The New York Times and the Washington Post (H/T Outside the Beltway) reported that Six Flags has declared bankruptcy. The culprit? Debt. Here's how the Times puts it:
Six Flags, the theme park operator, filed for bankruptcy early Saturday in Delaware after failing to reach an agreement with lenders to reorganize its debt....The theme park operator, which had $2.4 billion in debt, faced nearly $300 million in payments to preferred stockholders due in August.
Investors, including Dan Snyder and Bill Gates, have been working for years to get the parks back on track by selling underperforming parks, improving the remaining ones, and securing corporate sponsorships. But even though the steps helped Six Flags to narrow their losses, they were still losing money, and the recession obviously wasn't helping matters. Lenders have agreed to eliminate some of the debt during this bankruptcy period.
James Joyner of Outside the Beltway observed:
What’s interesting is that attendance continues to boom. My first impression on reading the headline at Slate was that amusement parks may be, like the circus, a legacy of an era gone by. It would be easy to surmise that kids raised on video games, the Internet, and instant gratification would find standing in ridiculously long lines for a three minue ride boring. The attendance figures, however, would seem to belie that.
But when you consider amusement parks, you have to remember that they have two audiences - the vacationers, and the locals. And recessions do all sorts of things to these audience.
In the first stage of a recession, the vacationers decide that perhaps they're NOT going to drive all the way to the amusement park, and instead opt to do something back at home. Meanwhile the locals decide to scuttle their OWN vacation plans, and decide to just go to the local amusement park instead. So while the hotel owners will see a dip, the park itself won't be as badly affected since all the locals are flooding in.
But when you hit a deeper stage in the recession, then the locals decide to stay home too and watch videos or play Farm Town or whatever.
Obviously Dan Snyder and Bill Gates and the folks at Disney understand this and tailor programs for both vacationers and locals. But there are other things that can affect attendance, including accidents and not-so-accidentals such as planned demonstrations. Oh, and the weather. Regarding Six Flags, the Washington Post noted:
[I]ts summer 2007 attendance was slammed by bad weather in Georgia and Texas, and by an accident on a ride at its park in Kentucky.
Not quite the perfect storm, but a storm nevertheless. But it appears that the parks will get by.
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