Six Flags Going International: A Look At The Deal With Dubai

On Tuesday, March 4, 2008, theme park developer Six Flags Inc. and the Dubai Holdings’ Tatweer unit announced a deal that would bring a five million square-foot amusement park to Dubailand, a strip of desert land in the United Arab Emirates. The theme park, called Six Flags Dubailand, will be the first developed by the company outside of North America, and Six Flags announced that they will break ground on this project sometime in 2009. Although this theme park is the main focus of the project, it is only part of the overall project that Tatweer envisions. This proposed project will include concepts such as tourist attractions, shopping malls, restaurants, and residential units. The three billion square-foot Dubailand will be home to a number of tourist attractions, including DreamWorks Animation Park, Universal Studios Dubailand, Bawadi, and Global Village. Projects that are in the advanced stages of development include The Tiger Woods Dubai, Dubai Sports City, Falcon City, Motor City, Dubai Heritage Vision, and Al Barari. According to Saeed Al Muntafiq, Executive Chairman of Tatweer, the realistic time frame that the Dubai Strategic Plan will be complete is by 2015. He states that "the new alliance with yet another global leisure and entertainment leader such as Six Flags consolidates Tatweer's commitment to becoming a leading global tourism, leisure and entertainment investor, and a key contributor to the tourism objectives of Dubai Strategic Plan 2015."

By far, Dubailand is considered to be the most ambitious tourism, leisure and entertainment project in the world and Tatweer's hope is to increase global tourism and appeal to all age groups. Al Muntafiq said: "The addition of Six Flags, one of the world's most reputed leisure and entertainment companies, to our burgeoning portfolio complements Dubailand's value proposition as an unrivalled tourism destination. It is a privilege for Tatweer to be selected by Six Flags as its regional partner and Dubailand as the destination to host the first Six Flags theme park outside of North America." Even though the financial terms of the deal were not disclosed, it is believed that the entire development will be paid for by Tatweer. Mark Shapiro, CEO of Six Flags, is thrilled and believes that this deal will turn around the company's misfortune and allow for them to expand more globally. He states: "This is an historic day for our company. Expanding Six Flags beyond our current North American borders validates the growing strength and momentum of our brand. Through this partnership with Tatweer, we now have the opportunity to create a world-class theme park destination that will allow guests from around the globe to experience Six Flags' unique combination of thrills and entertainment." Six Flags Inc., already the world's largest regional theme park company with 21 parks across North America, believes that it will prosper from this project and eventually expand into other countries as well. This deal is a bold move for a company that has been under some scrutiny for the past few years. Six Flags is over $2 billion in debt, but Shapiro believes that expanding internationally will possibly give them a new depiction and a semi-fresh start. Even though the company has sold eleven of its parks and properties in the past three years, he says that "the overseas brand-building will have a positive impact." Six Flags will help Tatweer by conceptualizing and overlooking the development of the theme park, which some people believe will be even more ambitious and thrilling than any of the other parks across the United States, Canada, and Mexico.

Six Flags will not announce their 2007 fiscal year numbers until late Monday afternoon, but it is believed that they will be higher than 2006's. Last month, Six Flags reported a preliminary 7% increase in fourth-quarter revenue, as well as a 4% increase in attendance. For the past forty-seven years, Six Flags has provided entertainment to millions of families and has appealed to every age group imaginable. They even have a strange old guy with glasses named Mr. Six as their mascot, and they carry themed attractions for the Looney Tunes, the Justice League for America, and Thomas the Tank Engine for kids. Six Flags theme parks hosted 28.5 million guests in 2006, which only trailed Walt Disney Parks and Resorts. The company expects attendance to grow in 2008 due to its introduction of eight new roller coasters in eight of its largest theme parks. Since the announcement of the alliance on Tuesday, Six Flags' stock has fluctuated and ranged from $1.70 to $1.96, ending at $1.71 per share Thursday afternoon. Six Flags, Inc. hopes that expanding internationally will help increase its market share price and they have even started looking at other countries to expand into within the next few years. The company's stock hovered around $6 at this time last year, and its management hopes that it can regain the same form that it was able to achieve in past years. Whatever Six Flags attempts to do in the near future, it still has a huge hole to dig out of. Two billion dollars in debt is a bit much for a company that loses money every year, which Six Flags has been doing since 1998. If they believe they can climb out of that hole by international expansion, then who is stopping them? Only Six Flags can save itself from destruction.