On Shaky Ground

The financial condition of the Fair was a matter of intense media debate. The promises of 70 million in attendance proved to be vastly overestimated. The World's Fair Corporation, prior to the 1965 season, operated lavishly and without heed to the consequences of a much reduced gate figure and without proper accounting controls and oversight in place. The result was that the Fair was nearly bankrupt as it entered its final season. Only a combination of reduced spending, higher admission prices and a huge influx of visitors in the waning days of the Fair reduced the loss for the 1965 season and, in turn, for the entire run of the Fair.

As the Fair went into the 1965 season, it was beset with tenants who could not operate their exhibits because they were insolvent. The Fair, nearly bankrupt on its own, was forced to bankroll major exhibits at the Fair or face the prospect of substantial numbers of padlocked and shuttered pavilions. And at the close of the Fair it faced huge write-offs in uncollectable receivables from exhibitors. This financial drain also took its toll on the Fair.

On October 26, 1967, The Office of the Comptroller of the City of New York (Mario A. Procaccino, Comptroller) issued the Third Supplemental Report on New York World's Fair 1964 -1965 Corporation Covering Operations from Inception to December 31, 1966. In excerpts from this report, a true picture of the Fair's financial difficulties at its close (and through the demolition period) can be seen:

The following is presented as a summary of the results of our examinations from inception to December 31, 1966:

1. The financial condition of the New York World's Fair 1964-1965 Corporation, as at December 31, 1966, barring any unfavorable court decision on the numerous legal actions against it, discloses that there will be barely sufficient funds available to meet its outstanding obligations.

2. The net loss resulting from the operation of the Fair amounted to $21.1 million. This is in sharp contrast with the projections released by management during the early stages when it was freely predicted that the exhibition would wind up with a surplus of over $50 million.

3. The extent to which the Fair's various service contractors were permitted by management to control the spending of funds, particularly with respect to procurement matters during the pre-opening period and the 1964 season, has been commented on before in our prior reports. It was this policy that contributed to a large degree to the loss of over $20 million during the first year of operation. That this error was not repeated in the 1965 season is indicated by the fact that the loss during this period was held down to approximately $1 million. Whereas revenues for the two years were almost the same, expenses were cut back sharply in the second year, especially in the areas of contract services by Allied Maintenance and Pinkerton's, with the result that 1965 showed a vastly improved picture. It is now clear that if some of these economies had been instituted earlier by management that the losses sustained by the Fair would have been considerably less. Expenses should have been kept more in line with revenues for it was obvious almost from the beginning that the Fair Corporation would never realize the profits indicated in its early projections.

4. The Fair was faced with the dilemma of either evicting delinquent tenants with the consequent denuding of large portions of the exhibition area, or to continue to subsidize concessionaires so as to give the appearance of full occupancy. Management chose the latter course and in a few instances the Fair chose to advance monies to insolvent firms for the same reasons. In so doing, it had to charge off as bad debts more than $6 million of accounts and loans receivable.

5. The failure of the Fair Corporation to enforce the requirements in its agreements with exhibitors and concessionaires for the posting of a bond or other security to guarantee the cost of completion and post Fair demolition of their buildings and for the payment of rent resulted in considerable additional expense and loss of revenues to the Fair Corporation.

6. In order to carry out the terms of the lease with the City with respect to the requirement to restore the park area to the satisfaction of the Commissioner of Parks, and to conserve funds therefore, it was necessary for the Fair Corporation to reach an accord with the noteholders whose remaining claim was $22,421,750 at the end of 1965. After prolonged hearings, a court approved settlement was reached for the payment of $4 million. Adding this sum to the $47,457,250 previously paid on the notes, the Fair Corporation returned about 38.4 cents on each dollar it borrowed, not including interest paid to the end of October, 1965.

Following the settlement payment of the $4,000,000, plus accrued interest, the unpaid balance of $18,421,750 remaining in the Promissory Notes account was canceled on the books of the Fair Corporation.

To remain within the limits of its remaining assets the Fair petitioned the Board of Estimate for approval of a reduction in its earlier commitment to the city in connection with post Fair restoration and general and administrative expenses by $2,737,910 thereby eliminating the recorded deficit of $21,159,660 from the Fair Corporation. The estimated cost of post Fair operations was thereby reduced from the original $11,580,000 to $8,842,090. As of December 31, 1966 the Fair had expended of this amount a total of $6,193,647.24 leaving a balance of $2,648,442.76.

7. In spite of its experience in dealing with construction contractors, the Fair found itself obligated to post a bond to guarantee payment to two demolition contractors who had been awarded lucrative contracts during the pre-opening construction period. This action forced the Fair to incur additional expenses during the post-Fair period.

