The Herschend family story is legendary in the Ozarks. It started with a cave in Branson and two-dozen properties later, the story includes America’s iconic basketball team, the Harlem Globetrotters.
On Jan. 21, Peter Herschend addressed 125 people at Springfield Business Journal’s 12 People You Need to Know breakfast series. At 79 years old, Herschend speaks like a sage with a career of experience behind him and a future set on core values ahead of him.
Excerpts from the 12 People interview follow:
On the recent Harlem Globetrotters purchase … “They came to us the first half of last year, the management team of 16 men and women. The Trotters were owned by a finance company, Shamrock (Capital Advisors). Like any finance company, they own a property for a period of time and then they sell it. It had come time for Shamrock to sell (and) management said, ‘We’d like to be sold to an operating company.’ They came to us and said, ‘Would you be interested in buying it?’”
On the Globetrotters fitting into the HFE portfolio … “A lot of people said, ‘You guys are nuts. What are you doing buying a basketball team?’ The Harlem Globetrotters are in entertainment. Herschend Family Entertainment is in entertainment. The Harlem Globetrotters are creating memories worth repeating using a basketball. That’s the only difference. We use craftsmen, and shows and sets to create memories worth repeating.”
On assessing the brand … “The Globetrotters are an 84-year-old company. We didn’t buy them out of bankruptcy. The last five years of operation, it’s been their most successful five years yet. We believe strongly that they know how to run the business of basketball entertainment. Those same 16 men and women are now the management team with us.”
On HFE’s plans with the team … “Nothing right now. They are very good at what they do. Jim Collins, in his book, ‘Good to Great,’ says there are three things you ought to do to be successful in business. First, you ought to be the best there is in your world. The best in basketball made into entertainment, they’re there. Second, you ought to be profitable. The third – and all three of these apply to the Globetrotters – you want to enjoy doing what you’re doing.”
On the purchase price (a source familiar to the sale reported to CNBC it was between $70 million and $100 million, and Shamrock turned a profit) … “I can’t tell you. That’s confidential. It’s got a lot of numbers in it.”
On the most popular HFE attractions … “Were it not for five rainout weekends in November and December, this would have been a record attendance year at Silver Dollar City. Attendance drives a lot, but what really makes a difference is if it made its budget. The answer to that is yes. We planned on 80,000 (guests) for Silver Dollar City because of Outlaw Run, and we did that.
“And Dollywood. Two-million, two-hundred fifty thousand – that’s where, in a normal year, we’d hit at both properties.”
On the firm’s acquisition plan … “I wish I had been smart enough to think to have said this first, what a very wise person said: You can buy bigness, but you cannot buy greatness. We choose to be great in the sense of best in our business. Not all of them are successful. Look at Celebration City. We put it in and it didn’t do so well. Not everything we do will be covered in gold and be an instant success. Hopefully, we learn from them. We don’t have a plan that by end of Q2 this year we’ll have one more property in the fold and by the end of the year, two. We don’t do that. A few years ago, we acquired two or three properties out of the Six Flags bankruptcy – which by the way has been a successful bankruptcy, they’ve emerged whole. Of those properties, we held one and we let one go. It wasn’t going to work. Elitch Gardens [in Denver] is the one we dropped. Darien Lake is doing well in northern New York.”
On aquarium operations in New Jersey and Newport, Ky. … “When those first came up, I said, ‘Fish. What’s entertaining about fish?’ I was wrong. I just saw the numbers from both aquariums, they had 5,000 guests yesterday, and yesterday was Monday. It isn’t just fish sitting behind glass walls that make aquariums interesting, it is the opportunity for kids, in particular, to get hands on – to pick up a starfish, to watch a penguin. Penguins are just the funniest creatures in the world; they smell bad, but they’re fascinating. Just as the Harlem Globetrotters are wonderfully entertaining with a basketball, fish and aquatic life can be very entertaining. The aquariums are very good business for us.”
On Atlanta as headquarters … “The corporate operations work out of Atlanta. Almost all the corporate staff are there; there are a couple in Missouri, still. [CEO] Joel Manby works out of Atlanta. When we have operations in Seattle, San Francisco, Boston and points in between, and you want to get to Seattle from here and back in a day, for just a two-hour meeting, you better start someplace else. It can’t be done. So, it’s logistics. And too, that’s where Joel lives and where he was raising his family and wanted to stay there and that’s perfectly OK. It’s worked well.”
On his day-to-day role … “I’m not a numbers guy. The operating staff will be very pleased to tell you: Do not bring to Pete accounting questions. I do work at my office, five or six days a week and the numbers just process through on a daily basis and weekly. The company makes it easy to keep track of. I am really interested in where this company is going. My brother, Jack, and I don’t have nearly the voice now. We may have some influence, but we don’t have a voting voice in the company. Neither of us is on the board, intentionally.”
