Why Jana’s partnership with Travis Kelce could tip the balance and revive Six Flags’ business

Company: Six Flags Entertainment (FUN)

Business: Six Flags Entertainment is a regional amusement-resort operator with approximately 27 amusement parks, 15 water parks and nine resort properties across 17 states in the United States, Canada and Mexico. The company provides memorable experiences to millions of guests every year with coasters, themed rides, thrilling water parks, resorts and a portfolio of intellectual property such as Looney Tunes, DC Comics and Peanuts. The company’s parks include Hurricane Harbor Phoenix, California’s Great America, Knott’s Berry Farm, Knott’s Soak City Waterpark, Six Flags Magic Mountain, Six Flags Discovery Kingdom, Six Flags Over Georgia, Six Flags White Water, Cedar Point Shores Waterpark, Six Flags Great America, Six Flags Fiesta Texas, Hurricane Harbor Splashtown, Dorney Park & Wildwater Kingdom and others.

Stock Market Value: $2.60 billion ($25.63 per share) 

Activist: Jana Partners

Ownership: ~9%

Average Cost: n/a 

Activist Commentary: Jana is a very experienced activist investor founded in 2001 by Barry Rosenstein. They made their name taking deeply researched activist positions with well-conceived plans for long-term value. Rosenstein called his activist strategy “V cubed.” The three “Vs” were: (i) Value: buying at the right price; (ii) Votes: knowing whether you have the votes before commencing a proxy fight; and (iii) Variety of ways to win: having more than one strategy to enhance value and exit an investment. Since 2008, they have gradually shifted that strategy to one which we characterize as the three “Ss” (i) Stock price – buying at the right price; (ii) Strategic activism – sale of company or spinoff of a business; and (iii) Star advisors/nominees – aligning with top industry executives to advise them and take board seats if necessary.

What’s happening

On Oct. 21, Jana announced that it had partnered with Travis Kelce, Glenn Murphy and Dave Habiger in an investment in Six Flags Entertainment and plans to engage with the company’s board and management regarding opportunities to enhance shareholder value and improve the guest experience.

Behind the scenes

Six Flags Entertainment is a regional amusement-resort operator with approximately 27 amusement parks, 15 water parks and nine resort properties across 17 states in the United States, Canada and Mexico. In November 2023, Six Flags announced that it would be merging with Cedar Fair. While this news received backlash from some investors, most notably from activist Land & Buildings, the merger was completed in July 2024. At the time, this merger seemed like an opportunity to combine Six Flags’ regional dominance in amusement parks, strong licensing arrangements (such as its lifetime IP agreement with Warner Brothers) and modern tech and pricing backbone with Cedar Fair’s operational discipline, best-in-class park experience and high customer satisfaction rate to generate synergies and elevate Six Flags’ asset value.

However, this arrangement has not really gone as planned. In the second quarter, Six Flags faced severe weather conditions during their typical peak May to June season, which resulted in substantial EBITDA and attendance misses. Moreover, the company entered this period highly levered from the merger, and these misses only amplified the company’s balance sheet problems in the eyes of investors. This sent Six Flags’ share price down over 58% from the completion of the Cedar Fair merger to the day prior to Jana’s announcement.

Stock action like this on otherwise strong businesses that is due to an idiosyncratic event like weather that is not likely to recur generally gets the attention of good value investors. However, Six Flags does have other issues, namely poor operational execution, integrating the Cedar Fair merger and identifying a new CEO, as CEO Richard Zimmerman has announced he is stepping down from his role at the end of 2025.

Jana Partners is now the fifth activist investor in this stock. Other include Sachem Head (4.82%), H Partners (4.59%), Dendur (4.38%) and Land & Buildings (n/a). All of those other activists, except L&B, have received board representation.

Jana, as it often does, is coming in with an All-Star team: Glenn Murphy, executive chairman of Petco and former chairman and CEO of the Gap; Dave Habiger, chairman of Reddit; and NFL Superstar Travis Kelce. The investment group holds a roughly 9% economic interest and plans to engage Six Flags’ board and management team to explore ways to enhance shareholder value and improve the guest experience.

Much of Jana’s campaign echoes the qualms already raised by the other activists in the stock, including the company’s potential to unlock value by reinvigorating the business as a standalone company with a new CEO and/or monetizing the real estate, or even selling the entire company. Regardless of which plan is pursued, the company must immediately start down the road of fixing its operational issues.

