11-04-2006, 10:58 PM
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Magic Mountain News
Magic Mountain sale possible
Six Flags struggling with low earnings
Daily News Staff and Wire Services
June 23, 2006 VALENCIA - Citing hurdles in its efforts to attract families instead of just teens to its theme parks, Six Flags Inc. said Thursday it will consider selling Magic Mountain, Hurricane Harbor and five other properties.
The New York-based company's share plummeted 19 percent after Six Flags' announcement that it might fail to reach a previous earnings forecast, and the need to modify terms with lenders.
The family strategy was expected to bring in a customer base that would spend more money than the teens who flock to the parks for the white-knuckle rides.
"What has been unexpected thus far is that the families we are targeting to replace those teens have been harder to attract than anticipated," said Mark Shapiro, president and chief executive officer. "Make no mistake about it, families are coming back - as evidenced by our solid increase in per capita guest spending - but not as quickly as we had hoped."
Magic Mountain attendance was up 5 percent - to 2.8 million - in 2005, according to industry analysts.
But a rainy spring hurt attendance at West Coast parks and the New Orleans park was closed for the season because of damage from Hurricane Katrina.
Properties that could be sold are the two local parks known together as Six Flags California plus Six Flags Darien Lake outside Buffalo, N.Y.; Six Flags Waterworld, in Concord, Northern California; Six Flags Elitch Gardens in Denver; Wild Waves and Enchanted Village outside Seattle; and Six Flags Splashtown in Houston.
Through May 31 this year, Six Flags' total revenue was up 1 percent, or $2.6 million, from last year, driven by a strong increase in guest spending and offset by a decline in attendance. But for the period through June 18, revenue has fallen 1 percent, or $3.2 million, and attendance is down 13 percent.
"Increased guest spending is continuing at a strong pace - a clear indication that our strategy is working," Shapiro said. "The drop-off in attendance was driven primarily by an anticipated decline in our season pass sales, which we are no longer deeply discounting in an effort to restore price and brand integrity, and to wean ourselves from those teens who don't spend money in the park."
However, Six Flags said its plan to attract families has been more difficult than anticipated. It plans to raise cash operating expenses by $15 million above prior guidance, to $60 million, over the course of the year to beef up staffing in order to draw more families to its parks.
Shapiro, a former ESPN programming executive, took the helm at Six Flags in December, recruited by shareholders who ousted the top management.
Six Flags had been struggling in the industry while saddled with more than $2 billion in long-term debt, partly the result of years of investments in coasters and other high-capital projects.
The increased costs and other factors mean it will be "extremely difficult" for the company to meet its prior guidance for earnings before interest, taxes, depreciation and amortization, company officials said.
Meanwhile, the company said it is exploring strategic options for six of its weaker properties, including selling or closing them. Among those properties are Magic Mountain and Hurricane Harbor.
Magic Mountain is Six Flags' only true thrill park, which has worked so far since other amusement parks in the local market are more family-oriented, said Wendy Goldberg, spokeswoman for Six Flags.
"There's a perception out there that it sits on valuable land," Goldberg said. "There's also a perception out there that it may not fit into our mission of repositioning our brand in the marketplace.
"This is not something that is going to change this season. We haven't set a time frame."
Any transactions could include selling the parks as going concerns or dismantling them and selling the land for real estate. The decision is part of the company's move to dispose of noncore assets to reduce debt.
Larry Mankin, president and CEO of the Santa Clarita Valley Chamber of Commerce, worries that a sale to a company not focused on tourism could be bad for local businesses serving theme park visitors.
"If it is sold to a group that would continue to operate it as an entertainment facility, then that's another story," he said. "But certainly if it was sold for speculation and development, that would be not good for those people who depend so heavily on tourism revenue in this community in their respective businesses."
Six Flags shares dropped $1.40, or nearly 19 percent, to $6.05 in after-hours trading on the INET electronic exchange, after closing earlier up 5 cents at $7.45 on the New York Stock Exchange. Shares are down 3.5 percent from the beginning of the year, but have lost 38 percent of their value since hitting a 52-week high of $11.93 in early February.
Jack Kyser, chief economist with the Los Angeles County Economic Development Corporation, said the Six Flags announcement comes as a surprise.
"But then if you're ... trying to dig yourself (out) from some financial issues, the local Six Flags would probably be one of the more attractive assets that you have, and there are potential buyers out there."
The park could be a good candidate for a more family-friendly environment, but there's competition.
"Family-friendly might work," he said. "But you have to remember you have the king of family-friendly in Disneyland."