8. The original estimate of post closing general and administrative expenses amounted to approximately $1.4 million. However, when it became apparent that the Fair Corporation would be unable to complete its post-Fair demolition and restoration work within four months after closing the exhibition period on October 17, 1965, as required under the lease agreement, the extension of the post-Fair period to December 31, 1967 required an upward revision of post-Fair general and administrative expenses to $4.3 million, a three fold increase of the original estimate for this category of expense.

9. Since the Fair Corporation wound up its operations without sufficient funds to complete the park restoration program originally planned, the Triborough Bridge and Tunnel Authority appropriated over $6 million for additional park work including a zoo, ballfields, picnic areas and general landscaping in various areas of the restored park.

10. The New York City expenditures for facilities and improvements to be retained post-Fair were as follows:

1. Utilities, Paving, Landscaping

 $22,396,590.

2. Hall of Science

$05,905,353.

3. New York City Scale Model

$00,628,650.

4. Reconstruction, New York City Building

$02,334,964.

  Total Cost 

$31,265,557.

11. Estimated cost of Exhibitors Structures to remain post-Fair are as follows:

1. Unisphere

 $04,000,000.

2. Top of Fair (Heliport)

$07,000,000.

3. Marina

$05,800,000.

4. New York State Pavilion

$12,000,000.

5. Federal Building

 $12,000,000.

6. Space Park Exhibit

 $21,000,000.

  Total Estimated Cost 

$41,8000,000.

12. Although the Fair Corporation has been named as defendant in numerous legal actions involving approximately $14 million, it is management's and also the Fair's general counsel's opinion that the Corporation has valid legal and equitable defenses to these suits.

No provision appears to have been made in the post-Fair estimates of wind-up costs other than a sum of $367,000 identified as "Close out and Final Litigation."


Revenue

Revenue from all sources, for the entire period of the Fair, from inception on August 18, 1959 to the end of the exhibition period on October 17, 1965 amount to $128,671,034.97.

1964 Revenue

1. Admission Revenue - 1964 Season

Number

 Description

Amount

30,691,720

Advance sale tickets

$57,090,388.45

  Less: Discount

 18,021,802.80

 
  Proceeds - Advance Sale

 $39,068,585.65

 

 14,344,163

Less: Unredeemed Tickets

 18,279,192.75

 

 16,347,557

Advance Sales Redeemed

$20,789,392.90

 

9,794,225

Gate Ticket sales

17,270,647.49

816,252

School Group Sales

217,008.53

26,928,034

Total

$38,277,048.92

       
2. Other Operating Revenue - 1964 Season
  Parking

$03,212,017.69

 
  Ground Rentals

18,593,632.42

 
  Utilities

2,218,015.60

 
  License Fees

874,340.39

 
  Plan Fees 

172,972.03

 
  Identity Passes

100.250.00

 
  World's Fair Publications

8,073.05

 
  Special Events

136,338.09

 
  Miscellaneous

54,419.51

$025,369,958.78

       
3. Other Revenues - 1964 Season
  Income from Investments

$00,0558,937.87

 
  Interest on Notes and Loans

38,230.40

  Contributions

 90,100.00

 $00,687,268.29

     
  Total Revenue - 1964  

$064,334,275.97

1965 Revenue

1. Admission Revenue - 1965 Season

Number

 Description

Amount

16,879,599

Advance sale tickets applicable to 1965

$22,676,049.79

10,196,730

Gate ticket sales

20,284,210.86

598,033

School Groups

146,102.58

27,674,362

Total

$43,106,363.23

The Fair sold a total of 33,227,156 "Advance Sale" tickets as follows:
 Redeemed 1964

16,347,557

 
  1965

14,067,353

 
 

 Total

30,414,910

 
 Unredeemed at 10/17/65

2,812,246 

 
 Total "Advanced Sale" tickets sold

 33,227,156

 
       
2. Other Operating Revenue - 1965 Season
  Parking

$02,938,680.82

 
  Ground Rentals

15,175,949.59

 
  Utilities

2,393,410.81

 
  License Fees

534,423.05

 
  Identity Passes

48,748.04

 
  World's Fair Publications

315.70

 
  Special Events

7,147.68

 
  Miscellaneous

35,167.45

$021,133,843.14

       
3. Other Revenues - 1965 Season
  Income from Investments $00,087,825.56  
  Interest on Notes and Loans

8,727.07 

$00,096,552.63

     
  Total Revenue - 1965  

$064,336,759.00

  Total Revenue - 1964  

64,334,275.97

  Total Revenue from 8/18/59 to close of Fair at 10/17/65  

$128,671,034.97


Accounts Receivable

The open accounts receivable at December 31, 1965 totaled $5,162,012.19.

