Monday, November 12, 2018

After years of unsubstantiated rumors, it looks like Six Flags may finally be headed to Orlando

Posted By on Mon, Nov 12, 2018 at 11:34 AM

click to enlarge PHOTO VIA SEAWORLD
  • Photo via SeaWorld
One of the oldest rumors in Central Florida tourism is of national amusement park chain Six Flags finally making a significant investment in America’s theme park capital.

Over the years, Six Flags has shown that Orlando is on their minds. Decades ago, the company did operate a long-gone wax museum near SeaWorld Orlando. After Boardwalk and Baseball abruptly closed, many thought Six Flags might purchase it. But instead, we’ve seen Six Flags completely retreat from Florida after a water park in South Florida operated by the company closed. Today, few take the Six Flags Orlando rumors to be true, and that has proven accurate time and again. But now the doubters may be proven wrong.

Last week an obscure theme park industry blog, ThemedReality, posted a Facebook message stating “Reliable sources inform me that Six Flags Entertainment Corporation is in talks to purchase all or part of SeaWorld Entertainment. More as details become available.”

The Facebook post has since gone viral.
click image IMAGE VIA THEMEDREALITY | FACEBOOK
  • Image via ThemedReality | Facebook
While ThemedReality is not known by many, it’s author surely is. Joe Kleiman has been covering the themed entertainment industry for more than two decades. He currently serves as the News Editor at In-Park Magazine, one of the industry’s leading news sites. There, Kleiman regularly interacts with the highest echelon of tourism industry leadership. He also has contributed at the likes of MiceChat, Jim Hill Media, and the TEA Thea Awards Programs.



The otherwise respected author and industry voice at times has shown an unusually strong dedication to animal-based attractions with his private personal blog, ThemedReality. One of the taglines the site carries is the “Final Days of Conventional Wisdom.” Numerous posts tagged as "The Main Agenda" are deep dives into very specific incontinences in claims made by various industry leaders including Merlin and SeaWorld. His seemingly primary focus on the site is to draw attention to the debate surrounding marine mammals in captivity. He regularly posts strongly worded posts calling out anti-captivity groups like PETA and post-Blackfish voices like John Hargrove. The posts are often filled with side commentary and calling out specific people on the anti-captivity side of the debate.

Through ThemedReality, Kleiman has fueled the pro-captivity side with massively detailed posts that regularly serve as talking points. On the site, Kleiman has been upfront in his outrage regarding the move by SeaWorld to phase out orca breeding and transition to more educational based animal interactions.

Despite this problematic history with previous posts, Kleiman’s ThemedReality site does seem to be onto something this time, thanks to a number of surprisingly timed events soon to occur.

Six Flags has been very open in their desire to expand via purchasing, or in many times leasing, new parks. This plan has helped the company weather some likely otherwise negative attendance news and has helped fuel impressive increases in annual pass sales, a key measure in the Six Flags business model.

Over at SeaWorld their largest shareholder, Zhonghong Zhuoye, has seen their assets frozen as their sister company, Zhonghong Holdings, collapsed due to massive loan defaults, which have now drawn the interest of the Chinese government. The situation is so severe that at one point the CEO reportedly was on the run from the government, hiding out in Hong Kong. A crucial court hearing later this week could determine the future of many Zhonghong investments, including SeaWorld. The 21 percent share of SeaWorld that Zhonghong has put one of their executives on the SeaWorld Board of Directors and gives the company exclusive rights to the SeaWorld name in China.

Numerous SeaWorld parks were announced for China, but all have since fallen through, as Zhonghong quickly offloads its Chinese real estate investments.

As part of the SeaWorld purchase, Zhonghong took a loan out with PAG; one of Asia's largest alternative investment management firms. The $150 million loan was a key part of Zhonghong financing for the SeaWorld purchase. Now as Zhonghong collapses many including Kleiman, are pointing to PAG as a likely important decider in who the future owner of the SeaWorld shares is.

SeaWorld’s introduction into the Chinese market seems inevitable with the brand receiving very high name recognition throughout Asia. Numerous new marine animal parks, often with recently caught wild orcas, have seen massive demand across Asia.

Little is known on the SeaWorld plans that Zhonghong announced for mainland China but Kleiman is now questioning the timeline of how the Chinese parks were announced. In a blog post titled “Questions for Merlin Entertainments, WDC, Zhonghong, and PETA” Kleiman aggressively points to inconstancies in the animal care debate by each of the groups mentioned.

His section for PETA includes outrage over the update Barnum’s Animal Crackers packing that no longer shows animals in cages, instead opting for a safari like scene. Towards the beginning of the post, Kleiman addresses Zhonghong and points to PAG as a likely future owner of the SeaWorld share;

“For Zhonghong Zhuoye and Zhonghong Holding:

Did your subsidiary Sun Wise UK default on paying its $150,000,000 loan issued by Pacific Alliance Group (PAG) and applied to purchasing Blackstone’s shares of SeaWorld stock? If so, is PAG taking ownership of those shares?

Sources working within the attractions industry tell me that you announced the location of your first Chinese SeaWorld-branded park without first notifying SeaWorld that you had determined a location. Is this true?

Why did you make an announcement on the 28th of this month that Jiaduobao Group and Yinyi Capital had agreed to invest equity in Zhonghong Holding, when the result was Jiaduobao announcing that it had never signed an agreement with you and Yinyi announcing that it was unaware of the contents of the agreement?”

