Existential Crisis? Towers and it's future

[Islander]

Obviously Six Flags would need to sort out it's debt though but both companies are a bit wobbly currently really.

I’m no businessman, but is it really a good idea, or even feasible, for a “wobbly” company to purchase another “wobbly” company?

 

[GooseOnTheLoose]

H'okay, shall we break this one down?

Six Flags might be interested - with a possible merger?

Both companies could be described as "a bit wobbly," largely due to their substantial debt piles in a high interest rate environment. The proposed solution, therefore, is to tie these two drowning men together in the hope that they might somehow learn to swim. This does not create a stronger entity; it creates a larger, more complex entity with an even more terrifying amount of debt to service. It is a recipe for financial catastrophe.

This is, frankly, the most financially illiterate part of the suggestion. First off, LEGOLAND® Discovery Centres have already been given back to LEGO®. Secondly, The Gateway / Midway attractions (Sea Life, Dungeons, etc.) are cash cows. They are the low CapEx, high margin, year round revenue generators which provide a stable financial bedrock for the entire group. They're what insulates Merlin from a washout summer at Alton Towers. Suggesting "getting rid" of them is carving out the most consistently profitable part of the business to focus solely on the most expensive, volatile, and capital intensive part. It is strategic madness.

the parks are quite similar really with IP's

Are they? Six Flags' core brand identity is, and always has been, a DC Comics themed iron ride park. Their model is to build the biggest, fastest hardware and place it on a patch of tarmac.

Merlin, even in its current state, is fundamentally a themed attraction operator, a legacy of its Tussaud's heritage. Their model is built around creating (at least attempting to create) immersive worlds and experiences, whether that's with LEGO®, Jumanji, Minecraft, Peppa Pig, or their own in house lore.

The two brand philosophies are oil and water. One sells the thrill of the machine, the other sells the story of the world it sits in. Attempting to merge them would create a Frankenstein's monster of a portfolio with a completely incoherent brand identity.

It's a solution in search of a problem that doesn't exist, which would create a hundred new ones. It's a fantasy that wilts under the slightest scrutiny of a balance sheet.

Please God no.

 

[Thameslink Rail]

I would also note that Six Flags bought Walibi in 1998 to give them a foothold in Europe but they sold them off six years later. From what I understand, the American business model of plonking rides down just didn't translate for Europeans.

 

[BSwiss]

32% of Gen Z dont own a car and considering Gen Z is 14-29 year olds currently, you're only excluding 3 years of that range from being able to drive, which will only dwindle as entry level jobs disappear entirely as unemployment rises.

This is a wildly misleading statistic. 32% of Gen Z are also 14-19. So, as a statistical equivalency - you could say every 20-29yo owns a car.

Privately owned cars pump wayyy too much into the economy in the form of taxation and workforce support for them to become redundant.

Public transport has been largely neglected because it doesn’t suit the needs and tastes of the modern population.

The next change to transport we will see is micro ownership of shared low-capacity vehicles. Public transport as we know it won’t increase.

 

[Bert2theSpark]

I’m part of Gen Z and a very regular willing user of public transport. So are a lot of other young people, I’ve seen a lot of ID’s across three or four job of mostly Gen Z (and some Millennial) and the biggest thing I’ve noticed with drivers licenses is the class/social divide between those with blue or cream licenses.

Those with blue ‘full’ licenses often need their car to work, they more than likely didn’t go to university but have the benefit of going wherever they want when they want. Those with cream ‘provisional’ licenses are university students and white collar graduates who often get public transport. Profession is a much bigger indicator on whether someone will have a blue or cream passport than age, speaking from anecdotal experience.

By having providing access to Alton Towers largely by private transport, you limit the audience to at the very least at one person with a licence. It’s an invisible barrier to entry for the park and something should absolutely be done to remove this barrier, because at the very least there will be an increased resilience within the park’s visitor numbers.

 

[AltonLover123]

Six Flags also fairly recently merged with Cedar Fair, with the latter having the controlling stake.

So whilst they operate parks individually, they’re all owned by the same company.

 

[rob666]

...and the biggest thing I’ve noticed with drivers licenses is the class/social divide between those with blue or cream licenses...

Old gite calling...Whatever happened to pink and green licences, like mine???

And going back a couple of posts, I agree six flags would be a no goer, but regarding the sea life centres...