The balance in these accounts covered the amounts owed the Fair Corporation for ground and concession rents, as well as charges for water, electrical usage, service connection fees and various other services provided to exhibitors.

...it should be observed that fully eighty-four cents of every dollar outstanding was considered doubtful of collection at December 31, 1965. The year before the estimate had been only sixty-nine cents of each dollar remaining unpaid.

The main reason for this large loss on accounts receivable was that many concessionaires were permitted to continue operating even after the Fair Corporation knew that the tenants could not meet their obligations.

NEW YORK WORLD'S FAIR 1964-65 CORPORATION

LIST OF ACCOUNTS CONSIDERED WORTHLESS

AND WRITTEN OFF

Debtor

Amount Due

Balance Written Off As Worthless
Africa

$0,036,304.98

$0,028,178.09

British Lion Pub

5,113.89

5,113.89

Caribbean Pavilion

11,592.23

11,592.23

Exhibits De France

249,563.02

219,563.02

Greece Pavilion

17,436.12

16,267.95

Hellenic Exhibits, Ltd.

61,179.36

61.179.36

International City, Inc.

49,609.32

49,609.32

Morocco Pavilion

39,847.89

39,847.89

American Israel Pavilion

37,839.25

37,839.25

Pavilion of Paris

5,683.64

5,683.64

Polynesian Pavilion

51,414.54

51,250.00

Switzerland Pavilion

98,090.90

97,283.81

American Interiors

271,021.49

271,021.49

Hall of Education

330,870.80

330,845.80

House of Good Taste

331,255.74

331,255.74

State of Hawaii

56,744.45

53.534.36

State of Montana

19,301.72

16,591.12

State of New Mexico

10,690.87

5,690.87

Pavilion Property, Inc. (Bourbon Street)

295,780.94

255,681.23

Port of New York Authority

31,778.20

12,540.49

Transportation & Travel

538,414.07

538,414.07

American Cavalcade

27,646.89

27,646.89

Continental Circus

38,646.34

36,146.34

W.T. Development - Flume Ride

248,330.33

242,330.33

Wynne Century Showcase

145,607.78

145,607.78

Brass Rail Inc.

38,294.36

24,667.15

Marinas of the Future

11,529.33

4,529.33

Other Accounts Written Off

22,792.39

22,792.39

 
Total
$3,076,380.84 $2,942,703.83

Loans Receivable

At the close of 1965, the balance in this account was $3,001,273.95. This amount was owed to the Fair Corporation by several exhibitors who had been advanced varying sums when they ran into financial difficulties and had to be assisted either to complete their pavilions or to remain in business.

During 1965 some collections were made from the Belgian Village and Pavilion Property, Inc. which reduced somewhat their outstanding balances. As to Pavilion of American Interiors, its debt increased during 1965 by $50,000.00 when the Fair had to make payment, as guarantor, on a note executed by the exhibitor with the First National City Bank.

Although remaining loans receivable are considered totally worthless, the Fair's legal counsel stated that the accounts have been left on the books because of litigation involving these accounts and the Fair.

NEW YORK WORLD'S FAIR 1964-65 CORPORATION

LIST OF LOANS RECEIVABLE

AT THE END OF 1965 AND 1966

12/31/65

12/31/66
Belgian Village - Robert Straille

$0,812,617.29

$0,800,350.46

Texas Pavilion - Angus Wynne Jr.

1,348,275.77

1,348,275.77

Pavilion of American Interiors

 450,000.00

 450,000.00

Louisiana Fair - Pavilion Property

390,380.89

- -
 
Total

$3,001,273.95

$2,598,626.23


 

Exhibitor's Buildings Demolished at Fair's Expense

The Fair Corporation's failure to enforce the demolition security deposit requirements under the lease agreements with exhibitors resulted in additional expense for the Fair since many exhibitors defaulted on their obligation to demolish their pavilions. The cost of demolition, consequently had to be borne by the Fair without, in most cases, any chance for recovery of such a cost from the parties involved.

The full amount owed [to the Fair Corporation] by the Better Living Pavilion on December 31, 1965 was ... $516,299.33. Furthermore, it appeared ... that the group in control of the concession would also abandon its building and leave the demolition to the Fair Corporation. The early estimates were that this would necessitate an additional expenditure of $600,000.00 by the Fair for demolition. On January 14, 1966, however, the Fair Corporation concluded an agreement with Better Living Associates in which the latter agreed to demolish its own structure and, in addition, to pay the sum of $200,000.00 as settlement in full of its debt. The $200,000.00 was thus received by the Fair and the difference written off to the reserve for bad debts.

