Economy Pushes Six Flags

How our Economy Pushes Six Flags

The United States economy is an ever-changing and dynamic system. It is a structure that is made up of people who make critical financial decisions every hour of every day. Every organization, from Wall Street giants to the guy selling hot dogs on the street, is effected by the movements of the overall economy. These economic movements, or trends, can push sales for some, or put others out of business. Though they are intangible, these forces can still be measured, studied, and presented in the form of economic indicators. They can take the form of anything from the productivity of the overall economy, to the supply of money in it. This paper will review the economic indicators Consumer Sentiment Index and the Unemployment Rate and see how they affect theme park giant, Six Flags.

Six Flags Entertainment Corporation owns and operates themed amusement parks with attractions ranging from roller coasters, thrill rides, to zoo-like animal encounters.

At a price tag of 3 million dollars, the first Six Flags park, Six Flags over Texas, opened in Arlington Texas in the year 1961. (When first park opened) Since then the company has grown to 18 parks, 16 in the United States, 1 in Canada, and 1 in Mexico; and is currently the world’s largest theme park company. (The biggest) Last year 25.6 million guests attended a Six Flags park (six flags attendance), posting $1.2 billion in revenue. (Six flags makes money). Ticket transactions accounted for approximately 55% of sales revenue with the rest being from food, games, merchandise, and other income sources. (six flags report, page

28)
Because of the seasonal nature of the theme park industry, company income fluctuates throughout the year. Six Flags 2014 Annual Report stated that “Approximately 80% of our annual park attendance and revenue occurs during the second and third calendar quarters of each year.” (Annual Report, page 12). Despite the challenges of a seasonal business, the company has had success with their current business model, recently posting their fifth consecutive record year. (record guys) Six Flag’s revenues also rely on the finances and employment of their target cites, also stated in the report was that “Our (six flags) success depends to a large extent on discretionary consumer spending, which is heavily influenced by general economic conditions and the availability of discretionary income.” It’s because of this venerability to these economic trends that Six flags should be paying attention to the Consumer Sentiment Index.
The Consumer Sentiment Index is presented by the University of Michigan and is defined as “A statistical measurement and economic indicator of the overall health of the economy as determined by consumer opinion.” (CS Def) The indicator is a measurement of how consumers feel about the economy as a whole. Conditions that affect the CSI can include things like immediate economic trends like inflation and unemployment, or it could be political events like war or terrorist attacks. (what effects the CSI)
The Index is calculated by first taking a national monthly survey of 500 random households. The surveyors from the Survey Research Center at the University of Michigan (Who collects it) call a household and ask roughly fifty questions pertaining to how that household is fairing financially. Questions range from topics pertaining to “…three broad areas of consumer confidence: personal finances, business conditions, and future buying plans.” (Whats in it) Roughly 60% of data that is collected is from new responses and the remaining 40% is from revisited households. (How much) That information is then collected and put into the equation:
CSI = x1 + x2 + x3 + x4 + x5 / 6.7558 + 2.0
Where x1 … x5 are relative scores to five core survey questions rounded to the nearest whole number. The 6.7558 + 2.0 provides a base period total. The‘6.7558’ is taken from 1966, the base year for the index. The index also takes into account a constant for a sample correction made in the 1950s, the ‘2.0.’ (how its calculated). Because the CSI provides correction to previous statistical model changes, the method in which the data is collected appears sound.
The following graph provides the Consumer Sentiment Index from January 2005.
The graph uses data retrieved from the University of Michigan’s Survey of Consumer’s website ( graph). The index reached a four year high in January, 2015 with 98.2 points and appears to be on an upward trend, though it has flattened out to a current 95.9 point figure. This represents that, on average, Americans are feeling better about their personal financial situations and the economy as a whole. The Index has had a 14% increase since this time last year. (how much?) Today the index indicates that consumers may be confident enough that they may spend more money on products. (They may spend more) We may see an increase in the sales of consumer products because of the increased confidence.