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Scott.
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This week, Six Flags released their Q three earnings. We're
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going to talk about that on this week's episode of
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Green Tag Theme Park in thirty. I'm Philip and I'm
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joined as always by Scott Swinson. Scott Swinson, great development
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for this week's review of the big news and discussing
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why it's important to you the listener or watcher.
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I suppose so, well, hopefully you're watching and listening, because
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if you're just watching, this is really dull because you
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just see two heads popping back and forth for quite
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some time. So there's that.
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So yeah, six Flags Q three.
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So this is the first earnings report that we've really
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had where we've had a whole quarter of looking at
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how these two are doing after these two these one
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now after the merger.
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So this is the merged report together.
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And the news is I'm not sure if it's good
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news or bad news. There's a lot of details and nuances,
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and I wanted to I pulled everything together, the call transcripts,
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the actual reporting files, you know, everything in like I
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really we wanted to look at some of the big pieces,
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the big chunks, and I think the first chunk is
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just the overview. Then the chunk is what they're calling
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Project Accelerate, which we'll talk about after the overview and
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then maybe some of our takeaways on it. But the
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big picture essentially is revenue is down and the per
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cap is increased, and October did really well. That's the
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like the overview, So the attendance was down only point
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set so it's from twenty one point seven to twenty
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one million, so we're looking at we're looking at last year,
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the two companies combined brought in twenty one point seven
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million during the same quarter. This year combined during the
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same quarter, it's twenty one so it only went down,
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you know, that point seven of a million, and then
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the per cap I guess you could say it was
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up kind of, but like last year the per cap
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at six Flags was fifty six thirty seven and at
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Cedar Fair was six one sixty five. But this year
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combined it is sixty one twenty seven, so it's like,
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I guess the average is like pulled up, but it's
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still less than Cedar but more than but significantly more
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than it was when it was six Flags, So that's
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a weird number. But the total number is for revenue
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was one point three to five billion for the quarter,
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with a net income of one hundred and eleven million,
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So at least there's net income and adjusted EBITA of
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five hundred and fifty eight million. So the I think again,
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the takeaway here is there's a slight dep in attendance,
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but the increase in per cap spending and it looks
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like this is kind of in line with the other
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discussions we've had about the revenue over quantity kind of approach.
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And of course we talked about this too with the
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increased ticket prices for Halloween and that kind of thing.
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I'm not trying to like shift it up, which seems
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to be the more successful model if you look at Disney, right, So, Scott,
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what do you think about just this over the brass,
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like the thirty thousand foot over you or just the
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numbers and the EBITA and margins.
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Well, considering, I mean, I think the most important thing
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that we have to keep in the back of our
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mind throughout this entire conversation is this is the first
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real quarter of them being combined. I mean, this is
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this is the first time that they've really reported as
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a combined dentity. So there is no we can we
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can we can make up baselines. We can look at
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the two halves of the of the current company, or
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not even halves, the two factions of the current company
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and guestimate as to what has happened there and what
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hasn't happened there and what it used to be in
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the past. You know, like even like you said, just
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looking at the per cap, you've got a fifty six,
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fifty six point three seven and a sixty one point
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sixty five of the two different companies, and after they've
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come together, their per cap is sixty one point twenty seven.
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So does that mean to me that is a positive note?
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But again we're comparing apples to ardvarks here. I mean,
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there is no there is no baseline. What we are doing,
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in my opinion here is setting the baseline. You know,
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we're setting what the new what is it six Flags
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Entertainment or SFE something.
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Yeah, that six flags, six Flags, What the new flags?
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What the new six Flags, what the new combined six
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Flags slash seater is all about? And you know, if
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I were coming into it from the Cedar fair side,
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I'd be going, oh damn, we're down. And if I
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were going to come into it from the six flag side,
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I would be like, oh hey, yay, great, we're up.
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Yes.
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So again, none of these, none of these shifts or
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switches seem to be that radical, either good or bad.
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It's just kind of this is sort of what we expected.
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We've kind of averaged out here a little, you know,
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based on per cap. I think we've averaged out a
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little above where we were before. And as far as attendance,
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I think we've averaged down a little bit from where
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we were before. But again, if you've got one going
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up and one going down, you're still okay.
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You know, we.
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Almost every theme park I have ever been affiliated with,
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either directly or as a consultant, they constantly the pendulum
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constantly swings back and forth. Are we looking to have
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super high attendance or super high per cap? And the
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the You know, of course everyone wants to say we
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want both, but that doesn't give you necessarily marching orders
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to how to run your company. So you have to
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make that decision as to where your focus is, what
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is your primary and secondary focus. So here it looks
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as though, I think you're right, It looks as though
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they are either focusing on or happy with a higher
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per cap. But a slightly lower attendance number, and what
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that usually leads to, and this is, you know, there's
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there's always exceptions that prove the rule. What that usually
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leads to is a better guest experience because you have
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fewer guests in the park, but they're spending more money
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because they're having a better time.
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Well, I guess that leads into our the next section.
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They're calling this strategy, So I guess I think to
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what you said about this being the first like baseline,
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I think they're also that seems to be also their
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standpoint where they're kind of like, look, we have a
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new plan. It's called Project Accelerate, and this is where
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we're going to go from here. So it does seem
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like they're kind of setting the future path forward. And
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they even put a name on it, which is always
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exciting when we have names to you know, long long
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term projects.
