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Dan Snyder has a reputation as a fab businessman. He does make lots of money owning an NFL team.
Then again, so does Bill Bidwill, longtime owner of the legendarily futile Arizona Cardinals.
The results of a referendum on Snyder’s fiscal chops away from football are about to be disclosed. On Friday, Nov. 9, Six Flags is set to release earnings for the third quarter of 2007. That’s peak season for amusement parks.
The numbers aren’t expected to be at all good.
“What works for the Redskins won’t work everywhere,” says investment analyst and blogger Todd Sullivan. “This summer will be the proof that it isn’t working at Six Flags.”
Sullivan, a former Washington restaurateur now living in Massachusetts, researched and weighed in on Snyder’s methods after bringing his family to Six Flags New England this summer. His feelings about that visit, as well as his overview of the company under the Redskins owner, are summed up in the title of his piece: “Six Flags: A Ripoff.” His musings have been circulated among and dissected by theme-park observers over the summer.
Snyder took over as chairman of the board of the amusement-park giant in late 2005 by way of a stockholders’ coup he organized. Costs of concessions and parking skyrocketed at Six Flags—just like they did at FedExField—and park attendance went down.
To compare the stockholders’ experience under Snyder to one of the amusement park chain’s rides, look to the roller coaster at Six Flags America in Largo known as Two Face, the Flip Side. On the evening of Oct. 6, the ride got stuck at its apex, stranding 28 passengers about 13 stories high, then came crashing down to earth at 55 miles an hour before hitting bottom so hard that at least a dozen were reportedly hurt, two seriously. (As if fear and the otherworldly G-force weren’t scary enough, all passengers got sprayed with hydraulic fluid just before it crashed.)
On the close of business on Nov. 30, 2005, the day the takeover was certified, stock was going for $7.46 a share, and it shot up to more than $11 after the publicity generated by the takeover by a football money man.
But everything’s changed since Wall Street got a closer look at his operating methods. The stock has languished at less than half its Day 1 value for months now. At the end of last week, it could be had for just $3.08, a drop of more than 57 percent from the start of the Snyder era.
That means if you bought into the Snyder-incited hype to the tune of $10,000 worth of Six Flags stock on his first day onboard, your investment would now be worth $4,289.54.
Perhaps it’ll turn around. But the behavior of Snyder and his close associates lately indicates that stockholders could find the upcoming earnings report creepier than a home visit from Mr. Six, the park’s singularly creepy former mascot.
Last week, for example, Red Zone LLC, the well-moneyed group Snyder formed and used to gain control of the Six Flags board of directors, quietly redistributed all the stock it owned in the amusement park to its investors. The outfit had owned more than 11 percent of all Six Flags stock, making it the top shareholder; according to the SEC filing of Oct. 15, it now owns zero shares.
Sullivan is among those who see the stock distribution as a breaking-up-the-band move—an obvious signal that Snyder’s partners are ready to bail on his Six Flags experiment.
“Distributing shares means Red Zone LLC no longer holds shares in Six Flags, so this is a loss of control [for Snyder’s group],” says Sullivan. “So this means somebody wants out. It makes no sense for any other reason.”
And there’s the recent comments made by Mark Shapiro, a Snyder associate who is the Vinny Cerrato of the Six Flags enterprise. Snyder plucked Shapiro away from ESPN, the same place Skins personnel man/hanger-on Cerrato was working before coming back to Redskins Park in 2002, and installed him as CEO of Six Flags after the takeover.
At the end of summer, Shapiro announced that Six Flags would commence “the unprecedented introduction of seven coasters and new thrill attractions.”
The declaration seems right out of Snyder’s Redskins playbook: Make a big splash in the offseason to get ticket sales going. The problem is, this expansion is a total flip-flop from the scheme that Snyder and Shapiro told stockholders they would be pursuing when they took over the company two years ago.
Snyder wrote in letters to shareholders that “new roller coasters…are not the key to the Company’s future success” and that Six Flags parks are “skewed towards thrill rides catering to teenagers at the expense of families and young children.”
In an interview with USA Today in spring 2006, Shapiro slammed the previous Six Flags regime’s reliance on thrill rides to bring folks to the park.
“Their whole strategy was, ‘Build a roller coaster, and people will come,’” Shapiro told the paper. “They alienated the family in their quest to become the thrill-park leader.”
The 180-degree turn won’t go unnoticed by Wall Street.
“Six Flags is coming out with a different plan all the time,” says Sullivan. “First, it was teenagers. Then, Shapiro said it wasn’t thrill rides, it was a focus on families. Now, it’s thrill rides. It really looks like they don’t know what they’re doing. And the fact that Six Flags is coming out with these ‘positive’ plans before the earnings report is another thing that tells me the earnings are going to suck. And this year, there’s no way anybody at Six Flags can blame the weather. It didn’t even rain on the East Coast this year. As low as the stock is now, it can go lower.”
If, in fact, the earnings report is as horrible as Sullivan predicts and the stock falls more, changes might soon be afoot in the Six Flags boardroom. Shapiro could be shown the door. Snyder’s position might be tenuous, too.
And all this comes on the heels of a Fox News report that his much-publicized venture with Tom Cruise is over before it ever really began. The actor apparently bought Snyder out of what was supposed to be a movie development deal that would serve as the football owner’s entry into Hollywood.
Without a theme-park chain to run and film deals to close, Snyder can get back to focusing on local matters. Lucky us.