Bill Gates Vows To Improve Six Flags
Bill Gate's investment company, Cascade Investments, owns 12% of Six Flags said today that they are unhappy with how Six Flags is currently being run. They are planning on taking a more active role in the company now. This comes on top of Washington Redskins owner Dan Snyder announcing that he bought 9% of Six Flags and plans to improve it by either restructuring or merging with another company.
This has, interestingly, caused the stock price to rise almost 25%. We can assume this is because the market has faith that Gates and Snyder can improve the company, which will be a challenge:
•Mature industry. Unlike technology and even football, the amusement park business is growing slowly. Last year, overall park attendance fell 2 million to 322 million people.
• Track record. Six Flags' performance has been so sour that some portfolio managers have written it off. Derek Rollingson, of the Icon Leisure and Consumer Staples fund, in 2002 removed it from a list of stock he'd even consider buying.
•Crushing debt. The company ended the second quarter with nearly $2.2 billion in debt, roughly twice the equity invested in the business. The debt has put Six Flags in a straitjacket, preventing it from adding rides that get visitors' blood boiling, says James Zoltak, editor of Amusement Business magazine.
It's exactly those odds Snyder relishes, and the industry needs his entrepreneurial attitude, Speigel says. "(Snyder is) an out-of-the-box thinker," he says, adding that Six Flags' current "management has gotten away with this too long."
