Six Flags announced Saturday that it has filed for Chapter 11 bankruptcy protection, dealing at least a public relations blow to Redskins owner Daniel Snyder, who took control of the theme park operator in December of 2005.
In its bankruptcy filing and in a letter to employees, the company cited more than $2 billion in debt that it has been unable to pay down or refinance. All theme parks will remain open.
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Snyder’s Red Zone LLC investment company had been a major investor in Six Flags until 2005, when it took control of the company in a proxy battle, claiming that it could turn around the struggling business. Under Snyder and his right-hand financial man, Six Flags CEO Mark Shapiro, the company’s finances did improve in some areas but attendance dropped as the economy went south. To make matters worse, it became harder and harder for Six Flags to refinance its heavy debt. Six Flags was due to owe $300 million in August and wanted to refinance it but simply couldn’t.
For what it’s worth, the Six Flags said that despite drop in revenue due to the economy, the company had managed to cut its losses in 2008 to $135 million, down from $275 million the year before.
So what does this mean for the Redskins? Not a whole lot, really.
The Redskins are a separate business entity that has been consistently profitable since Snyder bought the team. Six Flags is part of a broader portfolio of companies in which Snyder has an ownerships stake, including Johnny Rockets restaurants, Dick Clark Productions and Red Zebra Broadcasting.
While perhaps the economy has led to a flattening out of the Redskins’ sponsorship dollars, secondary ticket revenue and other income, the team still sells out every game and has the highest ticket prices in the league. The team’s revenues and operating income is the highest in the NFL, according to Forbes magazine.
The credit crunch could be of continuing concern to Snyder, who bought the Redskins and the stadium for $800 million and had to borrow heavily to do it. But that was more than a decade ago, and he most likely was able to pay down a considerable portion of that debt or refinance it to manageable terms. Forbes estimated that the Redskins debt/value ratio was 16 percent, about middle of the pack in the NFL.
- Tim Lemke