Close Magic Mountain? Residents Aren't Thrilled
By Amanda Covarrubias and Lynn Doan, Times Staff Writers
July 2, 2006
When Magic Mountain opened 35 years ago, the theme park was billed as a magnet for development in the cattle ranches and pastoral hills of northern Los Angeles County — much as a certain magic kingdom had put an obscure southern outpost on the map 15 years earlier.
"Remember what Disneyland did for property values in Anaheim?" read one real estate ad in 1970. "You should be living here when the Mountain comes. Your property values should be all uphill from here."
Move there they did, by the thousands, making the Santa Clarita Valley and surrounding region the fastest-growing section of Los Angeles County.
As more suburbanites flooded the north county, their relationship with the amusement park was mixed: It generated jobs and taxes, but residents disliked the traffic and crime that periodically caused problems.
But now, as Magic Mountain's owners talk about shutting it down and selling the 250 acres for development, residents are rallying to keep it around.
Their desire to save the park is driven both by nostalgia for the past and concerns about future development.
"I've never known a Santa Clarita without Magic Mountain," said Santa Clarita Councilman Cameron Smyth, who grew up in the area and worked as a ride operator as a teen. "It's part of the community … and it's a landmark for the Santa Clarita Valley."
North L.A. County is in the midst of a major building boom — adding an estimated 350,000 residents in the next 15 years — and some residents say the region cannot handle another mega-development.
North of Magic Mountain, nearly 21,000 homes are rising on the old Newhall Ranch. Farther up Interstate 5, 23,000 homes are slated for the new community of Centennial near Tejon Ranch. And 15,000 to 20,000 homes are planned on the eastern edges of Santa Clarita.
"The growth here has been just ridiculous," said Valencia resident Jennifer Molidor, 34, who worked at the park as a photographer when she was a teenager and now takes her children there. "I think we have enough housing here."
Molidor and others in Santa Clarita say it is ironic that Magic Mountain has become a victim of the development boom that it helped create.
The Santa Clarita Valley's population was about 48,000 — plus at least 6,000 head of cattle — in 1971 when Magic Mountain opened. Now, it is 170,000 and growing. What started as a middle-class bedroom community has become an upscale suburb with high-end shopping as well as technology and entertainment businesses.
But as homes spread around Magic Mountain, residents grew unhappy about the crowd the park attracts.
While Disneyland has long catered to families, Magic Mountain has always been a magnet for teenagers lured by the venue's 17 roller coasters. Teen troublemakers have been a periodic problem.
Several high-profile crimes dismayed residents, including a gang-related stabbing spree in 1985, a riot that spilled from the park to businesses in 1993 and the shooting death of a teen in the parking lot in 1998.
In announcing his intention to sell Magic Mountain, Six Flags Chief Executive Mark Shapiro cited the park's rowdy teen atmosphere and how it has made it difficult to attract families.
"Once you burn Mom, she is not rushing back," Shapiro said.
Although Shapiro said it was possible that Magic Mountain would be sold to another theme park operator, some real estate experts have said the land is so valuable that converting it for housing or housing-retail development probably would yield the greatest profit.
Real estate experts estimate that the land could be worth at least $200 million.
But many in the Santa Clarita Valley say the region does not need more housing tracts. With traffic worsening and massive developments rising at a rapid clip, north county leaders are struggling to attract more jobs.
The area has some of the worse freeway gridlock in Southern California, and a Metropolitan Transportation Authority report said it will get far worse unless officials can find money to build more roads and rail lines.
On Interstate 5, motorists now crawl during rush-hour at an average of 26 mph. By 2020, according to the MTA, traffic speeds will be down to 11 mph. About 600,000 residents now live in the north county. But the Southern California Assn. of Governments expects the population to reach nearly 1 million by 2020. Though the theme park generates traffic — and about 2.5 million visitors a year — community leaders say it is also a hub of economic activity that is more beneficial to the region than a housing development would be. The park is the region's largest employer, with about 4,000 workers.
"I have concerns just because it's such an economic driver for the valley," Councilman Smyth said. "If they choose to sell, the tax revenue that it generates would be a noticeable hit."
Larry Mankin, president and chief executive of the Santa Clarita Valley Chamber of Commerce, said keeping Magic Mountain makes the most sense for the region in part because "it is part of our brand."
Still, Smyth and others say that if the park is sold for development, the land should be used for job-producing industrial, commercial and office development rather than homes.
But it remains unclear if there is a market for nonresidential use of the land. Moreover, the park is situated in an almost entirely residential area, potentially making it difficult for a dense commercial development to rise from it.
If Magic Mountain closes, it would not be the first Southern California amusement park to succumb to the pressure of development.