NEW YORK WORLD'S FAIR 1964-65 CORPORATION

SCHEDULE OF EXHIBITOR BUILDINGS DEMOLISHED AT

EXPENSE OF WORLD'S FAIR CORPORATION

DECEMBER 31, 1966

House of Good Taste $0,010,000.00
Texas Carnival 60,000.00
Belgian Village

90,000.00

Switzerland

10,000.00

Juli-Mar Farms

3,000.00

Continental Circus

5,500.00

Dancing Waters

2,480.00

Santa Maria

2,300.00

Bourbon Street

79,020.00

American Israel

3,500.00

Caribbean

8,200.00

All State Properties

1,900.00

British Lion Pub

2,800.00

Hall of Education

32,000.00

American Interiors

42,000.00

Russian Orthodox Church

1,000.00

Montana

6,500.00

Greece

12,000.00

International Plaza

13,349.00

Africa

9,349.00

Oklahoma

4,349.00

Oregon

6,349.00

New Mexico

7,349.00

Chunky Candy

1,349.00

West Berlin

2,349.00

Atomedic Hospital - Foundations

6,500.00

Mastro Pizza - Foundations

5,400.00

Travel and Transportation

63,000.00

Stroller Areas

8,900.00

Denmark

14,800.00

Minnesota

10,300.00

France

20,000.00

Philippines

7,500.00

Wisconsin

10,400.00

Total 

$0,565,643.00


Other Liabilities

The amount of $175,251.23 set up as a liability to Greyhound at the Fair represents one-half of the accounts receivable in the amount of $350,502.46 as rent due the Fair from the International Cable Ride Corp. (Swiss Sky Ride).

Greyhound at the Fair had obtained exclusive transportation and sightseeing rights under its agreement with the World's Fair Corporation to operate as the transportation and sightseeing concessionaire on the Fair grounds. Therefore in order to get the Swiss Sky ride and the Monorail Ride as concessions to operate on the Fair grounds, the Fair Corporation had to include the Greyhound Corp. as a participant to share in the rental income collected by the Fair from the two amusement rides. Under the terms of a subsidiary agreement between the Fair Corporation and Greyhound at the Fair Inc. the latter would receive 25% of the Fair's share of rental received from the Monorail ride and 50% of the rental received from the Swiss Sky Ride. However, the Swiss Sky Ride operators have refused to pay the Fair the amount of $350,502.46, claiming that the Fair Corporation had already received the maximum amount in rental called for by the rental agreement. The Swiss Sky Ride operators have placed the $350,502.46 in Escrow until settlement of its lawsuit against the Fair.


Flushing Meadow Park Restoration

The following is a summary of the restoration program undertaken by the Fair Corporation and the various major improvements that are being incorporated into the Flushing Meadow Park area:

NEW YORK WORLD'S FAIR 1964-65 CORPORATION

ANALYSIS OF POST FAIR DEMOLITION AND RESTORATION

EXPENSES, OCTOBER 18, 1965 TO DECEMBER 31, 1966

World's Fair Building Demolition   $0,130,017.45
General Demolition   $0,294,851.20
Exhibitor Buildings Demolition   $0,349,720.99
Temporary Fencing   $0,006,470.43
Snow Removal   $0,014,608.00

High Tension Electrical Conversion

Conversion of the electrical system to Park Department requirements.

  $0,214,261.43
Demolition and Conversion of Fountains   $0,178,183.57

Alterations to Permanent Park Pools

Installation of permanent lighting and water effects in decorative pools at Unisphere site. United States Steel Corporation contributed $100,000.00 toward the cost of the lighting and other work.

  $0,130,440.29

Reconditioning of Swimming Pool

Rehabilitation of the swimming pool for public use at the Amphitheater.

  $0,080,038.00

Reconditioning of Buildings

Reconditioning of the former Singer Bowl and other buildings for permanent park use.

  $0,045,049.78

Pitch-Putt Gold Course

Construction of an 18 hole pitch and putt golf course and starter house and equipment

  $0,250,966.83

Holly Planting and Landscaping

Mainly in Unisphere area and at Exedra at former Vatican Pavilion site.

  $0,026,277.65

Flushing Meadow Park Restoration

General repairs to pavement, lighting system and overall landscaping

  $1,777,885.40
Miscellaneous Credits:    
Sale of Street Lighting Equipment
$075,000.00
Cable Salvage
$232,571.67  
United States Steel Corp - Donation - Lighting at Unisphere Site
$100,000.00  
Other Credits - Net
$052,844.43 $0,460,416.10
 Engineering Design and Supervision   $0,274,326.95
     
Total    $3,312,681.87

More Content