On the company in five, 10 years … “Twenty years ago, if someone had said what is the company going to look like in 2014? I would have said I don’t know. I certainly wouldn’t have said, Harlem Globetrotters, the Ducks. There are lots of things I couldn’t know. I don’t know what we’ll physically look like, what our mix will be and I don’t care. What I do care about – and I believe this with all my heart – is that what will make or break our company is not which properties we acquire, it is the values we keep. As long as we stay true to this mission: creating memories worth repeating, as long as HFE does that 20 years from now, in whatever physical form it takes, we’ll be just fine. We lose that, we won’t.”
On resigning from the state chamber … “It’s not complicated. I’m a strong supporter of the work of chambers of commerce. Well-run chambers of commerce make a difference. Springfield, Mo., has a well-run chamber of commerce, professional in every respect. This is not rocket science, chambers of commerce exist to promote the economy throughout the region. At a basic measurement is the creation and sustaining of jobs in a community. I had been on the state chamber board for probably 20 years. I was not then and am not now angry at anybody. But the state chamber under their auspices, they brought [Texas] Gov. Rick Perry in – that’s not wrong. But in the same function, Gov. Perry went on the air, you might have heard the ads, and said ‘Missouri businesspeople, why don’t you leave Missouri and come to Texas because we’ll take care of you.’ That’s fundamentally not what a chamber ought to be about. I just simply resigned. (Back to) creating memories worth repeating, inside our company, we call those memory breakers, the things you do wrong. There are core values. It isn’t just, ‘Oops, we put a typo in a letter.’ It was a core value.”
On the goals before his state education board presidential term ends June 30 … “The singly, important and impactful thing that can happen for kids across the state – I have a million kids in my class – is universal early childhood education. Not to teach a child at age five how to do the pythagorean theorem, but to teach children how to get ready to learn.
“They are usually 15-20 percent ahead of kids who have not had early childhood education. But with 1 million kids in our system, the majority – 65-70 percent – do not get a quality early childhood education experience. I’m not talking about day care. We could reshape education results. By the way, statistically, with early childhood education the likelihood of that individual being incarcerated at age 25 is 50 percent less. That’s startling.
“The second area that has to be addressed is extremely controversial because it will require different methods: the management of failed schools. We have about 55,000 youngsters in schools in this state who are getting educationally shafted. They are so educationally mistreated in the schools they attend, the likelihood of them being successful in any normal sense of that word in this life is darn near zero. And that is a responsibility that lies on all of us. We can do something about it. Is it expensive? It’d be about $500,000.
“Until we get that money appropriated into the Department of Elementary and Secondary Education funding stream, we will not deliver. I wish I could get every one of our legislators to understand that early childhood education would pay for itself in terms of prison population.”
On quality education goals … “We all know that delivering on the promise of quality education is hard because, frankly, you get too many diversified interests whose primary concern is not education but self preservation.
“There are diverse interests in education who seek to create their own fiefdoms first and the well being of the child second. I guarantee you will get an argument on that statement. Because they will all say, and I will say, ‘No, I care about kids.’ It’s the actions that you have to go to.”
On how to fix failing school districts … “I know what I would do. We cannot do what we have done heretofore. It hasn’t worked. Kansas City in the last 40 years has had 21 superintendents of education. Anybody want to try to run your business with a new boss every other year? It can’t happen. Have they made some progress? Yea, but not enough. Seventy percent of kids are not proficient in reading. How to fix it? Pete’s opinion: You reshape the system in failed districts. I’m only talking in failed districts where generations have failed. The answer lies in two words: building leadership. Carver Middle School in Kansas City has to have a Class A education leader, the principal, instead of a central office – and this is the systemic change – controlling everything. In Kansas City, the building principal has a discretionary spending of less than 10 percent; everything else is directed by the central office. I would reverse that. Of that $8,000, I’d give $6,000 to the building principal and let him or her apply that money as that community needs it.”
On the chance of Pete’s plan finding agreement … “Find agreement? Zero.
“The objective isn’t my plan. The objective is to get that damn 70 percent to 60, and then to 50 and then to 40. Will we hammer out a compromise? Yes. The reason is we have to.”
On the challenges in transportation … “Money. Next question.
“In order to bring Missouri’s transportation system up to a reasonable goal, not a Cadillac, one that really does right for the economy of the state, it will take $750 million a year for the next 20 years. That kind of money doesn’t exist from general revenue. The state’s gross budget is $23 billion and 85 percent of that is already spoken for. It will require a tax. I believe the answer will lie in a 15-20 year sunsetted tax. A one-penny sales tax, dedicated. It doesn’t go to general revenue so the legislators get their hands on it. It has to go to what Vice President Gore called ‘a lock box’ dedicated for transportation.”
This installment of Springfield Business Journal’s Architects & Engineers Project Report showcases 26 endeavors by area design and engineering professionals.
