When Wall Street Came to Main Street USA

How Public Corporations and Private Equity Forever Changed the American Theme Park Industry

I was lucky to enter the industry at a very young age to witness changes that have had a lasting impact on the amusement / theme park industry. As most of us know, America’s amusement and theme park industry was built by entrepreneurs. They were operators, builders, showmen, and risk-takers. They were people who knew every corner of their parks, who walked the midways daily, owners who knew employees by name, and who often made million-dollar decisions while standing beside a Philly carousel or an old woody roller coaster. Many had literally grown up in park families, some second and third generation operators. No question, the businesses reflected their personalities. I was lucky enough to know many of the early industry pioneers, people like the Carrolls, the Batts, the Thompsons, the Schotts, the Wachs, the Henningers, the Freeds, the Wynns, the Nelsons, the Otts, the Knotts, the Gascoignes, the Lococos, the LaGrosses, and the Rooses, all of whom were entrepreneurial families.

But what changed? It started when Wall Street arrived. Situated now over the past sixty years, beginning with the maturation of publicly traded entertainment companies and then accelerating dramatically with the arrival of private equity during the late 1990s and early 2000s, the ownership structure of our theme park industry fundamentally changed, some for the good and some for the bad.

Disney had already become a publicly traded company in the 1950s, providing it access to capital markets that later helped finance the extraordinary expansion of Walt Disney World and their subsequent global growth. Universal evolved under publicly traded parent companies before ultimately becoming part of NBC Universal and Comcast. Six Flags emerged as a public company again in 2010 after restructuring from bankruptcy, while numerous regional and destination parks increasingly attracted private equity investors seeking stable cash flow and valuable real estate. The financial world was truly enamored with the theme park business.

My boss in the 70s, Gary Wachs, stated early on in this integration of Wall Street into the park business that “A good promoter beats a good banker anytime.” It was meant as an indicator that a pretty rendering really got them excited. They were now in “show business” and wanted to be a part of its glitter! I have to say that even 50 years later, that axiom still rings true! Frankly, I still see these infatuated feelings coming forward from the financial world on a constant basis with new emerging projects.

As a result of this interloper of Wall Street, the industry became larger in many ways. It became more expanded, more sophisticated, and more financially disciplined. It was becoming clear that the entrepreneurial era of the American amusement park industry was quietly disappearing. Before Wall Street and institutional capital reshaped the business, parks were built, owned, and operated by entrepreneurs and families whose personal fortunes rose and fell with every decision they made. The Koch family at Holiday World, the Herschends at Silver Dollar City, the Knoebels at Knoebels Grove, the Henninger and McSwigan families at Kennywood, and hundreds of other independent operators governed their parks with an owner's mindset. They weren't managing assets for shareholders. They were protecting a family legacy. Their names were on the front gate, and every decision reflected that personal commitment.

I have always believed, and still do, that their success depended on instinct. If attendance softened, a new show appeared. If guests complained, management often heard it firsthand. If an attraction was needed, ownership made the decision quickly to add something. Innovation often came from passion early on, rather than spreadsheets. Now understand, mistakes certainly occurred, but they belonged to the owner, not to committees, analysts, or shareholders. The early parks reflected personalities, and no two were alike. But signs were indicating times were changing.

Alas! The entrance of institutional capital. It had arrived. As the industry matured, its economics became increasingly attractive. Attendance proved remarkably resilient through various economic cycles. Guests generally prepaid admissions. Real estate values appreciated. Food, beverage, retail, parking, and lodging generated strong recurring revenue, with the overall business producing significant cash flow when managed properly. And Wall Street noticed. Private equity firms saw opportunities to consolidate fragmented operators, improve operating efficiencies (sometimes), and eventually monetize their investments through resale or public offerings. Typically, they already had an exit plan in the can when they entered the company, which was 3-5 years in and out.

Organizations such as The Bass Brothers and Blackstone became some of the industry's influential investors, acquiring interests in Universal Orlando, Cedar Fair in Sandusky, and Taft Broadcasting, purchasing Merlin Entertainments, which grew into a global attraction operator, and then later acquiring SeaWorld Parks & Entertainment from Anheuser-Busch/InBev in 2009 before taking the company public in 2013.

Others investment groups like Apollo Global Management, later entered the business acquiring Great Wolf Resorts, recognizing the long-term value of destination family entertainment. The message was unmistakable. Theme parks were definitely on the radar for institutional investors.

Wall Street, through a new set of eyes, almost instantaneously did some things correct. There is no question that public ownership and private equity accelerated the industry's growth. Large-scale capital became available that few family operators could have imagined. (I lived this situation myself within Coney Island/Taft Broadcasting!) Entire resort destinations were expanded. Hotels multiplied. Water parks were added. Retail districts emerged. Technology investments accelerated. Individual family parks were bought up.

