'No-strings-attached' deal would keep WOW alive

Several members of Springfield's business community say it's a sure-shot deal, but bondholders have until Feb. 6 to notify their brokers of their decision; the offer expires Feb. 9.

Though securities law prohibits museum officials from commenting on the offer, museum interim director Max Peterson said the buy-out would not change the museum's ownership.

Funds for the buyout, donated by Bass Pro Shops owner Johnny Morris and others, do not give the donors any ownership rights in the museum.

"Those are purely donations. No strings attached," Peterson said. "No way does it represent ownership or future control."

Former WOW board member Paul Potthoff is reflecting on what went wrong with the wildlife museum. Though Potthoff's term expired last April, he stayed on through September and still feels strongly connected.

"I think this community wants to rely on the fact that Johnny Morris will be the one who stands behind it. It's one thing when it's a couple hundred thousand dollars; it's another when it's $3 million a year," Potthoff said of the museum's debt service, which cannot be met at current funding levels.

Potthoff, vice president of commercial lending at Great Southern Bank, said the Springfield community never embraced the idea of an educational facility, which put the museum behind the eight ball from the start. Attendance fell far short of the projected 900,000, with only 406,000 visitors in the museum's first full year, and to 252,000 last year.

By the end of 2003, employee morale was diminishing, said Elise Crain, who worked in museum and corporate sales at WOW for much of last year.

"Lots of people were concerned about the future of the facility and their jobs," said Crain, who left the museum Dec. 19 to take a project manager position at DeWitt & Associates.

Community support

From analyzing other successful aquariums and museums, Potthoff and the board learned that those facilities had "substantial fund-raising and community support," something WOW never had. That forced Springfield's museum to rely too heavily on attendance, Potthoff said.

WOW projections based about 85 percent of its revenues on cash flow from attendance, Potthoff said, while successful museums depend on attendance for 40 percent of revenues.

"Education is what I always thought it should be but the reality is to get people in there you've got to have some flash and boom," Potthoff said. "It's a great asset to the community and a great asset to the nation for people who come to Bass Pro to have an opportunity to find out about conservation."

Perhaps Bass Pro Shops Outdoor World, what company officials call "the Mecca" of Bass Pro stores, is not the draw it once was. Company officials say they do not track attendance, but claim 4 million visitors annually, which is at best an estimate from three years ago, according to Bass Pro spokesperson Larry Whiteley.

Sales tax revenues from within the museum district, which comprises the museum, Bass Pro Outdoor World LP and tenants Payless Shoes, McDonald's, Triple Play Sports, LoJo Merchandising and K. Gregory Enterprises, have declined annually since 2000, the first full year the museum district collected revenues. District sales tax collections were $525,448 in 2000; $506,273 in 2001; $494,424 in 2002; and $476,809 in 2003, according to the information memorandum for the tender offer and WOW's CFO Peggy Smith.

That means retail sales within the museum district shrank from approximately $70 million in 2000 to approximately $63.6 million in 2003, a decrease of 9 percent. Certain purchases were exempt from the three-quarter-cent district tax, including boats, trailers, motors and vehicles

At the same time the district sales tax collections were shrinking, WOW projected they would be rising. For example, the projected sales tax revenue for 2003 was $611,716, but actual tax collected, at $476,809, was $134,907 short.

That's minor in the grand scheme of things, but fewer visitors to the taxing district, as well as to the museum itself, would have an impact.

'Gutsy' offer

SRC Holdings Corp. President and CEO Jack Stack knows about investing; he led an employee purchase of Springfield Remanufacturing Corp. in 1983. Today, SRC is a multimillion-dollar holding corporation owned by its 900 employees.

But he never considered buying the museum's revenue bonds when issued in 1999.

"I just didn't see the numbers. I didn't know what the hook was," Stack said. "I didn't know what people saw in stuffed animals, I guess."

Considering how badly the revenue and attendance lines were missed, Stack said the offer on the table is a great one. His advice to bondholders: "Take the money and run."

The market value of the bonds in recent months has been as low as 28 cents on the dollar, according to the bondholder letter.

Should the larger 95 percent of the bonds be tendered, bondholders will recoup 99 cents on the dollar over the investment period, because investors have received tax-exempt interest payments equaling at least 26 cents per dollar, the letter said.

Stack gives Johnny Morris and his companies credit for stepping forward with the rescue attempt.

"You've got to admire the guys that are stepping up and covering it," he said. "This thing may not end. If they don't crack the attendance code, the guys that are responsible for flipping it are looking at additional losses going forward. They are taking the losses off the back of the bondholders and they are taking the risk on themselves. That's gutsy."