the option of renting for $10 a small paging device called a Q-Bot that enabled them to reserve a place in line for particular rides. Guests could thus place themselves into a virtual queue and were free to do something else in the interim. The test was a resounding success, and Six Flags introduced the system into eight more U.S. parks for the 2002 season.
Despite all of the optimistic expansionary moves that the company was making, Six Fags’ financial performance was not stellar in the early 2000s. Attendance at a number of U.S. parks was depressed by abnormally cool and wet weather in the summer of 2000, while revenues from the European parks were impacted by the decline in the value of the Euro versus the dollar. During 2001 Six Flags felt the effects of both the economic downturn and the aftermath of the events of September 11 ; the company estimated that it lost a minimum of $25 million in revenue during the four weeks that followed September 11. Although Six Rags surpassed the $1 billion revenue mark for the first time in 2000 and managed to eke out a 3.9 percent revenue increase in 2001, the company posted net losses for both years: $52 million in 2000 and $58.1 million the following year. Saddled with more than $2.2 billion in long-term debt, which resulted in annual interest expenses of more than $220 million, Six Rags had virtually no chance of making a profit during these years when the operating environment was so negative.
The company’s troubles continued in 2002. In August of that year, Six Rags’ stock fell 57 percent in one day after the company posted an unexpected loss for the second quarter—driven by an 11 percent drop in park attendance—and warned that it was unlikely to achieve its full-year financial goals. Microsoft co-founder Bill Gates, through his private investment fund, Cascade Investment, took advantage of the depressed price to increase his stake in the company to 10.2 percent. Meanwhile, Warner Bros. Movie World Madrid opened in April 2002. Construction of the $400 million park was funded almost entirely by other parties as Six Rags held just a 5 percent ownership stake but had a contract to manage the park for 99 years in return for a fee equal to 2.5 percent of the park’s revenues. In August 2002 Six Rags secured its 39th park by acquiring Jazzland, a 140-acre theme park located outside New Orleans.
Principal Operating Units
Enchanted Village & Wild Waves; Frontier City; The Great Escape & Splashwater Kingdom; Jazzland Theme Park; Six Rags America; Six Flags Astro World; Six Flags Darien Lake Resort; Six Rags Elitch Gardens; Six Rags Fiesta Texas; Six Rags Great Adventure; Six Flags Great America; Six Flags Hurricane Harbor (Arlington, Texas); Six Rags Hurricane Harbor (Jackson, N.J.); Six Rags Hurricane Harbor (Valencia, Calif.); Six Rags Kentucky Kingdom; Six Flags Magic Mountain; Six Flags Marine World; Six Flags New England; Six Rags Over Georgia; Six Rags Over Texas; Six Flags St. Louis; Six Rags SplashTown; Six Flags WaterWorld; Six Rags White Water; Six Flags Wild Safari Animal Park; Six Rags Worlds of Adventure; Waterworld USA (Concord, Calif.); Waterworld USA (Sacramento, Calif.); White Water Bay; Wyandot Lake; La Ronde Theme Park (Canada); Six Rags Mexico; Bel-lewaerde (Belgium); Six Rags Belgium; Walibi Aquitaine (France); Walibi Rhône-Alpes (France); Walibi Schtroumpf (France); Warner Bros. Movie World (Germany); Six Rags Holland (Netherlands); Warner Bros. Movie World (Spain).
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—Tracey Vasil Biscontini and Jason Gallman
—update: David E. Salamie