Apart from the "Weaker species kept in small glass boxes for the entertainment of better species" argument, I'm not at all sure sea life centres are a cash cow at all.

All that water needs heating, the place itself needs heating and staffing, vet bills, they seem to get through fish like Harry Ramsdens, going by the smell by the back doors (free parking 30 mins)...and if the Blackpool one is anything to go by, hardly anyone actually pays to get in, they are all Merlin pass holders strolling down from the Tower.

But the dodgy fish tanks still don't mean there is any existential crisis.

No sign whatsoever, just a dinosaur rolling on.

 

[Matt N]

I’m part of Gen Z and a very regular willing user of public transport. So are a lot of other young people, I’ve seen a lot of ID’s across three or four job of mostly Gen Z (and some Millennial) and the biggest thing I’ve noticed with drivers licenses is the class/social divide between those with blue or cream licenses.

Those with blue ‘full’ licenses often need their car to work, they more than likely didn’t go to university but have the benefit of going wherever they want when they want. Those with cream ‘provisional’ licenses are university students and white collar graduates who often get public transport. Profession is a much bigger indicator on whether someone will have a blue or cream passport than age, speaking from anecdotal experience.

By having providing access to Alton Towers largely by private transport, you limit the audience to at the very least at one person with a licence. It’s an invisible barrier to entry for the park and something should absolutely be done to remove this barrier, because at the very least there will be an increased resilience within the park’s visitor numbers.

I’d argue a bigger indicator of someone having a driving license than either of these is location.

I am also part of Gen Z. I have a postgraduate degree and currently work in a white collar job in the city… but I have a full driving license (automatic, but I figure that’s a relatively academic detail for the purposes of this debate) because I live in a rural immediate area where the bus only comes once every 2-3 hours. If I didn’t have a license, I would be considerably curtailed in being independent and going to work, because the public transport locally is not good enough to give me a great degree of autonomy. The trains aren’t terrible for a rural area once I reach my nearest station, with trains leaving every hour or so in each direction, but the buses more locally to me are so infrequent that I’d either have to walk a lot or rely on lifts to even get to the station in the first place!

With my car, I can at least drive myself to a train station over the Welsh border with more frequent rail services into the centre of Bristol, whereas if I didn’t drive, I’d have to take a bus to my local train station (which I’m not even sure would leave early enough from my location), take a train from my local train station to the train station in Wales and then change onto the same train line as I take anyway.

If I lived in the city, I’m not sure that driving would be quite such an essential because of how much more frequent buses and trains are. When buses and trains come every 10 minutes and you’re quite possibly walking distance from a station with frequent services, driving becomes less essential to autonomy, and I think that’s the same regardless of profession or age.

I’d hazard a guess that if you polled, location would be a more influential factor in influencing whether someone has a license than profession or age.

 

[Snexed]

I’m no businessman, but is it really a good idea, or even feasible, for a “wobbly” company to purchase another “wobbly” company?

Aye no arguments, it was assumption that they'd both sort their debt out ie it won't be next week.

H'okay, shall we break this one down?

Both companies could be described as "a bit wobbly," largely due to their substantial debt piles in a high interest rate environment. The proposed solution, therefore, is to tie these two drowning men together in the hope that they might somehow learn to swim. This does not create a stronger entity; it creates a larger, more complex entity with an even more terrifying amount of debt to service. It is a recipe for financial catastrophe.

This is, frankly, the most financially illiterate part of the suggestion. First off, LEGOLAND® Discovery Centres have already been given back to LEGO®. Secondly, The Gateway / Midway attractions (Sea Life, Dungeons, etc.) are cash cows. They are the low CapEx, high margin, year round revenue generators which provide a stable financial bedrock for the entire group. They're what insulates Merlin from a washout summer at Alton Towers. Suggesting "getting rid" of them is carving out the most consistently profitable part of the business to focus solely on the most expensive, volatile, and capital intensive part. It is strategic madness.

Are they? Six Flags' core brand identity is, and always has been, a DC Comics themed iron ride park. Their model is to build the biggest, fastest hardware and place it on a patch of tarmac.

Merlin, even in its current state, is fundamentally a themed attraction operator, a legacy of its Tussaud's heritage. Their model is built around creating (at least attempting to create) immersive worlds and experiences, whether that's with LEGO®, Jumanji, Minecraft, Peppa Pig, or their own in house lore.