Busch Gardens, a tropical-themed park and bird sanctuary in Van Nuys, shut down in 1979 so that the adjacent Anheuser-Busch brewery could expand. Marineland of the Pacific, the water-themed amusement park on the Palos Verdes Peninsula, shut down in 1986. And Lion Country Safari in Irvine, a drive-through zoo concept where the animals roamed free, closed in 1984.
The trend isn't a surprise, said Los Angeles economist and author Joel Kotkin, noting that most amusement parks rose in the outskirts of town to take advantage of low land costs. But as development pushes out and property values rise, the economics of land-eating theme parks has become harder to justify, he said.
"Maybe the area where they built it was a great place to put a theme park at one time," Kotkin said. "But the fringe of suburbia is not so fringy anymore."
Since Six Flags announced its sales plan last month, many Santa Claritans have reminisced about summer jobs and high school outings at the park.
Resident Donna Moore said she could not imagine the area without Magic Mountain. For five years, Moore said, her 16-year-old son, Zachary, has bought a season pass to the park. Unless a good movie is in theaters, she said, the park is his Friday night ritual. She's gotten so used to carrying around Zachary's season pass that she pulled it out at an airport once as his identification.
"It's the only thing that keeps this city from being any other obscure place," she said.
Moore acknowledged that the park can be rowdy, but she said it has gotten a bad rap. Not everyone is mourning the possible demise of Magic Mountain. Resident Darrell Mouw is a retired firefighter who in the past had responded to fights in the park.
"Disneyland doesn't have these kinds of problems," he said. "I wouldn't miss a thing."
Group sets out to make sure park stays put
BY CAROL ROCK, Daily News Staff Writer
VALENCIA - The latest white-knuckler that Charles Beris is riding is his computer keyboard, where he's hastily established a new Web site dedicated to his favorite amusement park, Six Flags Magic Mountain.
The threat of the park's closure has sent him into a stomach-churning drop, inspiring him to launch www.savemagicmountain.com. There, visitors can leave memories, rally support for the park's rescue, buy T-shirts with photos of coasters or bygone park mascots, or pool their resources to buy the park and keep it operating.
On Saturday, he gathered a handful of friends to create signs that could be used in future protests.
"We just need to spread the word that this might happen," Beris said.
"If it came down to it, I would chain myself to the sign," said supporter Holly Patterson, 21. "It's a landmark and brings a lot of money into the Santa Clarita Valley."
"I know they're talking about closing the park and selling off the land for more homes and traffic," she said. "But they need to realize they're taking away jobs and places for kids to go. What would they rather kids do, go to Magic Mountain or out to cause trouble?"
Trouble is one of the reasons cited by management for the park's decline in family attendance, reasoning that parents do not want to bring their children to a place where rival groups might choose to take out their differences with fists or weapons.
Kelly Patterson, 23, disputed that theory.
"Teens like fast roller coasters and it fits into everyone's budget," she said. "They know it draws a younger demographic. If they can build a $12 million ride, they can buy more security."
Beris, 26, the only former employee in the group, felt that installing metal detectors helped control any violence. In the past, he worked as a supervisor at Hurricane Harbor, gave new employees orientation and training and, while attending high school, worked as a ride operator.
"I wanted to have a place where people could talk about the issue and add their memories, whether they were employees or guests," he said.
The Web site, filled with photos of coasters through the years and of mascots like Bleep, Bloop, King Troll and The Wizard. It offers clothing items with the Web site address as well as a suggestion that investors with a soft spot for the park pool their money and buy it.
Beris says he modeled the site after a similar one put up to save another Six Flags park, Six Flags Astroworld in Texas. That movement failed, and the park closed Oct. 30, 2005, after 35 years in operation.
Asked if he was ready to accept the same fate - Magic Mountain is celebrating its 35th anniversary this year - Beris said he would keep the site going until there was a definitive end.
"We will keep up the effort to save the park," he said. "We're hoping whoever purchases it will keep it as a theme park. Astroworld closed because a lot of people didn't know what was going on until it was too late."
Beris, who sells real estate for a living, understands the value of the property beneath the thrill rides, but is willing to stand firm.
"We have plenty of houses and traffic," he said. "Closing the park would take away 3,600 jobs and a terrific place to go. It's just too much to lose."
Fans Seek to Save Magic Mountain
By Adam Clark Signal Business Writer
Thursday July 13, 2006
A group of San Fernando Valley young people have launched a Web site in opposition to the potential closure of Six Flags Magic Mountain.
The Web site, www.SaveMagicMountain.com, is aimed at increasing awareness regarding the theme park's plight, said creator Charles Beris.
