Monday, December 18, 2017

Regional Theme Park Industry 101, Part 3: Who?

The first and second parts of Regional Park 101 explained the history of the regional theme parks in the US and described how they came to be and why the way they are. This third part describes the owner and operators both big and small:



Six Flags

Market Cap (12/17/17): 5.6 Billion Dollars

Number of Properties: 20

Theme Parks owned/operated & Market Served:

Great Escape (NYC, CT), La Ronde (Montreal), Six Flags America (DC), Six Flags Discovery Kingdom (San Francisco), Six Flags Fiesta Texas (San Antonio), Six Flags Great Adventure (NYC/Philadelphia), Six Flags Great America (Chicago, Milwaukee), Six Flags Magic Mountain (Los Angeles), Six Flags México (Mexico City), Six Flags New England (Boston, Providence, CT), Six Flags Over Georgia (Atlanta), Six Flags Over Texas (Dallas), Six Flags St. Louis (St. Louis)

Even after bankruptcy, Six Flags is still the biggest regional operator based within the United States. It's hard to believe as big as they are that they were once twice as big as they are now, but that's what a shaky business plan and expanding too fast too soon does to you. The chain has retained a presence in 9 of the 10 largest media markets in America; that they aren't a perfect 10 for 10 is why we'll see Kieran Burke appear later on the list. The company has been doing gangbusters business since emerging from Chapter 11, more than doubling their stock price in the last 5 years and currently operating at an all time high of 66.90 as of Friday's market close.


Often when you see people try to describe what happened to Six Flags in the 2000s, one item brought up consistently is the low season pass pricing that "gave away the gate" - in order to drive return traffic and increase visitation to other parks, Story and Burke had super cheap season passes that were often similar or identical in price to one day admission. Those who point to this as a failing show that per capita spending decreased significantly over time and the parks became glorified day care centers for poor families, making them unappealing for anyone else. Ergo, they crashed and burned. In these darkest days, season passes accounted for roughly 1/3 of admissions to the Six Flags parks per press releases and SEC documentation.

Jim Reid-Anderson, corporate raider supreme, has retaken the mantle of CEO after a brief retirement. Historically, he's been incredibly successful with every business he's touched, and Six Flags has to date been no different. Successful businessmen often find things that their predecessors were right about, but go about them differently to achieve actual success. Season pass sales was exactly this thing: rather than increase the price dramatically to push people out of possessing them, Six Flags went the opposite route and kept them at similar or even lower price levels than before, then began to tag on a number of "pluses" which could be assumed as advance revenue. Parking passes had always existed, but Six Flags made them a cornerstone of early pass sale promotions which were often tied to new ride announcements. Then came Season Dining Plans. Then came Season Drink Plans. Then Season Photo Plans to record those special memories. Then Season QBot to skip the lines every time you go. By 2017, season pass holders now made up greater than 60% of visitation: double what it had in the olden days. And those pass holders in turn often spent more money than single day pass holders over the long run, so while they were spending less per visit, they spend more money overall.

To keep from returning to a heavy debt load, Six Flags put effort into a number of new revenue channels - heavy in park advertising is the most blatant and in your face at Six Flags of almost any facility around. Total capital expenditures for the chain has been capped to roughly 9% of gross revenue by management, meaning that all the parks combine for about $100-120 million in investment. That's rarely enough for gigantic coasters, but then, the parks are chock full of them already. Six Flags has found themselves investing in smaller footprint attractions like flat rides and "gimmick coasters" such as the S&S Free Spin and Larson Giant Loop, but their concerted market effort has generally made these smaller attractions into still being hits. They've also constructed several new dark rides with the Justice League series of attractions, which are shockingly good all around. The chain has also decided to go further into the season than ever before, expanding to Christmas time operation at parks outside of Texas and California, as far north even as Six Flags New England.


From a business perspective, Six Flags has one obvious issue - at some point, you can't keep growing the season pass holder base. Conversion to pass holders has slowed down over the years as they've reached maximum market penetration. Converting pass holders to some of their other products, particularly Season Q-Bot and Season Pictures, has been slower going than they'd like. One change made recently was to institute new flavors of their season pass which would come with exclusive benefits like pass holder ride times and exclusive souvenirs. The continued pursuit of new winter events will also demand more indoor attractions, and that may be where their biggest capital expenditures lie in the near future.

