ENTERTAINMENT: Trouble in Freedomland

Freedomland opened in New York’s Bronx three months ago with a blare of publicity billing it as the world’s largest outdoor entertainment center. But it has been no fun for its promoters. Last week they were scratching to round up fresh capital to pay the park’s bills and keep it operating.

The woes of Freedomland began even before the first spade of earth for the 205-acre playground was turned. A plan to sell stock to finance the venture flopped; William Zeckendorfs Webb & Knapp, which owned the land and leased it to Freedomland’s promoter, the International Recreation Corp., had to buy 40% of the stock for $7,000,000. This financing proved too little—partly because builders overshot the estimated $17.5 million construction cost by $4,500,000.

Too Many Customers. On opening day last June, 60,000 people, more than twice the number anticipated, came to Freedomland. This might have been good, but it was bad: the crowd struggled to walk through the semicompleted park, raised a storm of complaints and bad feeling. This was only the beginning of the trouble. A few days later, a stagecoach overturned, injuring ten people. Then three hoodlums robbed Freedomland’s cash-control office of $28,836, and escaped. They were nabbed last week with only $14,563 left.

Great crowds stayed away from Freedomland. Enthusiastic officials had originally estimated that the 1960 attendance would reach 4,800,000 before the park closed in October, and that the average day’s crowd would run to 37,000. Attendance fell off to 20,000 a day, forcing revision of the seasonal estimate to 1,700,000 people. Barricades to hold back crowds at the Chicago fire exhibit were often hardly needed. Business on weekends, the most crowded time at other New York entertainment parks, dropped 20% below the weekday rate. The park lost money on all but the biggest days. To protect its investment, Zeckendorf and Webb & Knapp, which had stayed out of International Recreation’s management, stepped in and took charge.

Too Little Cash. Webb & Knapp fired or demoted Freedomland’s managers, cut operating costs from $40,000 to $25,000 a day, jumped adult admission charges from $1 to $1.50. In August, says the new management, the park made an average operating profit of $20,000 a day. But W. & K. is still stuck with 40% of the stock and $4,000,000 in unpaid construction bills—and the stock, issued at $17.50, has plummeted to a low of $6.25. To meet these bills, Bill Zeckendorf is preparing a plan for new financing, to save both Freedomland and Webb & Knapp’s Freedomland Inn, a $6,000,000 motel which is being built on the property adjoining the park and which would be relatively worthless if the entertainment center folded.

In a characteristically complicated financing plan, Webb & Knapp will buy $11.5 million in convertible debentures from International Recreation, which will use $3,000,000 of this sum to pay off its construction bills, use the remaining $8,500,000 to buy the leases of Webb & Knapp’s Astor, Manhattan, and Commodore Hotels, thus returning the cash to Webb & Knapp. With the purchase of the debentures, Webb & Knapp will have further control over Freedomland and an $18.5 million stake in it. The park will be run by officials appointed by the real estate firm. By taking over the midtown Manhattan hotels, Freedomland will have a year-round income, hopes to be able to offset hotel profits with playground losses.

Bill Zeckendorf was scratching for ready cash in several other quarters last week as he continued the retrenchment program started to pay off his expensive short-term debt and complete his major projects under way. For more than $5,000,000, he sold his 200-year lease (with options) on Manhattan’s posh St. Regis Hotel to Mexico’s Cesar Balsa, 37, a onetime bellhop whose nine-hotel chain in Mexico City and Acapulco is the largest in Central America. The sale completed the financial legerdemain begun last February when Webb & Knapp bought the St. Regis for $14 million. Two months later it sold the hotel to Manhattan’s Kratter Corp. for $11 million, kept operating control. Webb & Knapp’s estimated profit on the St. Regis deals: $2,000,000.

In another, similarly complicated move, Zeckendorf sold his 99-year lease on the 70-story office building at 40 Wall Street, the world’s fourth-tallest office building, to London’s City & Central Investments, Ltd. for $15 million. Last year Webb & Knapp bought 40 Wall and the land beneath it for $32 million, sold the land and the building to Metropolitan Life Insurance Co. for $20 million, retaining the lease. With the sale of the lease last week, Webb & Knapp’s profit on the 40 Wall transactions is estimated at $3,000,000.