Change At Six Flags Essay

1486 words - 6 pages

When Six Flags’ shareholders became unhappy with the overall performance of their company, they demanded a drastic change. Shareholders insisted that the management and board of directors were replaced immediately (Ryan, 2006). The fight for control of the company was led by Daniel Snyder, owner of the Washington Redskins and Red Zone LLC. Snyder began a proxy battle with the company and finally won the battle and took over as chairman of the board (Donnelly, 2005). However, there were serious problems facing the company including dilapidated parks, inability to attract the right audience, an excessive amount of debt, and a falling stock price. Snyder immediately restructured the organization to begin improving their weak performance. Eventually Six Flags regained its place within the industry, but there were several key factors that were overlooked when implementing the turnaround strategy.
When Snyder took over Six Flags in 2005, he inherited the “largest theme park company in the world” as well as the declining performance of this company (Ryan, 2006). One of Six Flags’ primary problems was that their main assets had been severely neglected. Though the company operated over 25 theme parks, not all of these parks were valued added to the company. For instance, one park in New York was described as nothing more than “a souped-up county fair” (Ryan, 2006). Six Flags parks were in general disrepair. Chipping paint and filthy restrooms detracted from the customer experience. Additionally, Six Flags did not have a strong competitive strategy. Their business was seasonal and they did not attract a lucrative audience to their parks. “Deeply discounted” season passes attracted more teenagers than families (Ryan, 2006). Six Flags’ parks became more of a teenage hangout than a gathering place for young families (Hyman, 2006). Moreover, the company’s long-term debt was excessive. Six Flag’s debt increased significantly between 2003 and 2006 as its current ratio progressively declined (“Six Flags financials,” n.d.). This means that the company was increasing unable to pay off its obligations if they came due (Keown, Martin, & Petty, 2011). Six Flags had accumulated $2,242.4 million in debt by 2005. Finally, the company’s stock price plummeted. In 1999, Six Flag shares were trading at $40 per share and just seven years later, shares were trading for around $5 (Krantz, 2006). For Six Flags to regain its position in the theme park industry, it was necessary for their management team to concentrate on their improving the performance and perception of their brand.
In order to turn the struggling company around, Snyder’s first order of business was to hire an entirely new board of directors and appoint Mark Shapiro, a former ESPN programmer, as CEO of Six Flags (Donnelly, 2005). Neither Shapiro nor the new board had particular experience with Six Flags or retrenchment strategies, but Snyder believed this governance group would help the company recover...

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