2017 saw some appreciable improvements in their operations. Sure, the parks can still be an assault on the senses with neon colored Taki's advertisements, and the food is still grossly overpriced and of middling quality, but it feels like they're becoming better spaces. Many of the most grievous eye sores have been taken care of, and there's real effort from management to take some of that annual reinvestment and plug it into the little things (paint, lights, etc).

Cedar Fair

Market Cap (12/17/17): 3.8 Billion Dollars

Number of Parks: 13

Theme Parks owned/operated & market served: California's Great America (San Francisco), Canada's Wonderland (Toronto), Carowinds (Charlotte), Cedar Point (Detroit, Cleveland, Columbus OH), Dorney Park & Wildwater Kingdom (Philadelphia), Gilroy Gardens (San Francisco), Kings Dominion (Richmond, DC) Kings Island (Cincinnati, Columbus OH), Knott's Berry Farm (Los Angeles), Michigan's Adventure (Grand Rapids, Chicago), Valleyfair (Minneapolis), Worlds of Fun (Kansas City)

Six Flags may beat Cedar Fair in valuation, but after 3 quarters of operations this year, it was Cedar Fair who actually lead in gross revenue. Markets like Cleveland and Grand Rapids may not excite Wall Street in the same way New York City does, but Cedar Fair's superiority in integrated resorts and plans to expand with hotel rooms elsewhere in the chain should. Richard Zimmerman is slated to become the new CEO of the company in 2018 while Matt Ouimet heads to do whatever else it is exactly he wants given that he's been a star in the role. Cedar Fair stock was as low as $6.00 a share in 2009 and has risen to greater than 11x that under his leadership. He's managed to do it without abandoning maintenance and capital expenditures either; all the big parks have seen tremendous investment.


Cedar Fair under Dick Kinzel was a pretty conservative company doing pretty conservative things; if it worked at Cedar Point, it should work anywhere. Knott's Berry Farm did recover some attendance during the Kinzel-era as coasters were plunked in, but purists were crying and complaining up a storm. The Paramount purchase put a huge debt load on Cedar Fair just as the economy slumped, and Kinzel's choices of capital investment during this time frame were, let's say, sub-optimal (a 10% drop in Cedar Point attendance matched its new for 2008 light show). Pursuing a sale to Apollo wound up getting him the hook, and things have been sweet as boysenberry pie ever since.

Now, I'm not saying that Kinzel was bad; just situationally bad. He didn't really get what Knott's could be as a Disney alternative for the locals, nor was he particularly forward thinking when it came to Cedar Point's resorts and the standards they met. Breakers was basically a dump which was perpetuated as such because practically speaking, hey, we can charge whatever for this, right? Ouimet, with his background at Disney's Parks and Cruise Lines as well as time on the Starwood board was going to have none of this. He sold unnecessary water park assets to tear down Hotel Breakers to the studs and rebuild it, creating a hotel that could charge $200 a night almost every night and still have high occupancy. Knott's classic attractions were rehabbed, and a dark ride reinstalled into a space built for such things. And attendance vaulted, with Cedar Point breaking 3.7 million visitors and Knott's being announced as having 5 million in 2016 on an earnings call.

The business model at Cedar Fair is quality with quantity: the classic all things to all people. Ticket schemes are similar to that of Six Flags, except with higher prices. A Gold Pass at Six Flags Great America which includes entry and parking to the rest of the chain can be had for somewhere in the $65 range. A comparable pass at Cedar Fair is more like $210. Individual visits are still the bulk of their entries. Also like Six Flags, Cedar Fair is full steam ahead on the "renovate things and call them new" bandwagon, as 2018 will see two Rocky Mountain coasters built on 90s era woodies take center stage.


It's hard to see the future at Cedar Fair overall as anything but bright: continuing on the same path right now will lead to resorts in Charlotte and Toronto, more winter events, more revenue, and more quality attractions. Like with Six Flags, there's a cap on the market for their pass products, especially at the prices they charge. Also like everyone in this market, they have challenges with staffing. Cedar Point and Valleyfair offer housing for out of area employees, but low wages make them largely noncompetitive for quality employees. Expanding and continuing to improve housing while also improving pay will go far in getting them domestic employees, and expanding the season at many parks in tandem with setting up agreements with other seasonal businesses to transition people into new jobs when the gates close would be enormous. For now, they're years away from that sort of trans-formative move, and you'll find closed rides or food booths at many parks even at the height of the season as a result.