We saw sophisticated reservation systems, season pass pricing, mobile applications, advanced ride systems, and integrated guest analytics all become possible because incredible amounts of capital were available. On top of this, professional management also improved. Corporate governance introduced stronger financial controls, strategic planning, risk management, procurement systems, and operational consistency. These were all essential improvements to the business that were lacking under the earlier private ownership industry management systems.

Larger organizations could recruit specialized executives in finance, marketing, technology, food service, and human resources who simply would not have existed within smaller entrepreneurial companies. The industry became significantly more professional. Many parks became better businesses. But frankly, something was lost. Money changes behavior. Public companies do not answer to founders. They answer to shareholders. We saw that every ninety days, quarterly earnings were becoming the scorecard. As a result of these newly imposed metrics, growth expectations became continuous, budgets became commitments, and capital expenditures competed with dividends. And executives began managing not only parks but also investor expectations. And that changes decision-making. We went from entrepreneurial organizations asking, "How do we create something remarkable?” to public corporations asking, "What is the return on invested capital?” Those are not the same question. The difference may appear subtle. But it is profound. Because governance replaced instinct. The industry quickly learned that public corporations require governance, and that is appropriate. This governance brought boards of directors, audit committees, risk committees, legal reviews, capital approval processes, and the all-important budget authorizations. And yes, all were necessary additions.

Yet every additional layer slowed the entrepreneurial decision-making. The owner who once approved a new attraction after walking the property on Saturday morning now required months of presentations, financial modeling, committee approvals, and board authorization. Creativity rarely thrives inside bureaucracy. And no question, speed disappears. The calculated risk became increasingly difficult. Ironically, an industry that was built upon imagination became managed by a slowed process.

As a result, debt became both friend and enemy to some industry companies. Understand, private equity introduced another powerful force. Leverage! Borrowing money to acquire companies can produce exceptional returns when markets are strong. It can also become devastating during recessions and other downturns.

No example illustrates this better than Six Flags history. In the late 1990s and early 2000s, aggressive expansion and substantial debt obligations eventually overwhelmed the company during the 2007-2009 financial crisis. It culminated in Chapter 11 bankruptcy in 2009. The parks themselves remained valuable. The capital structure did not. The company reorganized and returned to the public markets in 2010, but the episode became a cautionary lesson about confusing financial engineering with operational excellence. Guests never caused Six Flags' bankruptcy. Debt was the culprit.

Another lesson learned was that standardization has benefits and costs. Large corporations naturally seek consistency. Operating manuals become standardized. Food offerings become standardized. Marketing becomes standardized and centralized. Purchasing becomes centralized. The efficiencies are real, but individuality often disappears. Many independent parks once possessed unmistakable personalities. And regional traditions flourished. Local foods mattered. Unique operating styles differentiated one park from another. Corporate ownership can unintentionally smooth away those distinctions in pursuit of efficiency. The numbers improve. But often character declines.

But I must indicate not every corporate story has been problematic. Disney parks demonstrate what happens when long-term investment is protected by patient leadership and an extraordinary brand. And Universal, under Comcast, illustrates how substantial capital combined with creative confidence can redefine competitive standards (Epic Universe). Merlin, as an example, grew from a collection of attractions into a global powerhouse by combining disciplined investment with operational expertise but, as of late, under a series of management changes, has been experiencing difficulties. These organizations understood that capital alone does not create memorable guest experiences. Investment must remain paired with imagination and creativity.

What have we learned? What is the lesson? From my personal perspective, the entrance of Wall Street unquestionably strengthened the financial foundation of the theme park industry. It financed remarkable growth. It improved operational professionalism. And no question, it created global companies that could never have existed under fragmented ownership.

Yet it also shifted the industry's center of gravity. Decision-making migrated from the midway to the boardroom. Operators increasingly answered to investors instead of guests. Quarterly earnings began carrying more influence than generational vision. We saw this as a profound cultural change.

My final observation at this time, having spent more than six decades in this industry, is that I believe the greatest parks have never been built by accountants alone, nor have they been built by dreamers without financial discipline. Walt and Roy Disney were the best examples of this. One a dreamer, one a bean counter!

But I believe the true magic occurs when entrepreneurial vision is supported, not replaced, by intelligent capital.

No question, Wall Street made our industry larger, wealthier, and more sophisticated. But it did not build this industry. Entrepreneurs did. As I have said many times, “Anybody can learn to fly an airplane, but it takes real talent and know-how to build one!” That’s what the pioneers demonstrated.

If we are to preserve what has always made our parks special, we must ensure that capital continues to serve creativity, not the other way around.

I learned early on from some of the best in the theme park business that the balance sheet may finance the future, but imagination has always been the industry's greatest asset.

Click here to read more observations.