The reason why Astroworld is shutting down

Behold the magic of frenzied corporate acquisitions.

Premier Parks went on a shopping spree in the late 1990s that would be the envy of any fun-lover. Among the items: Elitsch Gardens Amusement Park in Denver, Waterworld USA parks in California and Great Escape and Splashwater Kingdom in New York.

By the time the company gobbled up the Waliby Family Parks, with locations in France, Belgium and Holland, it was pretty clear to some analysts that things were getting out of hand.

Then in 1998, the Oklahoma City-based company acquired the Six Flags chain of parks for $1.9 billion and later took on the Six Flags name. Now it finds itself saddled with more than $2 billion in debt, and the company is up for sale in the middle of a proxy battle.

This week the company announced it will close the landmark Six Flags AstroWorld theme park in Houston at the end of this season. AstroWorld, a Houston institution since 1968, is the victim of rising land values that overshadow its worth as an entertainment venue. The site at Loop 610 and Kirby could become a mixed-use development, including multifamily housing, retail and offices.

It is, of course, a big overstatement to say that Astroworld would be around for the foreseeable future if Six Flags had never been bought by Premier Parks. The park needed major upgrades and a better parking arrangement, and its location was suboptimal. Sooner or later it was going to have to answer the question about whether the rise in area property values meant that it was utilizing its real estate in a profit-maximizing way. Still, it's not impossible to imagine a scenario in which a healthier Six Flags, unencumbered by the bad decisions that Premier made, chose to give the venerable old place a facelift. Especially if you were a rollercoaster fan, the place still delivered good value. I think the odds were against it long term, but its death was not predestined. At least, it didn't have to be. Alas.

UPDATE: Shoulda read Ken Hoffman before I posted this.

Here's why I think AstroWorld finally bit the dust.

A regular one-day ticket costs $42.99. That's a lot of money, but that's what theme parks are getting these days. Disney World charges $60 for a one-day pass. Sea World in San Antonio is $40.50.

But for the past several years, AstroWorld has been selling season passes for crazy low prices. You can buy them online for $59. I remember promotions where you could get them even cheaper.

That's when AstroWorld became an inexpensive day-care center. Each day, parents would drop off their kids in the morning, and pick them up on their way home from work. After a while, even a roller coaster is boring. The park was crowded with bored kids just hanging out.

Bored kids equals trouble. AstroWorld became an uncomfortable place for parents to bring young children.

In the theme park business, when you lose families, you go out of business.

As I recall, when we bought our season passes a couple of years ago, they were something like $90 apiece. The admission price then was in the $35-$40 range, so you needed to use it three times to make it worthwhile. Putting the issue of bored kids aside, it seems to me that making your season pass cost be less than 150% of a one-day admission is questionable economics. Yeah, you can make money on the pass holders, if they eat or buy souvenirs or play some of the carnival games. I avoided those things as much as possible, mostly because they were way overpriced. I'd be willing to bet that a lot of pass holders didn't spend all that much beyond the cost of the pass itself. If I were a financial guy for AstroWorld, I'd have been skeptical of that price point.

Posted by Charles Kuffner on September 15, 2005 to Bidness | TrackBack