SeaWorld Entertainment

Market Cap (12/17/17): 1.2 Billion Dollars

Theme Parks owned/operated & Market Served:

Busch Gardens Tampa (Tampa, Orlando), Busch Gardens Williamsburg (DC, Richmond), SeaWorld Orlando (Orlando), SeaWorld San Antonio (San Antonio), SeaWorld San Diego (San Diego), Sesame Place (Philadelphia)

If you're here, you know it's been a bad few years for SeaWorld. Here's the good news: they can survive. Their real issue is with a debt load that's been dumped on them by Blackstone. What's that debt? The money Blackstone borrowed to buy them! They still have a high enough attendance level to be sustainable without it, so Chapter 11 sometime in the future is coming. But we're getting ahead of ourselves.


SeaWorld is going low cost with capital expenditures and there's not much of a 5 year plan. CEO Joel Mamby came from Herschend with a wealth of experience, but he's come into a situation where the company is under seemingly endless federal investigation for all sorts of wrong doing. The initial plan by his predecessor to ignore the wave of anger and resentment towards the brand is all sorts of impossible to overcome. Joel Mamby probably wants you to pray for him, knowing Herschend.

In the meantime, they're looking to compete as "local's parks" rather than destinations and well, good luck to them given that the average household in Orlando's income per capita is actually lower than Detroit's.


Hope that Trump doesn't screw up the global economy so bad they can't get investment money from outside to float them while they figure out what to do or let someone else take a nose dive. In fairness, an aggressive strategy could pay off in markets like San Antonio or even San Diego over the long term, but there's no easy path out.

Herschend Family Entertainment

Market Cap (12/17/17): ????? - Herschend is not a public company

Number of Properties: 17 if you count the Harlem Globetrotters

Theme Parks owned/operated & Market Served:

Dollywood (Atlanta, Charlotte), Silver Dollar City (Anywhere in a 300 mile radius of Branson), Wild Adventures (Jacksonville, Tallahassee, Valdosta GA), Stone Mountain Park (Atlanta)

Herschend is all about increasingly integrated resorts in locations where lots of people travel as destinations. They're the Walt Disney World of their vacation lands. They build stuff with theming, they build wild stuff, they build stuff for kids, they have it all. SDC and Dollywood are awesome parks that you can visit darn near year round. I love them. They're so good. So so so good.


They're private, so they don't talk. They've been building some of the most unique and exciting themed attractions in North America for the last 15 years. Crowds are coming. They have employees that love working for them. They seem to be doing something right. Well, Wild Adventures isn't much but christ, have you ever been? It's in the middle of nowhere. At least they smartly stopped year round operation there. Now just get a new train for Cheetah.


Branson is hurting for tourists but SDC still packs em in for now. Of course Dollywood has been headed skyward for as long as I've been into this whole rides for kids nonsense, and they've got a year round hotel there and lord knows what else planned. They're gonna be fine, and more importantly, they aren't selling out to anyone any time soon. God would be pissed.


Merlin Entertainments

Market Cap (12/17/17): 3.7 Billion Dollars

Number of North American Properties: 30-ish?

Theme Parks owned/operated & Market Served:

Legoland California (San Diego, Los Angeles), Legoland Florida (Central Florida, Tampa), Legoland New York (New York City, opening in 2019)

Merlin made a play for the Busch Gardens parks from SeaWorld earlier this year but were told it was all or nothing. Smart move for SeaWorld, who Merlin honestly should buy and rebrand under the existing "Sea Life" moniker. They've got a lot of parks in Europe and facilities from here to Singapore. No one in North America runs more trackless dark rides, that uber exciting of technology, than Merlin and it isn't even close. Their biggest expansion comes in their "Midway Attraction" department, with acquisitions and operations of Ferris Wheels like the London Eye and the Madame Tussaud's brand.


They still haven't really made a global play with Merlin's brand as a whole and might never. In fact, they've never made really good regional plays in places like the UK where they could cross promote to engage tourists from their downtown sights into their theme parks (like Alton Towers and Thorpe). There's also some questions that are getting raised about their capacity for upkeep: Colossos is the premier attraction at Heide Park, and it hasn't moved in nearly two years due to maintenance costs that are seen as being prohibitively expensive. It's one thing at Busch Gardens Tampa for Gwazi to sit in the center of the park like a giant pair of wooden failsons. It's another when a chain that isn't struggling has something like that.


The kings of Retail Theme Parkery: Legoland, Dungeons, flying theaters, Shrek, and Aquariums are coming to somewhere near you soon if it isn't already. And they'll probably buy someone. Or someones. Multiple someone.

