Six Flags Agrees To Help Build Park in Dubai
Wednesday, March 5, 2008
Six Flags, the struggling amusement-park chain controlled by Washington Redskins owner Daniel Snyder, said yesterday that it is teaming up with a Dubai developer to build a theme park in the Arab emirate as part of a huge entertainment complex.
Six Flags entered into a 25-year agreement with Dubai company Tatweer to lend its expertise, brand and characters to the project in return for an annual rights fee, according to sources who spoke on the condition of anonymity for fear of violating disclosure rules regarding public companies.
The sources said Six Flags is not required to put up any money for the park, which is planned for more than 100 acres in Dubailand, a 70,000-acre development of hotels, resorts, shopping malls, restaurants and residential areas.
Work on the park is to begin next year with an opening planned for 2011.
Six Flags chief executive Mark Shapiro would not discuss the financial aspects of the deal. Sources familiar with the negotiations said Six Flags would design and develop the park and supervise its operation.
The new revenue stream from Dubailand is important to Six Flags, which has not reported an annual profit in nine years and whose stock has been near record lows.
"I said one of the major priorities of turning this company around would be international growth," said Shapiro, who was in Dubai yesterday to conclude the negotiations. "This is the first of what we believe could be several deals."
Six Flags shares rose 4 cents yesterday, to $1.74.
Shapiro said the Dubai park will likely include Six Flags staples such as rides based on skateboarding star Tony Hawk and the Wiggles. It may also feature Johnny Rockets, a 1950s-based chain of restaurants that Snyder has expanded since he purchased the franchise a year ago.
Six Flags joins U.S. entertainment companies such as NBC Universal and Anheuser-Busch, which in recent days announced deals to build attractions in Dubai.
Shapiro said Dubai's interest in Six Flags is evidence that the company has a strong brand despite a disappointing 2007 that included flat attendance and an accident at one of its parks. The company has doubled income from corporate sponsorship and from season-ticket sales, and it plans new roller coasters in eight of its largest parks this year.
"You spend two years in a turnaround, just trying to rebuild the brand and the experience," said Shapiro, who has attempted to remake Six Flags into a more wholesome, family-oriented experience while forging partnerships with sponsors such as Sara Lee. "It's paying off at home with our record-high guest-approval ratings, which will ultimately grow our business at home. In an international sense, we have a brand that's in demand."
Six Flags, which operates 21 amusement parks in North America, has a $275 million credit line and more than $100 million in cash, and it does not have to make debt payments until 2010.
Six Flags has had difficulties since 2005, when Snyder took over the company and overthrew the board of directors in a proxy fight. He hired Shapiro, a former ESPN executive, as president and chief executive, and installed a new board, which includes movie producer Harvey Weinstein and former representative Jack Kemp. Snyder is Six Flags chairman.
Snyder's Red Zone private-equity arm controls 12 percent of Six Flags stock.
Snyder made his fortune as founder and chairman of Snyder Communications, which he sold in 2000 for $2.3 billion. He now commands a growing entertainment empire whose flagship is the Redskins, which he purchased for $800 million in 1999 and now is one of the most profitable teams in sports. He bought Johnny Rockets and Dick Clark Productions last year.
Snyder, Shapiro and Dwight C. Schar, chairman of NVR, the Virginia-based home builder -- working in a partnership called First and Goal -- are listed as executive producers of Tom Cruise's movie "Valkyrie," which is scheduled to open in October.