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So stockholders love that.
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Yeah, everyone loves it. Yeah, it's like, so project Accelerating,
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that's their.
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New media get really excited about things that have names.
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Yeah, So it sounds like Project Accelery is their three
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year plan, and essentially it is a few things. It is,
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first of all, to increase the attendance to fifty five
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million annually, which if you again, we don't have the
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baseline to Scott's point, but just for perspective, the legacy
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Cedar Fair and Six Flags companies drew forty eight point
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nine million in twenty twenty three, so that would be
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essentially an increase of six million essentially to get them
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to that fifty five million mark.
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So they want so that's the first part.
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They want fifty five million guests annually and they want
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a thirty five percent modified EBIT of marchin by twenty
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twenty seven. And Zimmerman discussed on the call and in
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various interviews this plan. He said, to harmonize our operations
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and unlock the full potential of the new six Flags.
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The goal is to deliver one hundred and twenty million
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in cost savings by the end of twenty twenty five
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while reinvesting in guest experiences. And he said, while we
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intend to invest back into our parks when answer the
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guest experience and drive attendance growth, we are focused on
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funding those efforts with additional cost savings across the portfolio.
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That brought up the question, of course of theme park closures,
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which so just also to clarify, a lot of the
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mainstream media and other news outlets are saying that he
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referenced part closures. Just to clarify, he didn't actually say that.
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What he said was they're doing a portfolio optimization. Now
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that is generally code for closing, right when you're optimizing
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a portfolio, that.
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Does you I mean, how do you optimize your portfolio
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without eliminating something from the existing portfolio?
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Correct? Correct? I'm just how to do that.
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I'm just I'm just saying he didn't actually say they
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were going to close anything, but like he did, he
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did say optimization, which is probably and it is also
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I think smart considering the situation where again, if you
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would you know, we've just talked about, you have some
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that are you know, basically some of the six slags
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parks I don't think performing as well, and it's taking
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the entire average down. So if you can get rid
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of those or transform some of that, use that money
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for investment, I mean, that would seem very smart. So
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what he specifically said about the closures, they said, from
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a strategic standpoint, we're looking at the potential of each site,
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he said. Zimmin highlighted the focus on stratifying the portfolio,
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suggesting the company aims to identify parks with high value
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growth potential, while acknowledging that some smaller parks could be
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valuable due to their consistent performance despite size and market limitations.
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But he just basically talked about portfolio optimization and the
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potential of each site and kind of assessing that.
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So that's where they are. This strategy does.
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Seem to be in line with what we've seen in
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other research like the IAPA Global Outlook report, which said
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that many regional parks are pursuing cost officiencies while targeting
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specific guests experiences as primate growth drivers. They also also
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in that report mentions how attractions face ongoing operational cost
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increases and must balance cost control with the demand for
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high quality guest experiences, which I think that's part that
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he didn't mention really too much in this plan, right,
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was like, yes, you're you're optimizing your portfolio doing all
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these things, but you're not necessarily accounting for like inflation
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or any of those things.
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Or I don't know, but I think that's going.
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To be their tough line, like how do they achieve
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the cost savings without negatively impacting the service quality, and
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also whether it can streamline without undermining the guest experiences
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we've talked about before.
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I mean, yeah, I'm going to go even one step further.
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If let's go back to the optimization of the portfolio.
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How how do you increase attendance when you have fewer
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outlets to correct to generate attendance?
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That's like huge one.
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So that's a biggie, you know, it's it's and we again,
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I've seen this happen in theme parks over and over again,
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and that is they'll say, well, we're going to stop
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doing like even within a single park, We're going to
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stop doing this event. But our goal is to increase
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our annual income by X amount. Okay, well you're getting
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rid of an event that generates X amount of revenue,
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and now not only do you have to make up
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for that, but you also have to elevate above that.
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So it's it's a it's a huge balancing game. That's
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why I say, no matter what they're saying here, basically
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they're saying here's ground zero, here's and then they have
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to give a target otherwise stockholders get really stockholders and
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the media get really sort of disinterested, and you don't
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want your stockholders to be disinterested, you know. It's it's
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it's interesting because I extraneous to this, to this particular
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report came across my my social media because again being
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from Chicago, WGN came up and one of the six
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Flags properties is six Flags Great America in Gurney, Illinois.
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And did they say that they're going to be closing
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Six Flags parks? No? Did they allude to it, just
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like we've talked about here. Yes, are they trying to
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get the locals to rally behind the local park. Yes,
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Six Flags Great America has been part of the has
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been part of the Chicago land area since nineteen seventy
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six is when it first opened. And the only reason
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I know that is because I was living there at
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the time and I was there in the first year.
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So it's been around for a while. It wasn't always
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a Six Flags park. It has been passed from one
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to the next to the next. But the other question
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that was raised in that article with WGN and some
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discussions surrounding it, was if they were to start to
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refine their portfolio, what happens to these parks? You know,
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if you look back to the history like Geaga Lake,
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for example, which was a six Flags property that was
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actually sold off to become housing. Yep.
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So yeah, it's like, is there anybody that would even
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want to buy it to keep it as a park
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or would you just turn into some or is the
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land more useful?