Six Flags Theme Parks, Inc. Business Information, Profile, and History
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History of Six Flags Theme Parks, Inc.
Six Flags Theme Parks, Inc., is the second-largest theme park operation in the United States. Marketing itself as "Bigger than Disneyland, closer to home," the company has ten parks spread throughout the country and draws an estimated 22 million patrons per year. According to the company's marketing slogan, 85 percent of the U.S. population lives within a day's drive of one of the company's parks. Long known for introducing the public to the latest in thrill ride technology, Six Flags boasts some of the tallest and fastest roller coasters in the world. In addition to its hallmark thrill rides, the company is known for its affiliation with Time Warner, which can be seen in the many Looney Tunes characters and Warner Brothers film properties that have become increasingly prominent in the park during the 1990s.
The company that introduced steel roller coasters, log flumes, and whitewater rides to the world was founded by Angus Wynn in 1961. Three years before the grand opening of his first amusement park, Six Flags Over Texas, Wynn, a Texas 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 Wynn that he open an amusement park himself to generate the needed funds. Wynn 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. Wynn'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. Wynn quickly agreed and changed the name to "Six Flags Over Texas."
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"&mdash 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.
Wynn's marketing strategy in those early days was not unlike the approach of the 1990s. 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 Wynn 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, managing to pay off all construction costs and make a profit. As had been his original intent, Wynn 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, Wynn 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.
In 1966 Wynn sold his amusement park business to Penn Central. 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 Flags Over Georgia, in Atlanta. A future president and chief executive officer of the company, Larry Cochran, who began his career with Six Flags as a part-time draftsman helping to design and build the first park, was appointed vice-president and general manager of the new facility.
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. 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. Six Flags Magic Mountain, in Valencia, California, purchased in 1979, brought the park 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 AstroWorld 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 between 1981 and 1990. The first major change came in 1982 when Penn Central sold the company to Bally Corporation. Under the direction of the new owners, Six Flags 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 leverage 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 managed a strong performance at the gate in a decade that saw the megaparks, such as Disneyworld and Epcot Center, rise to the forefront of the industry. Six Flags, along with other mid-sized parks such as Great America and Great Adventures, 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 acquired the rights to Warner Brothers animations, Looney Tunes, which includes 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.
The Early 1990s: New Ownership Spurs Growth
In June 1990, Time Warner increased its interest in the financially strapped amusement park, acquiring a 19.5 percent share of the 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 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 long-time 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 ten 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.
Two years later, 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 40 percent, and the Blackstone Group and Wertheim 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 most of its long-term debt retired and a steady flow of cash, the company could now, as Cochran told O'Brien of Amusement Business, get back to what it does 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 Chief Executive Officer Bob Pittman's attempt to live up to the Six Flags 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. Coasters themed with movies such as "The Right Stuff" and children's rides featuring the Warner Brothers 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.
The Mid-1990s and Beyond
As Six Flags 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 compliment its traditional business with new attractions and services. In 1995, for instance, Six Flags Over Texas purchased the Wet 'n Wild waterpark in Arlington, becoming the third company park to have 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. Another avenue of diversification for Six Flags launched that year was the concept of the Outlet Center. With the intent of attracting parents and empty nesters who have dropped off their children and grandchildren at the park, Six Flags opened its first outlet center at its Jackson, New Jersey facility. The company planned to add similar stores, which sell a variety of Six Flags and Time Warner merchandise, to its other parks based on the success of the pilot store.
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 Flags 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 co-manage the company with Boston Ventures, Pittman, who helped the company to raise annual attendance levels to 22 million, planned to leave the company the following year.
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