Six Flags Looks To Untangle Unprofitable Sponsorship Deals

Sponsorship and licensing revenue was down 14% or $6.8M in 2011 at Six Flags Theme Parks, but CFO John Duffey says there's a good reason for that. As he told folks at the UBS Media and Communications Conference last week, the company had to analyze every deal and overhaul its approach to sponsorship as it emerged from bankruptcy.

"When this management team came on board, we looked at every single one of the sponsorship deals that we had out there," Duffey said "And to be honest with you, there were some deals, as you looked at it, made sense just from a top line perspective.

Duffey said the sponsorship revenue came at high cost to the company.

"As [you] peel back the onion and you looked at other things, like other commitments that we had to do to buy product from them or have them actually provide product in our park," Duffey continued. "We looked at some deals and said, these are either unprofitable deals or very low profit deals.

Six Flags' sponsorship revenue dropped as in Duffey's words "we made the conscious decision to walk away from some of those deals in 2011," but while the company is shedding some deals, it's also signing new ones. So far in 2012, it has secured an official ketchup and official home improvement partner. Duffey believes the change in strategy will begin to pay off by way of higher sponsorship revenue in the first half of 2013.

"We still believe that there are great legs to sponsorship and we can continue to see growth. So we are actively out there looking for new sponsors every day," Duffey commented. "Going forward, it will be a driver of growth."

source: SeekingAlpha.com