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| Six
Flags Over Texas Conference Call |
Question:
Six Flags chairman Kieran Burke said
during a conference
call this morning that SFOT and SFGA
will get new rides next year along
with two other parks as part of the
company's $100 million capital expenditure.
So what will Over Texas get? There's
been talk about a drop ride. There's
been talk about a liquid coaster.
What's the latest rumor?
Answer:
I just listened to the whole
thing, and here are the points that
I found interesting:
Next year's capital expenditures ("cap
ex") will be $125 million, down
from $140 million this year.
If the acquisition of Jazz land goes
through, they will spend a total of
$25 million over the next three seasons,
with Six Flags branding expected by
2005.
The per-capita spending increase wasn't
explained in detail, but several factors
were mentioned. Season prices
were raised $2 to $5. Admission ticket
prices weren't raised, but discounts
were lowered, which raised the effective
admission price. Investment
in games and up charge attractions
(such as go-carts) is paying off.
So far, Lo-Q has not contributed
significantly to per-cap spending.
The big four parks (SFMM, SFGAm, SFGAd,
and SFOT) typically account for about
30% of the company's revenue. Next
year, all four of those parks will
get new attractions (no details given).
Each year after that, at least
two of these four parks will get a
new attraction.
Attendance at SFMM and SFGAm has been
up, but the company's revenue was
hurt mainly by low attendance at SFGAd,
SFOT, and SFWOA. They blamed
this low attendance on the lack of
new attractions, combined with overly
aggressive reduction of admission
discounts at SFGAd and SFOT. At
SFWOA, they blamed the regulatory
delay in getting their two killer
whales, and they also need to improve
their marketing to better describe
that park.
The real shocker came at the very
end of the conference
call. I think it was Kieran
Burke who said this: "It's
counterintuitive, but the lower you
pay for your price to come into the
park, the less time you tend to spend
in the park, and the less amount of
money you spend in-park." His
rationale was that if you pay more
to get in, you're more invested in
your visit, and you'll stay longer
to get your money's worth. Sure
sounds counterintuitive to me.
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