The two brand philosophies are oil and water. One sells the thrill of the machine, the other sells the story of the world it sits in. Attempting to merge them would create a Frankenstein's monster of a portfolio with a completely incoherent brand identity.

It's a solution in search of a problem that doesn't exist, which would create a hundred new ones. It's a fantasy that wilts under the slightest scrutiny of a balance sheet.

Please God no.

Don't disagree with the financials, it was more long term more than next week, agreed tomorrow would be a disaster.

No arguments on the midway either, it was only specifically LEGO Discovery (didn't realise they had gone), and Sealife only (I know a fair few they wanted shot of anyway). The rest like the London Eye etc would be bonkers to get rid.

On the differences though, I don't think there is much difference really. Remember Six Flags is Cedar Fair not the old Six Flags, why they kept the Six Flags name I really don't know but that's another debate. Cedar Fair's Snoopy lands for kids, isn't a million miles away from anything Merlin is doing and places like Knott's Berry Farm isn't exactly a million miles away from the likes of Alton Towers or Thorpe Park either.

Btw you assumed it would be Six Flags taking control of the merger not Merlin but, imo it'd be more likely the opposite way around. Merlin has been expanding quite wildly lately, the state of Six Flags, it could be the opportunity for them to grab a big pie of the US market as the Six Flags group seems in a right mess, or at least cherry picking the best parts of it and binning the rest.

 

[GooseOnTheLoose]

Aye no arguments, it was assumption that they'd both sort their debt out ie it won't be next week.

For private equity owned entities like Merlin, debt isn't usually something they sort out before a major move. It's usually the fuel for the move itself. A merger of this size would likely require restructuring or increasing that debt load rather than clearing it first. Waiting for a debt free (or even low debt) scenario might mean waiting indefinitely, which doesn't really fit the aggressive timelines these firms usually operate on.

What typically happens in this scenario is a leveraged buyout, where the acquiring firm borrows the vast majority of the purchase price and then transfers that debt onto the balance sheet of the company they have just bought. Effectively, the company is forced to pay for its own acquisition using its future profits, meaning high debt is a structural feature of the ownership model, not a bug that needs fixing before they can expand.

No arguments on the midway either, it was only specifically LEGO Discovery (didn't realise they had gone), and Sealife only (I know a fair few they wanted shot of anyway).

Even with a trimmed list, I’d argue that selling off the Sea Life division would be risky. Those attractions provide a very stable, year round cash flow that insulates the wider group from seasonal fluctuations. Removing them might actually weaken the portfolio's stability rather than streamlining it for a purchase.

Whilst Merlin were exploring selling off some Sea Life centres, they didn't receive an offer which they thought worthwhile. According to a Sky News report:

Sources said that private equity firms such as Epiris and Platinum Equity had expressed an interest in the venues, but added that none of the offers had been at a level which persuaded Merlin to pursue a deal.

If Sea Life were a loss making entity, Merlin either would have accepted the offers they could, or they would have closed the attractions to prevent further losses.

Businesses explore potential sales of their assets all of the time, especially if they're looking to move into a different direction or float.

On the differences though, I don't think there is much difference really. Remember Six Flags is Cedar Fair not the old Six Flags, why they kept the Six Flags name I really don't know but that's another debate. Cedar Fair's Snoopy lands for kids, isn't a million miles away from anything Merlin is doing and places like Knott's Berry Farm isn't exactly a million miles away from the likes of Alton Towers or Thorpe Park either.

There are certainly surface similarities, both operate major theme parks with family areas, but the underlying strategies are quite distinct.

Merlin’s strategy, driven largely by Kirkbi, is heavily focused on becoming the world's premier operator of global IP (LEGO, Peppa Pig, Minecraft, etc.). Their goal seems to be creating branded, immersive resorts. Cedar Fair / Six Flags, meanwhile, is a powerhouse of regional "iron ride" amusement parks. Whilst they have Snoopy, their core business model is quite different from Merlin's IP first approach. Merging the two would be a massive clash of corporate cultures and strategic priorities.

Btw you assumed it would be Six Flags taking control of the merger not Merlin but, imo it'd be more likely the opposite way around. Merlin has been expanding quite wildly lately, the state of Six Flags, it could be the opportunity for them to grab a big pie of the US market as the Six Flags group seems in a right mess, or at least cherry picking the best parts of it and binning the rest.

