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Into the AbyssBy John Ramos
“Mid-February, we’re out of cash.” —Pat Schoff, Great Lakes Aquarium board member
On January 19, 2005, I attended a meeting of the Great Lakes Aquarium board of directors. Eight of the fifteen board members were present, as were Chad Netherland, the Ripley Entertainment manager who was hired to help put the aquarium back on its feet; David Schaeffer, director of education at the aquarium; and Elaine Hansen, a member of the Lake Superior Center Authority, the state agency responsible for oversight of the aquarium. I was the only observer, journalistic or otherwise. I got a number of scoops. For example, I learned that the aquarium is planning to bring in a new exhibit called the Abyss for the summer tourist season. New equipment for the Abyss (which, unlike the rest of the aquarium, is saltwater-based) will cost the aquarium $150,000; another $150,000 will be paid to Ripley Entertainment, which owns the exhibit, in the form of a lease. I learned that, on February 26, somebody (probably Chad Netherland) will endeavor to set the world record for the most ice broken by hand in sixty seconds, as well as for the largest chunk of ice ever broken by hand. Netherland, a black belt in jujitsu, staged similar stunts at the aquarium in November of 2003, when he lay on a bed of nails with 700 pounds of concrete on his chest and had an associate smash the concrete with a sledgehammer. A “world record” in anything is impressive-sounding, and, since Ripley Entertainment owns a piece of the Guinness company, the logistics of the event should not be hard to arrange. The aquarium has high hopes for the Abyss, which has performed well at Ripley’s Aquarium of the Smokies in Gatlinburg, Tennessee. The aquarium’s proposed budget for 2005, which was handed out at the board meeting, actually shows two budgets: one with the Abyss, and one without (Figure 1). If the aquarium remains the same and the Abyss is not brought in, it is predicted that the aquarium will wind up the year with an operating deficit of $314,754. If the Abyss is brought in, attendance is predicted to jump by fifteen percent and the deficit is predicted to drop to only $40,245. This is not a bad gain—until one notices the note at the bottom, which reads, “This cash outlay for the Changeable show is not reflected in the cash model.” The “Changeable show”—the Abyss—is going to cost the aquarium $300,000 to lease and set up. If you add that to the projected deficit, you come up with an overall deficit of $340,245—more than if the Abyss had not come in at all. Why is that $300,000 not included in the budget?
This curious method of accounting, where major expenses are listed in footnotes, is undoubtedly an attempt by the aquarium to put a positive spin on a negative picture. Such a spin will become necessary in February, when the aquarium, following a pattern of many years, approaches the city to ask for more money. This time they will not be asking for a direct handout, but for an expansion of their credit limit with US Bank. The limit is currently $250,000; the aquarium will ask that this be expanded to $400,000. The reason they must ask the city for permission to do this is that the city guarantees the aquarium’s loans. If the aquarium cannot make its payments, the city must do so. Subsequent footnotes in the budget indicate that half the cost of the Abyss—$150,000—is to be “raised or donated”; from where, it doesn’t say. The other half will be borrowed from Ripley Entertainment and paid back over two years “through grants, donations or subsidy.” Subsidy, of course, means the city. Ripley Entertainment has been, and continues to be, heralded as the savior of the aquarium. They are certainly being well paid for their efforts. The aquarium will pay Ripley a management fee of $210,000 in 2005, plus $30,000 for Chad Netherland’s “living expenses.” This is about three times the salary of Duluth’s mayor. Various incentives are also built into the management agreement, so that if Ripley does manage to make some money for the aquarium, they will immediately rake off the lion’s share of it. On top of that, the recycling of old exhibits from Ripley’s other aquariums around the country—a process that is now beginning with the Abyss—will result in hundreds of thousands of dollars more being paid to the company in rental fees. On top of that, Ripley is not responsible for any operating deficits at the aquarium, since they’re only “managing” it. The aquarium must cover all shortfalls. If they cannot do so—and they have never been able to before—responsibility will fall on the city. Expenses at the aquarium have always been large; within a year or two, they will become immense. Robert Masterson, president of Ripley Entertainment, in a speech given to business leaders at the College of St. Scholastica on April 15, 2004, which I attended, told the audience that, “Pumps and motors are gonna start going out six years, seven years from opening [and you’ll] start to have to make repairs—big repairs.” The Great Lakes Aquarium is now five years old. When the pumps and motors begin to go out, all responsibility for the big repairs will fall on the aquarium—and, by extension, on the city. The aquarium is not being run by a bunch of deadbeats. The deadbeats are the people who boosted and built the aquarium, then bailed out when things started looking bad (for a full report of those days, see “History of the Great Lakes Aquarium,” in Issue #3 of The Cheerleader). Today, the aquarium is doing the best it can with what it has. David Schaeffer, director of education, gave a lengthy presentation of all that was accomplished, education-wise, in 2004. He received a round of applause from the board, and hearty congratulations all around. Schaeffer also told an anecdote which illustrated the level of official support for the aquarium that exists in Duluth. David
Shaeffer: Mayor Herb Bergson has been fabulous working on a bus
program. This summer when we actually had summer camp programs, he was
here for another meeting, and we were just chatting a little bit before
the kids were there, and he asked me, “What’s the biggest problem getting
school groups here?” and my answer right away was, “Buses.” It’s not
paying for the aquarium, it’s paying for the buses.