Operationally, Six Flags has forfeited a substantial opportunity by failing to integrate its consumer-facing technology. More than a year post-merger, Six Flags still operates over 10 different apps, and even basic transactions like purchasing a season pass on the website have been unreliable, so modernizing and streamlining this technology could go a long way.

The company also needs to reexamine its operating strategy during inclement weather and adopt a more disciplined capex framework. For example, despite this poor weather during the second quarter, Six Flags still kept its parks open on more days during this quarter than the same period last year, resulting in significant and unnecessary losses.

Jana also believes Six Flags has the opportunity to leverage its existing real estate to implement year-round and inclement weatherproof experiences, such as indoor skydiving and trampoline parks.

Next, the company needs to reinvigorate its advertising and marketing. Six Flags is one of the most recognizable entertainment brands, but its advertising has been stale, abandoning regional marketing efforts while also missing the opportunity to leverage its national scale. While the new CEO will likely have good ideas in this area, having access to Travis Kelce, one of the most popular and liked celebrities in the world across all demographics is a valuable potential marketing asset. (For example, look what Sydney Sweeney has already done for American Eagle with just one ad.)

Kelce has not signed on as a brand ambassador or in any capacity other than as a shareholder, but he is a true fan of amusement parks like Six Flags, has already added advertising value to the company just by talking about it on his podcast and there is always a potential to do more with him either informally or through some sort of an agreement. Brand revitalization catalyzed by Kelce’s active involvement provides a meaningful opportunity to lift attendance and engagement at Six Flags.

JANA’s partnership with Mr. Kelce is unprecedented in two respects: 1) it pairs an activist and a world-famous celebrity that has personally invested in the company and is using their star power to boost the company’s brand from the outside in a highly authentic manner, and 2) it brings a perfectly tailored solution to rejuvenate the company’s branding and marketing, reaffirming its cool factor and resolving any concern about Six Flag’s brand relevance that has weighed on the company’s multiple.

Finally, and probably most importantly, the ongoing CEO process presents a golden opportunity to recruit a world class operator capable of executing upon these initiatives. In the world of shareholder activism, there are not many better opportunities for value creation than the activist having a say in identifying a new CEO for a great but struggling business.

With multiple activists participating in this process, we would expect the new CEO to be a first-rate operator with strong views on creating value for shareholders. Moreover, a reconstituted board over the past several years and the addition of Kelce as a potential formal or informal brand ambassador may increase the quality of the candidate pool.

That all being said, a CEO vacancy is also often the perfect time to explore strategic alternatives, and Jana is still urging the company to evaluate a potential sale of underperforming parks and/or the entire company.

Should Six Flags position itself for a sale, there would likely be both private equity and strategic interest. Apollo, for example, attempted to acquire Cedar Fair back in 2010 before their merger fell through due to lack of investor support, and Blackstone already owns Great Wolf Lodge – a complementary asset.

In terms of strategics, the growing media and entertainment trend of integrating physical park assets into cross-platform media ecosystems makes the industry a logical candidate. Media titans like Disney and Comcast have already provided the blueprint on how to leverage amusement parks to promote intellectual property.

Paramount, the third peer to Disney and Comcast, is the only one without an amusement park after interestingly selling five Paramount Parks to Cedar Fair in 2006. This becomes even more intriguing now that Paramount has made a $57 billion bid to acquire Warner Bros Discovery. Six Flags has a licensing agreement with Warner Brothers and at a current $2.6 billion market cap, would be a logical add-on to its acquisition by Paramount, or any strategic investor for that matter. (Netflix has also shown interest).

Jana is a highly experienced activist with a track record for showing up with operators tailor-made for a company’s specific problems, and that’s exactly what they have done here. The perfect brand ambassador and two corporate legends with almost unparalleled consumer and technology-based operational turnaround expertise may be exactly the medicine required here. With that in mind, we would normally argue that this is too crowded of a shareholder base for Jana to gain board representation, as there are already six directors on the board who were appointed pursuant to an activist settlement. However, we believe that the activists with representatives already on the board are like-minded to Jana and would welcome directors of this quality to help pursue a path they all seem to agree on.

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist investments.

Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. Versant would become the new parent company of CNBC upon Comcast’s planned spinoff of Versant.