I struggle to see the synergy here. Merlin’s recent expansion has been very targeted, with rolling out LEGOLAND resorts and Midway attractions in key global markets. Acquiring a massive chain of US regional amusement parks would be a huge deviation from that plan.

It would require enormous capital and distract heavily from their stated goal of expanding their IP footprint. I suspect Kirkbi and Blackstone are far more interested in building more LEGO branded destinations than acquiring a legacy portfolio of American thrill parks.

It’s an interesting what if, but I just don't see the financial or strategic incentives aligning for either party.

 

[John_P]

They kept the Six Flags brand name because that was the one the public would respond to as a known amusement park operator, outside of the industry and enthusiasts no-one knew what a Cedar Fair was.

 

[Snexed]

For private equity owned entities like Merlin, debt isn't usually something they sort out before a major move. It's usually the fuel for the move itself. A merger of this size would likely require restructuring or increasing that debt load rather than clearing it first. Waiting for a debt free (or even low debt) scenario might mean waiting indefinitely, which doesn't really fit the aggressive timelines these firms usually operate on.

What typically happens in this scenario is a leveraged buyout, where the acquiring firm borrows the vast majority of the purchase price and then transfers that debt onto the balance sheet of the company they have just bought. Effectively, the company is forced to pay for its own acquisition using its future profits, meaning high debt is a structural feature of the ownership model, not a bug that needs fixing before they can expand.

Even with a trimmed list, I’d argue that selling off the Sea Life division would be risky. Those attractions provide a very stable, year round cash flow that insulates the wider group from seasonal fluctuations. Removing them might actually weaken the portfolio's stability rather than streamlining it for a purchase.

Whilst Merlin were exploring selling off some Sea Life centres, they didn't receive an offer which they thought worthwhile. According to a Sky News report:

If Sea Life were a loss making entity, Merlin either would have accepted the offers they could, or they would have closed the attractions to prevent further losses.

Businesses explore potential sales of their assets all of the time, especially if they're looking to move into a different direction or float.

There are certainly surface similarities, both operate major theme parks with family areas, but the underlying strategies are quite distinct.

Merlin’s strategy, driven largely by Kirkbi, is heavily focused on becoming the world's premier operator of global IP (LEGO, Peppa Pig, Minecraft, etc.). Their goal seems to be creating branded, immersive resorts. Cedar Fair / Six Flags, meanwhile, is a powerhouse of regional "iron ride" amusement parks. Whilst they have Snoopy, their core business model is quite different from Merlin's IP first approach. Merging the two would be a massive clash of corporate cultures and strategic priorities.

I struggle to see the synergy here. Merlin’s recent expansion has been very targeted, with rolling out LEGOLAND resorts and Midway attractions in key global markets. Acquiring a massive chain of US regional amusement parks would be a huge deviation from that plan.

It would require enormous capital and distract heavily from their stated goal of expanding their IP footprint. I suspect Kirkbi and Blackstone are far more interested in building more LEGO branded destinations than acquiring a legacy portfolio of American thrill parks.

It’s an interesting what if, but I just don't see the financial or strategic incentives aligning for either party.

You know what good post and I actually agree now it isn't a good idea, at all. Just had a little look into the profits and LEGOLAND for Merlin is definitely the future for them tbh.

Btw for Sealife, it's more morals as much as money, unless they're making big bucks I'm not sure it's something you really want as with the way the world is going (in a good way imo), they're very likely to be a huge controversy in some form of way in the future. Animal controversy is never good either, and places like Scarborough etc surely can't be making big bucks.

Obviously, at the same time you don't want to give them away. of course.

Mind I'm starting to think the polar opposite and it'll be interesting to see if Merlin dispose the 5 resorts (possibly keeping Chessington). Thorpe Park, in particular, is a right red herring in their new direction really. I know it would be disaster being an Alton Towers enthusiast but it's an easy way to dump some of the debt onto them and clear it off the main company aswell and Universal whatever we want to pretend it won't, is likely to take a massive hit on the 3 UK Parks.

They kept the Six Flags brand name because that was the one the public would respond to as a known amusement park operator, outside of the industry and enthusiasts no-one knew what a Cedar Fair was.

No arguments about recoginition, but I'm not sure that's a good thing. Six Flags has a bad reputation, if I was them I'd be trying to get shot of it.