Off the field, Snyder's $800 million acquisition has been a brilliant, marketing-fueled success. Snyder beefed up the roster of sponsors, added capacity at FedEx Field, and created super-expensive premium seats for those stuck on the waiting list for season tickets. And he continually finds new ways to finagle more cash out of fans. He tried to force season-ticket holders who charge their tickets to use a Redskins Extra Points MasterCard, for example. * According to Forbes,the Redskins are now the National Football League's most valuable franchise. (Here's a neat graph plotting the rise of the Redskins.) The results on the field have been much worse. While they made the playoffs last year, the Redskins have compiled a losing record in the Snyder era.
Since the beginning of the year, Snyder has been trying to perform his marketing magic on another venerable franchise: Six Flags. And the results thus far have been a rout, with Six Flags on the losing end.
Snyder started investing in the company in 2004 and began advising management how it could improve the amusement parks. When the conversations turned hostile, he started a proxy contest for control of Six Flags. (Some of the correspondence between Snyder and Six Flags can be seen in this SEC filing.) Snyder believed he could do with Six Flags what he had done with the Redskins: invigorate an old franchise with snazzy marketing.
Snyder gained control of the company last December. And he quickly embarked on an ambitious plan to transform a middlebrow, suburban business—amusement parks—into an upscale one. His plan was to make Six Flags more like a media and marketing company than a carnival. Snyder installed Mark Shapiro, a former ESPN programming executive, as CEO, along with a new management team; added new board members, including media heavy Harvey Weinstein of Miramax fame; started a new entertainment and marketing department; and hired a direct-marketing agency, OgilvyOne, to build "positive customer relationships through data-driven communications that leverage customer feedback to deliver more personalized and relevant messages, invitations and experiences." (Read: junk e-mail!)
The general strategy was 1) to make the parks more like those operated by CEO Shapiro's former employers, Disney; and 2) to change the customer base from teenagers, who buy low-margin season passes and then loiter around the parks without spending much cash, to free-spending upscale families. So, Six Flags this spring made the park smoke-free. It struck sponsorship and marketing deals with pizza chain Papa John's and Home Depot. It raised cash by selling the land where Six Flags Astroworld was located for $77 million and putting other non-core assets up for sale. In the first-quarter earnings announcement, Shapiro spoke in Disney-esque terms about rolling out character brunches and "focusing on an improved guest experience—from keeping our parks cleaner, to a more friendly and service-oriented staff." It even changed its ticker symbol to the catchy SIX.
But the spring has been unkind to Six Flags. In a June 22 update, Six Flags noted that through June 18, "revenues were down approximately 1 percent," compared with the same period a year ago. While per capita guest spending rose 14 percent (more families spending money!), attendance fell by 13 percent, largely because of lower sales of season passes (fewer teens loitering around). Shapiro spun the numbers positively: "Make no mistake about it, families are coming back—as evidenced by our solid increase in per capita guest spending—but not as quickly as we had hoped."
The markets aren't buying it. The stock has fallen by about half since earlier this year (the chart looks strangely like an amusement park ride), and the debt-rating service Fitch said it might downgrade the company's debt.
So, why isn't Snyder's highly successful financial playbook working in this new arena?
Well, in the NFL, a bizarre combination of local monopolies and socialism among billionaires, you can still make tons of money and attract an upscale audience by fielding a mediocre team. Why? In every football market save New York and San Francisco, there's no competition. And football—especially Washington Redskins football—occupies a far different space in the affluent consumer's mind than amusement parks do. When Snyder acquired the Redskins, it already had a built-in fan base of intense, wealthy, and loyal fans. FedEx field isn't just a sports stadium, it's an arena for corporate lobbyists to entertain clients and politicians, for Washington's elite to purchase status.
The same can't be said about amusement parks. In order to attract rich people, they have to be spectacular destinations like Disneyworld, where people will want to spend a few days. And transforming the Six Flags parks into so many Disneyworlds would be an enormously expensive proposition, and probably a fruitless one, because there is only enough demand for a few Disney-like destination amusement parks, not dozens of them. Lobbyists won't pay for a luxury ride in a 20-year-old roller coaster at a Six Flags park. Fortune 500 companies won't rent out parks so that their executives can rub shoulders with senators on a water slide, no matter how big it is. And upscale adults—at least the upscale adults I know—will go to great lengths to avoid amusement parks in the summer, with their sweltering heat, long lines, screaming kids, and expensive, unhealthy food. That's why they buy season passes for their teens and drop them off for the day!