Griffith Park Facility Losing $100,000 a Month : Panel Saddled With 2 Views on Horse Center’s Fate

A city commission today is expected to grapple with two conflicting studies of whether the debt-ridden Los Angeles Equestrian Center in Griffith Park can become successful.

One study, by a consultant hired by the city, concluded that the facility will continue to lose money, even after the completion next year of a restaurant, retail stores and 300 polo stalls that are expected to bring in added revenue.

Another, done by a consultant to one of the center’s creditors, said revenue from the improvements could make the center profitable by the end of 1987.

The Los Angeles Recreation and Park Commission today will hear a proposal by center officials to build a 300-room lodge and a health club on the grounds of the center, which sits on city-owned property. J. Albert Garcia, president of the equestrian center, plans to present the proposal to the commission at a public hearing.

The city-commissioned study, released Nov. 15, recommended that the city not approve the proposed lodge and health center, which could cost $20 million to $40 million, until the 4-year-old facility proves itself.

$14 Million in Debt

The study by the Los Angeles-based consulting firm of Laventhol & Horwath was skeptical of whether the center can ever make money. It is $14 million in debt and has been losing $100,000 a month.

The success of the center depends upon a “perceived market demand for equestrian center activities which . . . has never been identified or validated in detail by an independent expert,” the study said. It concluded that the center’s financial viability “should be clearly demonstrated before additional facilities, particularly a hotel and/or health club, are permitted on the site.”

Expenses for the center will reach $4.9 million this year, with only $3.4 million in revenue, according to estimates by Laventhol & Horwath. Even with revenue from the restaurant and stores, the facility could lose $1 million in 1986 and $923,387 in 1987, not counting amortizing, depreciation and bankruptcy-debt payments, the study said.

A report released this week by Pannell Kerr & Forster, which was commissioned by one of the center’s creditors, indicated that the center had not been managed properly, adding that management had been “burdened with developing management expertise while simultaneously developing a benchmark equestrian facility.”

The firm, however, was more optimistic about the center’s potential. It estimated that, with a reorganization of the management and financial structure of the center, it will start to break even by the end of 1986.

Shirley Darwick, an analyst with the parks department, said the two conflicting reports may not have much bearing on the commission’s decision on the hotel.

Revenue ‘Not a Major Factor’

“I think that decision will be based more on public input, environmental impact reports,” she said. “Revenue is a factor, but it’s not a major factor. And both of these opinions are based on projections and estimates, so we just have to see what really happens.”

Garcia, the center president, wants to build the three-story convention lodge for visiting equestrians and their families. It would include a health and fitness center, swimming pool and tennis courts.

The complex would probably be built by private developers. Garcia said his investors are prepared to put up the money for an extension of Forest Lawn Drive, which would make the center more accessible from the Ventura Freeway. That would put the entrance under the jurisdiction of Los Angeles.

Garcia said Burbank residents and city officials have harassed him because of traffic and activities at the center. Moving the entrance would eliminate traffic, which now has to pass through Burbank to reach the center, on the Burbank-Los Angeles border.

Garcia said he also has a commitment from the city for financing of an equestrian bridge from the extension of Forest Lawn Drive to the equestrian center.

Part of the center’s rent over several years could pay for both road improvements, Garcia said. “We don’t want the city to put one penny into this,” he said.

The major expansion plan would have to be approved by the commission and the City Council. No costs have been estimated for the Forest Lawn Drive extension or the bridge.

The restaurant, tack shop, retail stores and banquet rooms--although approved in concept by the city--were never completed because the center, in 1984, became engaged in a legal battle with its chief lender, Gibraltar Savings of Beverly Hills. The center later filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code.

Both sides have worked out an agreement for the completion of the center.

Although the Laventhol & Horwath report said that the financial difficulties stemming from the absence of the restaurant and retail facilities could be lessened by the agreement between Gibraltar and the center, “It cannot reasonably be expected that the Los Angeles Equestrian Center will generate sufficient revenue . . . to cover operating expenses and the schedule of debt service payments” in the agreement, it said.

Garcia claimed that the hotel and health center are essential for the center to become viable.

“The only way we can make this place work is to do it right,” Garcia said in an interview last week. “We’ve got to get the finest center we possibly can for this place to work.”

The proposed hotel and health center could bring in $1 million to $1.25 million more in revenue each year, said Bruce Baltin, a partner with Pannell Kerr & Forster.

“The center can be viable without a lodge and health center,” Baltin said, “But there is not a whole lot of safety factor for its success. With the lodge and health club, it would make it a much stronger, more viable operation.”

In recognition of the center’s financial problems, the Recreation and Parks Commission last month agreed to temporarily restructure the center’s rent. The center was to have paid the city $2,500 a month, or 5% of the gross receipts, whichever was greater. But it is $76,000 behind in its rent, according to the city.

The commission said it would agree to lower the percentage the city is owed to 3.5% of equestrian revenue, 2.5% of retail revenue, 2% of food revenue, 4% of other revenue and 5% of beverage revenue.

The restructuring is expected to be approved by the City Council.

The current operating deficit is being absorbed by the shareholders of Equestrian Centers of America, the privately held corporation of which Garcia is president.

“We want to do whatever it takes to make it successful,” said Sheldon Jensen, assistant general manager of the city’s parks department. “We’ve been trying to make something of that area for the past 40 years.”