Why regional amusement parks are dying

The competition stopped being about rides. With the rise of IP-driven parks, visitors pay for immersion — $9 butterbeer, $10 Simpsons donuts, $12 Mario soda, $8 blue milk, $7 Marvel cheesecake orbs — and a generic mascot with a faster coaster is not a cheaper version of that, it is a different product people want less.

And customers pay the premium to get it. Disney and Universal charge two to five times more for admission alone, and remain further away than the local park, and visitors still make the trip. Convenience and price stopped deciding the category.

The economics were always hard. Parks are seasonal and weather-dependent, staffed by hundreds or thousands of minimum-wage short-term workers in high season, and a new park costs $400-800 million to build — against billions for a Disney or Universal.

Nobody builds new ones any more. The last real wave was the early-to-mid 1970s; the last serious attempt, Hard Rock Park in Myrtle Beach, collapsed within 12 months and never reopened. Every major metropolitan area already has an incumbent, so a $600 million investment would be chasing second place from day one.

Six Flags leases its own characters. It pays Warner Bros $3-8 million a year upfront plus a 12-15% royalty on all branded merchandise for the right to use those characters in parks — the IP advantage is rented, not owned.

Capital expenditure is the real constraint, and the headline number hides it. Six Flags invests over $100 million a year, which is 9-10% of gross revenue but 30-50% of operating income — a third to a half of the actual cash the business produces, spent every year, on assets with long payback.

The company borrowed itself into a corner long before any of this. From the late 1990s it took on over $2 billion chasing first-mover advantage across the US, Germany, Holland, Belgium and France.

At times it could not generate enough cash to cover the annual interest. It issued preferred stock, sold hundreds of millions in bonds and refinanced credit lines — using the proceeds to repay other debt — and paid dividends out of borrowed money while in the red.

The 2008 recession ended it. Six Flags went bankrupt in 2009, though the parks stayed open, and emerged in 2010 only because lenders forgave over a billion dollars of debt in exchange for full ownership of the company.

So it rebuilt around discounting, and the pricing tells you how far it went. In 2010 a day ticket was $30-40 with $10-20 parking, and a season pass cost $70. By 2014 the day ticket was $65 while a season pass was $80 and a membership $100 — both including free parking. Visit twice and you saved $50.

The theory was sound and the execution was not. Discounted admission was supposed to be recovered through food and merchandise — but Six Flags priced passes below single-day tickets and gave away free parking, queue skipping and complimentary dining on top.

Attendance responded exactly as intended: 24 million in 2011 to 30 million by 2016, with season pass and membership holders reaching 50-60% of it.

And the spending never came. Across nine years, admissions revenue grew 45% from $452M to $815M and food and merchandise only 40%, $348M to $574M — but per guest, the average ticket rose from $21.26 to $24.86, just $3, and in-park spend rose about a dollar to $17-18. Growth came from more bodies, not better economics.

Nobody wanted the food, which is the part they could have fixed. Guests declined $10-15 plates of frozen chicken strips, fries and pizza — so rather than improving it, Six Flags bundled meals into the passes as an upsell. One Californian ate lunch and dinner at his local park every day for seven years on a $150 season pass.

Then it filled the parks with people who had already paid. Overcrowding at capacity, congested lots because too many had free parking, queues up to an hour for food, concessions degraded because meals were being given away, permanently dirty restrooms, and everything that was not a roller coaster left old.

And it borrowed again. Acquisitions and water park bundling — pitching pass holders $20-40 more for entry to a nearby water park they were unlikely to visit — pushed long-term debt back over $2 billion, papered over with a Wall Street story about international licensing as asset-light, high-margin growth. Per-park earnings peaked at $70 million in 2016 and have not recovered since; while Cedar Fair, Disney and Universal all rebounded from COVID, Six Flags stayed below pre-pandemic attendance and revenue, and the CEO was removed in 2022.