"What we're trying to do is (let more people know) that there's a very real possibility that the park could close forever," he said.
Beris, along with three friends, launched the site after Six Flags Inc. released a statement last month that stated the company was exploring the possibility of selling six of its properties, including Santa Clarita's Magic Mountain.
While Six Flags officials have yet to release further information, much debate has been given to the fate of the park.
Potential options could include selling the park to another theme park company or dismantling the park and selling the underlying land for real estate development purposes.
Beris' Web site contains sections where people can post stories and memories of the park, as well as purchase T-shirts and get contact information for company officials.
"It's a good way to get more people involved and raise awareness," he said.
In addition to its status as a large tourist attraction, Magic Mountain is Santa Clarita's largest employer, providing jobs for more than 3,900 people during the peak summer season.
It's the loss of these jobs and the economic effect the park's dismantling would have on the city that most worried Beris.
"The biggest concern, first of all, will be the jobs," he said. "It's the first job for a lot of young people. I see a lot of seniors who are retired and just want something to do. These are the people it's going to effect."
Like many other Santa Clarita youth, Magic Mountain was Beris' first job.
"It was my first job when I was 17 as a ride operator," he said. "Then I worked there later in Human Resources as a park orientation trainer."
However, it's not only the economic value that concerns Beris.
"There are memories we want to protect in addition to the economic value," he said. "When you hear Santa Clarita, the first thing everybody think of is Magic Mountain."
In addition to the Web site, Beris and Co. are planning a protest-like event outside the park for sometime in August, though Beris had no specific details.
"Hopefully people are going to notice and get involved in writing letters to Six Flags management and making sure their council members are involved," Beris said. "We don't want to see it close. It's too great of an asset."
Beris said the Web site will remain online indefinitely.
"We can't loose (the park)," he said. "We'll keep this going as long as we need to, until we have a definitive answer to what's going to happen."
City Wants to Annex Magic Mountain
By Josh Premako Senior Staff Writer
Thursday July 20, 2006
On the heels of a Money Magazine survey rating Santa Clarita the 18th best U.S. city to live in, city officials are preparing to go on the offensive in trying to sell Six Flags Inc. on the idea of annexing Magic Mountain into the city.
Six Flags - in the midst of an attempt to dig itself out of debt - released a statement last month that stated the company was exploring the possibility of selling six of its properties, including Magic Mountain and Hurricane Harbor.
In a recorded message left with The Signal on Wednesday, Six Flags spokeswoman Sue Carpenter said "there is nothing new to report, (and) we are 100 percent open for business."
That is likely welcome news to city leaders, who don't want to see the park close its doors.
"(We) think having Six Flags and Hurricane Harbor located within the city would be a very good fit," city spokeswoman Gail Ortiz said. "We think we could save (them) money."
She said the city manager's office is drafting a letter to Six Flag's Manhattan headquarters, with reasons why the amusement park - located in unincorporated Los Angeles County - should be annexed into the city.
By joining the city, Ortiz said Six Flags would save money by not having to pay a business license tax, an admission or gate tax or a 5 percent utility user tax, which she said could save the park "hundreds of thousands of dollars" annually.
Those statements could not be confirmed or denied by Tony Bell, spokesman for Fifth District Supervisor Michael D. Antonovich.
Bell did say that claims that the city would impose less tax than the county are "erroneous," and he added that Antonovich plans to meet with Six Flags CEO Mark Shapiro.
While Six Flags officials have been fairly close-lipped, much debate has been given to the fate of the park.
Potential options could include selling the park to another theme park company or dismantling the park and selling the underlying 250 acres for real estate development purposes - not an option city officials favor.
"We want to see that property used as it is," Ortiz said. "I think we've got plenty of houses; what we need is an economic engine."
In addition to its status as a large tourist attraction, Magic Mountain is Santa Clarita's largest employer, providing jobs to more than 3,900 people during the peak summer season.
It remains to be seen if the only option will be for Six Flags to unload the park, which attracts about 2 million visitors per year.
"What we couldn't have realized, candidly, was that this brand is much more damaged than we previously thought," Shapiro told the Associated Press earlier this month.
He said families have abandoned some Six Flags properties because of teens who "drive our security problems, our disorderly conduct, loiter in the park, hate my no-smoking policy and don't spend."
Six Flags owns all of the property Magic Mountain is built on, and would file for annexation in the same manner as any of the 27 annexations the city has completed since 1987, by filing a land owner petition, said Sandor Winger, executive director of the Local Agency Formation Commission, which rules on all municipal boundary changes.
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