Parts of the post seem more like a roadmap to how Zhonghong might offload its SeaWorld shares.

Kleiman and others have pointed to what the Zhonghong deal has within it as the key to the recent Six Flags interest in SeaWorld.

Six Flags and its Chinese development partner, Riverside Investment Group Co. Ltd, have numerous Six Flags projects under development in China including a kids park concept that Six Flags may eventually bring stateside. On Friday, Riverside announced a fourth Six Flags anchored resort in China. The resort will include the Six Flags park, a water park, and a Paramount Pictures branded hotel.

If Riverside and Six Flags worked together to secure the SeaWorld shares, the SeaWorld brand, as popular as ever in China, could possibly be included in the current Chinese resorts already under development or could anchor new resorts by Riverside.

Not all are seeing the connections that Kleiman is pointing to. Some have pointed to differences between the annual pass programs found at the two chains. While this is true, SeaWorld did recently roll out a new annual pass program that is much closer to the system at Six Flags.

In a recent conference call, where the impressive third-quarter results were announced, SeaWorld’s Interim CEO & Chief Parks Operations Officer John Reilly stated that the company was still in the search for a permeant CEO– but downplayed the importance of any such search. The company also recently pull out of a hotel agreement that would’ve seen new luxury accommodations developed at its San Diego park.
click to enlarge Sesame Street at SeaWorld Orlando - PHOTO VIA SEAWORLD
  • Photo via SeaWorld
  • Sesame Street at SeaWorld Orlando
These actions by the company have some speculating that SeaWorld is preparing for a major announcement regarding its long-term plans.

The Six Flags presence could also see the two companies working much closer with each other. Possible agreements range from joint annual pass options to shared intellectual property rights. SeaWorld’s primary IP agreement is the U.S. theme park rights to the Sesame Street franchise. They also recently secured the rights to Rudolph and Friends through 2023 with multiple extensions included in the contract. Leftovers from previous partnerships have given Six Flags the rights to the DC comics universe and Looney Tunes.

With both companies looking to open new kids-focused parks in the United States, a joint venture where one or more of the kid-friendly brands that companies have exclusive rights to could prove advantageous as they look to compete against Legoland.

click to enlarge An artist's rendering released by SeaWorld of the proposed Blue World orca habitat
  • An artist's rendering released by SeaWorld of the proposed Blue World orca habitat
New Chinese-based SeaWorld parks could also provide a beneficial option for SeaWorld’s current orca problem. While the company has committed to ending orca breeding, many of the orcas are very young and likely still have decades before they pass away. With few options, SeaWorld announced larger, more natural multi-tank exhibits for its orcas but more recently those plans have been put on the backburner. SeaWorld could open new parks in China, where orca captivity is much less of a cultural hot topic, then move its orcas from the American parks to the new parks. With likely larger and more technically advanced tanks, similar to the ones previously proposed for the American parks, the move may even be championed by many of the groups that currently criticize SeaWorld’s handling of its orcas.

Ironically, one of the orcas currently under SeaWorld’s care is a 25-year-old female named Shouka, who came from Six Flags Discovery Kingdom. That Northern California Six Flags park still includes a number of animal encounters including sharks, penguins, alligators, giraffes, tigers, and butterflies. The park is also home to a dolphin show and a pinniped show.
In New Jersey, Six Flags Great Adventure includes a 350-acre safari habitat with numerous African animals. That park is also home to a California sea lion habitat.

In his reporting on the possible Six Flags buy, Kleiman hints at the prospect of a Six Flags rebranding of Busch Gardens. Other long-term plans could include the introduction of Six Flags IPs to SeaWorld Orlando as that park prepares to battle against Universal Orlando’s new third theme park that is expected to open nearby sometime within the next 5 to 10 years on the heels of colossal new investments at Disney World.

A deal with SeaWorld could also help Six Flags address some of its biggest criticisms. Six Flags would be wise to adopt SeaWorld’s high standards for landscaping and operations while SeaWorld might be able to score better deals on future attractions if they made joint purchases with Six Flags parks.

SeaWorld has been presented with other interested suitors in the past, including Merlin and Wanda. Merlin wanted to specifically purchase the Busch Gardens parks, which are viewed as one of SeaWorld’s most desirable assets and likely what kept the company afloat during the darkest days of their post-Blackfish struggles. Wanda officials were spotted walking Busch Gardens Tampa with SeaWorld leadership but, much like Zhonghong, Wanda saw the Chinese government crackdown on the company’s outsized leverage. Since then Wanda has sold off many of its assets, including all of its Chinese leisure resorts, many of which drew heavily on SeaWorld concepts.

It was just eight years ago that Six Flags finally emerged from a significant Chapter 11 bankruptcy that saw the company decrease its debt by $1.7 billion. Since then, the company has seen steady improvements in its numbers, but despite these gains, they still rank nearly neck in neck with SeaWorld. It would require a major investment by a third party, such as Riverside, for Six Flags to likely be able to afford such a dramatic purchase.

As of now, Kleiman is only reporting that Six Flags is interested in SeaWorld, but as the animal-based theme park chain rebounds it’s safe to say most larger amusement brands would be. What is still unclear is if anyone besides Six Flags will act in any way based on this interest. For that, we may have to wait until after the upcoming legal hearings regarding Zhonghong’s shares. Until then the future of SeaWorld ownership and what that means for the future of the chain is still very much up in the air.

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