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Wednesday, 01 April 2009 15:35

Ghost Town faces huge challenges as it tries to restructure debt, open park

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The business partners behind Ghost Town in the Sky are facing significant logistical and financial challenges as they pursue their goal of reopening the Maggie Valley amusement park by summer.

Ghost Town filed for bankruptcy three weeks ago under the auspice of reorganization. Whether the partners can pull that off remains to be seen, however.

“They are trying very hard to reopen but they have a lot of challenges to overcome,” said Mark Clasby, director of the Haywood County Economic Development Commission.

The challenges include $12.5 million in debt, not enough cash to make payroll and burned bridges with suppliers. Meanwhile state inspections of their rides have yet to be scheduled.

“It is my understanding that the situation is dire at best,” said Attorney Gavin Brown, the chairman of the Haywood County Economic Development Commission and the mayor of Waynesville. “They simply do not have the cash funds to operate and there is not an entity I am aware of that will assist them.”

Maggie Valley Mayor Roger McElroy said he doesn’t know what to tell his tourist-dependent town, which historically relied on the amusement park as its cash cow.

“All I can tell them is I don’t know. We just don’t know what is going on,” McElroy said.

Ghost Town’s owners continue to assert that the amusement park will open in mid-May, and that’s all the town has to go on, said Maggie Valley Alderman Mark DeMeola.

“All I can do, like anyone else, is just hope,” DeMeola said. “It is kind of like blind faith right now. We are at the mercy of what they are telling us. But here we are 30 days away and if you look at it on the surface, it does seem like a tall order.”

Burton Edwards, a contractor in Maggie Valley, said he does not think the current owners of Ghost Town have the capital they need to reopen the park.

“My honest opinion is with the current financial status, it is just a matter of time. There is no way they can do it,” Edwards said. “I want Ghost Town to succeed because I want Maggie Valley to succeed. I don’t think these guys now can pull that off. I hope they can.”

Edwards said the current owners had the best intentions when they bought the park two years ago. After being run by the same owner for most of its 40 years, the park had fallen into disrepair and eventually closed down in 2002. It stayed closed for five years, much to the dismay of the Maggie tourism industry.

The current owners admit they didn’t realize how much money it would take to get up and running when they bought it.

“Where we thought you had to paint the wall, it didn’t have a foundation under the wall,” said Steve Shiver, Ghost Town CEO.

Rides had to be completely rebuilt. Nearly every roof in the mock Old West town leaked. The park was on well water that didn’t meet code, requiring the new owners to run city water lines. Water pipes were clamped with muffler clips. The electrical wiring was jerry rigged. It cost millions more than they anticipated, Shiver said.

“I think they accidentally got in over their heads,” Edwards said. “They didn’t do a proper study and know how bad a shape it was in. Number two, the economy hit hard.”

The new owners rushed to get the park open after buying it. Two years later, the amusement park still isn’t running at full tilt, which has led to disappointed visitors, Edwards said.

“It has to be up and fully running to help Maggie Valley. Otherwise I feel like it is doing Maggie Valley more harm than good,” Edwards said. Edwards currently has a lien against Ghost Town over unpaid work, which Ghost Town is disputing on claims the retaining wall he built failed.

One sign of Ghost Town’s financial troubles is its failure to remit sales tax to the N.C. Department of Revenue. According to bankruptcy filings, the park owes $136,000 in back sales tax, penalties and amusement tax, some dating back to fall of 2006.

Ghost Town was collecting sales tax on everything from ticket prices to souvenirs, but for some reason did not remit it to the state.

“If the business owner takes it and uses it for another purpose, that is illegal,” said Kim Brooks, spokesperson with the N.C. Department of Revenue.

Ghost Town has also failed to pay property taxes. It owes $40,000 in property taxes to Haywood County and $30,000 to the town of Maggie Valley.

The health insurance policy for Ghost Town employees was canceled recently after the company didn’t make the payments. The N.C. Department of Insurance is investigating a complaint that coverage was terminated without employees’ knowledge. Shiver said the partners are working to get the health insurance reinstated retroactively so that employees won’t be left holding the bag for medical care incurred during the time they didn’t have insurance.