Parque Reunidos

Market Cap (12/17/17): 1.1 Billion Dollars

Number of North American Properties: 36

Theme Parks owned/operated & Market Served:

Kennywood (Pittsburgh), Idlewild Park (Pittsburgh), Lake Compounce (Hartford CT), Storyland (New Hampshire, Boston), Castle Park (Los Angeles/Riverside), Dutch Wonderland (Philadelphia)

Parque Reunidos' list of parks feels like the off brand Merlin to me. I don't know why. They kinda scrapped whatever IPs they had before, but now want to partner up with everyone from Ducati motorcycles to Nickelodeon after thinking harder about it. OK, sure. Just get Garfield out of the Kennywood Old Mill, please.


Kennywood used to give parks what they needed to get through the season and make improvements as it went along. The parks were great, always well run, and operations rocked. Parque Reunidos gives them a set budget and you better make it last. You can guess the rest of the story.

2018 looks like a year where they're throwing all the past ideas on admission pricing out the window and trying to copy Six Flags. There's many season pass flavors and they all come with different stuff. Expect further cuts in spending at the parks to try and generate a really nice revenue number. What they do with that number? I don't know, more stock offerings? Try to get sold to a Chinese shipping company?


They don't seem built for any big moves, and their stock price since 2012 hasn't moved all that much. I'd say they look like a great candidate for a takeover, but there's really only one buyer on the market today and they may be concerned with competing against themselves in some markets. I mean, that's stupid since Merlin owns 4 theme parks that draw from London, but whatever. I'm some jerk on his couch. It might also be that finding financing in the UK right now is tough what with the country on the verge of possibly eating a turd via Brexit.


Premier Parks Umbrella:

EPR Properties

Market Cap (12/17/17): Total Investments of 6.6 Billion Dollars

Number of Properties: Nearly 400

Theme Parks Owned & Market Served:

Darien Lake (Buffalo), Frontier City (Oklahoma City, Tulsa), Magic Springs (Little Rock), Pacific Park (Los Angeles), Wild Waves (Seattle) [Also owns Pacific Park at Santa Monica Pier, but that is not operated by Premier]

Stanley Kroenke 

Net Worth: $8.1 Billion

Theme Park Owned & Market Served:

Elitch Gardens (Denver)

Premier Parks LLC

Company Value: ??? Million

Theme Park Owned/Operated & Market Served:

Clementon Park (Philadelphia)

It would be easy for me to be hyper critical of Kieran Burke. He was a lawyer, not a park guy, he kinda stumbled into it because of connections that took him to Tierco and the success of Gary Story. Except now Burke is a park guy. I mean, he ran 40 theme parks at his peak. Not many other people have that level of experience. And he loves the business enough to not want to leave. He and Gary went back to Oklahoma and ultimately put a team back together under the old Premier name that would do park operations for CNL Lifestyle, a real estate trust. Gary Story died in 2013, and Burke is running the show and seeming to do a good job as all the CNL parks are still under his leadership even after being divested of.


CNL Lifestyle was often referred to as a dumpster fire. EPR, meanwhile is adding rides to the parks and generating revenue across the board from its Family Entertainment Center holdings, Ski resorts, and the development and expansion of their TopGolf brand. Premier then gets to manage fun new things at parks like Darien Lake and Magic Springs, the latter of which hadn't had a dry ride addition in something like a decade.


Premier has found its niche in the business running parks for just about everyone, even Six Flags (they're operating Waterworld Concord for Seis Banderas). Everything seems rosy right now, especially since their partners aren't averse to spending a little to get a little.

Hershey Entertainment and Resorts Company

Company Value: Billions and Billions and Billions

Theme Parks Owned/Operated & Market Served:

Hersheypark (Eastern Seaboard)

The biggest of all the independents, Hersheypark exceeds 3 million in attendance each year, had a Christmas event light years before anyone north of the Mason-Dixon, and operates a full service resort too (the outrageously nice Hotel Hershey). They're run as a bit of a strange duck as they are part of the Hershey Trust, and everything has to pass muster with the board. The Trust is majority owner of the Hershey chocolate brand, of which something like half the profits all go towards Milton Hershey's school for needy children. If you're thinking, "wow, that must be one helluva school," yes, it is one helluva school. Annually the trust spends $111,000 on each student's education. That board is conservative about expansions, which is probably why Hersheypark has a water park smack dab in the center of it included with admission rather than connected and charging a separate fee and making all the money ever.

Hershey Resorts, previously known as HERCO, has also owned and operated other parks than Hershey at various points. This includes Lake Compounce and Dutch Wonderland. Right now, they don't seem to be looking to making acquisitions, but when you have hundreds of millions at your disposal, things happen sometimes.