Ken Hogg: Yeah.
Schaeffer: So we, of course, surpassed that goal and now Jim’s stuck for $2500 and [inaudible due to somebody triumphantly saying, “YESSS!”] $6000 and school kids will be happy. Jim Pattison, Jr., is the executive in charge of new business for Ripley Entertainment. He is also the son of Jimmy Pattison, a Vancouver billionaire who was recently ranked the world’s 94th-wealthiest individual. Ripley Entertainment is only one branch of Jim Pattison Enterprises, a global conglomerate which encompasses shipping, advertising, packaging, grocery stores, fisheries, lumber companies, publishing, banking, radio, television, automotive sales and just about anything else that generates a nickel. Jimmy Jr., perhaps trying to prove himself to the old man, has been doing big things with Ripley. In addition to the forty-seven museums which they operate in ten countries, the Believe It Or Not! comic strips and television shows which are syndicated worldwide and the vast third-party user market for the Ripley name (such as lottery tickets, slot machines and greeting cards), Ripley Entertainment owns aquariums in the busy tourist destinations of Gatlinburg, Tennesee and Myrtle Beach, South Carolina. They are building a third aquarium in Grapevine, Texas. They are also building a $200 million Great Wolf Lodge and Aquarium of Canada in Niagara Falls, Ontario and a $350 million entertainment complex in Singapore. Jim Pattison’s gift of $2500 to the Great Lakes Aquarium’s busing program was not particularly hard for him to make. Indeed, since the aquarium plans to pay Ripley Entertainment $150,000 to rent the Abyss, Jim Pattison’s gift may be viewed as a coupon for somewhat less than two percent off the sticker price—much like the Cash Saver stamps handed out at local Food-N-Fuel gas stations. Ripley Entertainment, if they wished to do so, could purchase the Great Lakes Aquarium in the blink of an eye. They do not wish to do so. The GLA is a losing venture, buoyed up only by the optimism and financial backing of the City of Duluth and its inhabitants. Ripley’s is willing to “manage” the aquarium, for a hefty fee, until the money dries up. Chad Netherland, despite his jujitsu belt, is just a kid, cutting his chops at some backwater destination in northern Minnesota until he has proven himself competent to rise to bigger things within his company. The Great Lakes Aquarium is operating under an illusion—an illusion that it will actually succeed. How so many intelligent people can look at the facts and still claim to believe in the illusion is a mystery. Over and over, year after year, the aquarium has survived only with regular doses of public money. The largest dose came in March of 2004, when the city forgave the aquarium $7 million of debt. It wasn’t enough; the aquarium is back, asking for more. The aquarium has never done anything but ask for more, and it never will. Just because a private company like Ripley Entertainment is allowed to elbow up to the trough does not change the underlying foundation of the aquarium. Ripley Entertainment will take what they can get, and go home. Marti Buscaglia, publisher of the News Tribune, has been closely involved with the aquarium ever since she moved to Duluth in 2002. In that year, Mayor Gary Doty appointed her to head the task force responsible for finding a way to save the aquarium. It was at her strong recommendation that Ripley Entertainment came in to manage the facility. Marti is aware of much of what I have written here, and probably more, but apparently has not felt compelled to share her information with the public. I am sure that in late February we will get a big story on the ice-breaking stunt from the News Tribune. Why not on the rest of it? The fact is that, when it comes to the aquarium, the News Tribune under Marti is nothing more than a marketing machine, doling out news in a calculated way, rather than when it becomes available. By board member Pat Schoff’s own admission, the aquarium will be out of cash by mid-February. This may not be particularly surprising, but it is news. It is also newsworthy that the aquarium has begun to borrow money from Ripley Entertainment. What do those agreements look like? Is the city involved? Why did Mayor Herb Bergson (according to board chair Cindy Hayden) approve the aquarium’s budget, footnotes and all, without asking for any changes? And why do no News Tribune reporters attend the board meetings? As I do not possess Marti’s peculiar brand of restraint, I might as well close by mentioning a few other random news items that I discovered by attending one meeting: Les Bass, City Finance Director, will retire on April 29. He will remain on the board of the Great Lakes Aquarium in a voluntary capacity. Cindy Hayden, publisher of Lake Superior Magazine, who has been on the GLA board since 1989, will step down as chair. Dr. Patrick Schoff, a researcher at the UMD Natural Resources Research Institute, will take over Cindy’s duties in that capacity. The male hedgehog at the aquarium died. Husbandry specialists are worried about the female, who is “getting older.” The aquarium will be getting a great horned owl. Thank you. Good day. ___________ |