 

Lots to do

To pull off an opening for the summer, employees will have to be hired soon to start sprucing up the park, from pulling weeds to setting up rides. Characters in the theme town, such as gun fighters, must get up to speed on their skits, and ride operators will need refreshers before tourists start showing up. There has been no movement to begin hiring, however.

On another front, Ghost Town needs to find suppliers to stock concession and souvenir stands, fill its fuel tanks, and send caps for the gunfighters’ guns. Given the long list of companies owed money by Ghost Town, most will want to be paid up front, but doing so will be difficult due to a lack of cash on hand.

Shiver said there are plenty of vendors ready and willing to do business with Ghost Town, however.

The park also needs annual inspections of all its rides and chairlift before it can open. As of press time Tuesday, Ghost Town had not yet asked the state for a site visit, according to Jonathan Brooks, bureau chief of the amusement ride division of the N.C. Department of Labor.

Inspections would take several days to complete and would have to include an evacuation drill of the chairlift. Brooks said it would be difficult to pull off by mid-May at this point.

The roller coaster still lacks numerous tests and inspections, which could not possibly be completed by mid-May, according to Brooks. The same goes for the incline railway, which is being rebuilt and is still missing integral parts.

 

Tourist outlook

Shiver says Ghost Town aims to increase visitation from 130,000 last year to 150,000 this year. Unpaid bills with more than a dozen TV stations, newspapers and billboard companies, however, could make it difficult to place advertisements unless Ghost Town can pay up front.

Other challenges to increased visitation include the recession — which could impact travel and spending of tourists — and an increase in ticket prices.

Another challenge is capturing the imagination of today’s kids with Old West gun fights and fair rides, when laser tag and water parks might be more their speed.

“The theme itself may be dated, and therein may lie the problem,” said Gavin Brown, chairman of the Haywood Economic Development Commission.

Despite the challenges, the park has raised ticket prices by $2 this year, to $31.95 for adults and $19.95 for kids. You get $3 off if purchased now online.

Shiver said he believes there will still be plenty of tourism this summer. In fact, Ghost Town is positioned to capture tourists that opt for close to home trips rather than bigger, expensive vacations, he said. He said the park is opting for low cost marketing, citing a mass marketing email sent out last week.

“Tickets are being sold as we speak,” Shiver said of online sales, but wouldn’t say how many.

The bankruptcy filing says that Ghost Town brought in $5.56 million when it reopened in 2007, but only $4.44 million last year. The 20 percent decline in revenue between 2007 and 2008 could have several explanations. Ghost Town got a natural bump in visitation when it opened in 2007 after being closed for five years. But 2008 was plagued by high gas prices and recession.

Ghost Town allowed hotels in Maggie Valley to buy blocks of tickets at a wholesale price and either resell them to tourists for a mark-up or make them part of a package vacation deal through the hotel. Several hotels were unable to divest themselves of all the tickets they had bought last year, however.

 

How much would it take?

Prior to filing bankruptcy, Ghost Town partners were seeking a loan of $18 million, Shiver said. It would have allowed them to pay off their bills and get the park open. It would also have provided the major cash needed to get all the rides working and allowed Ghost Town to add new components to the park that would make it more appealing to today’s youth.

Shiver even went to lenders of last resort, chasing expensive money at unfavorable terms, but could not secure a loan. When asked whether Ghost Town was the victim of the financial collapse Shiver said,

“There is no question.”

In recent weeks, Shiver has been seeking public assistance. But the town of Maggie Valley, the Haywood County Tourism Development Authority and the Economic Development Commission have all declined.

Shiver said the Ghost Town partners have put significant resources and personal collateral on the line to make the park a go, but would not say how much or the nature of the collateral. They are in the process of injecting more cash into operations, per approval by the bankruptcy court.

“If we didn’t think it would work we would not go out and commit ourselves more. We hope the community supports us in that effort. Everywhere I turn I am getting extreme support,” Shiver said. “It is very damaging to speculate right now.”

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