Apex Parks Group

Company Value: ??? Million

Theme Parks Owned/Operated & Markets Served:

Fantasy Island (Buffalo), Indiana Beach (Indianapolis, Chicago)

Looking to become the newest conglomerate is Apex Parks; Founded by former Six Flags Great America GM Al Weber, the company is now in the hands of another Six Flags GM, John Fitzgerald following Mr. Weber's sudden and untimely death in 2016. Backed by private capital, Apex is actively looking to make acquisitions in the Family Entertainment Center, Water Park, and Amusement Park space. Their biggest purchase to date was Indiana Beach; once a beloved wacky boardwalk park plunked in the Midwest, life after sale from its family owners was harsh. Apex swooped in and grabbed it, giving the park new lease on life. Martin's Fantasy Island followed last year, and it's very likely that it's only just the start.

The Koch Family

Net Worth: Honestly, they probably don't talk to one another, don't even think of combining it

Theme Parks Owned/Operated & Markets Served:

Holiday World - Koch Development Corporation (Louisville, Evansville, Indianapolis) / Alabama Splash Adventure  - Pat, Dan, Natalie Koch (Birmingham AL)

Until June 16, 2010, the Koch Family appeared as the model of normalcy for a family run operation. Will Koch ran Holiday World, taking over from his parents Pat and Bill who had founded it in the 1950s. Will was a beloved figure with a penchant for aggressive roller coasters and clean parks; both won him many awards and international acclaim, and a park in the middle of nowhere Indiana wound up beating Six Flags into submission and exceeding 1 million attendees annually. Will Koch died that day while swimming, presumably the result of diabetic shock and everything changed. His brother and sister attempted to regain the park from Will's wife via legal means and were turned back at the courts. An attempt to take over Kentucky Kingdom and reduce it to a water park as a backup plan for them also flopped. Refusing to leave the industry, the matriarch of the family made some phone calls, and soon Dan, Natalie, and a host of managers from Holiday World made their way to Alabama to run the constantly floundering Alabama Splash Adventure. Holiday World, meanwhile, seems to be trucking along just fine with Will's children working in the park and preparing to take it over for the next generation.

Fun Spot

Theme Parks Owned/Operated & Markets Served:

Fun Spot Orlando & Kissimmee (Central Florida), Fun Junction USA (Atlanta)

Another FEC gone big and looking to make purchases is Fun Spot, who bought out Fun Junction USA this year and is planning big expansions in the Florida market. Comments made at IAAPA suggest that they purchased wood coasters from GCI and Gravity Group to see which they liked best, and they seem to think it is a situational sort of thing.

Triple 5 Group

Theme Parks Owned/Operated & Markets Served

Nickelodeon Universe (Minneapolis), Galaxyland (Edmonton), Nickelodeon Universe @ American Dream (New York City/Newark)

The Ghermezian family has billions in assets built around gigantic malls. Of course they were the folks who were able to actually finish Xanadu in the Meadowlands. Of course they already own and run the two most significant indoor theme parks in the hemisphere. In fairness, just saying they own malls doesn't totally describe the variation in what they develop (there's sections about biotechnology and nuclear energy on their site) but for what we're talking about, sure. They do malls. American Dream will open with a full theme park and some gnarly Gerstlauer built coasters as well as a Legoland Discovery Center, indoor ski hill, and Sea Life Aquarium.

And the fully independents:

Knoebel Family (Knoebels Grove, Pennsylvania)

Lagoon Corporation (Lagoon, Salt Lake City)

Nick Laskaris (Mt. Olympus, Wisconsin Dells, WI)

Santa Cruz Seaside Company (Santa Cruz Beach Boardwalk, California)

Jack and Will Morey (Morey's Piers, NJ)

Landry's Inc./Fertitta Family (Kemah Boardwalk, Downtown Aquarium, and Historic Galveston Pleasure Pier, TX)

Standard Amusements (Operator of Rye Playland, NY)

Central Amusements (Operator of Luna Park and Victorian Gardens, NYC. A subsidiary of Italian ride manufacturer Zamperla)

Gary Norton (Silverwood, Idaho)

Maritime Fun Group (Burlington Amusement Park, Shining Waters, Sandspit; all in Prince Edward Island, Canada)


Part 4 will complete the series with a look to the future; What projects are in the works in the regional park scene? More importantly: will any of them actually come to fruition?

No comments:

Post a Comment