Anachronism for Sale: Newport’s ‘Fun Zone’

Bob Speth is rolling up the tarpaulin around the merry-go-round. Joe Tunstall unlocks a door and considers the bumper cars, which must get their twice-monthly oiling today. A soft breeze off the harbor ruffles the canvas tarpaulin, and the water sparkles in the sunshine.

As he works, Tunstall reflects on how owning this amusement park looked like so much fun when he was a child, and how much work it is now.

“The Fun Zone’s no fun anymore,” said Tunstall, 51.

So Tunstall and Speth want to sell the bumper cars and the merry-go-round, the small Ferris wheel, the fun house and other amusement park equipment. If they do, another milestone will have been reached in the 53-year history of the Fun Zone: The new operator is likely to be a big corporation, possibly one of the giant Southern California amusement parks.

The milestones have been coming faster lately. Last year the Japanese, after spending $43 billion on U.S. office buildings, hotels and shopping centers in the last few years, finally discovered the Fun Zone. A restaurateur from Osaka bought the land and building that house the amusement park for $10 million.

Three years earlier, a former owner razed the original Fun Zone, which included among its collection of shopworn structures some of the buildings from the boatyard that occupied the site in the 1920s.

In its place is a 1 1/2-story building of drab yellow wood that takes up a hundred yards or so of prime waterfront real estate on the Balboa Peninsula, which shelters Newport Harbor from the open sea.

The little Newport Beach amusement park became an anachronism a decade ago, outliving two larger competitors to become the last seaside amusement park in the Los Angeles area. The Fun Zone has remained an Orange County landmark, even if it seems Lilliputian alongside Disneyland and Knott’s Berry Farm.

It wasn’t long after the park opened in 1936 that the Fun Zone and the Rendezvous Ballroom, a few blocks away, were attracting enough people to cause traffic jams on Pacific Coast Highway, which had only two lanes then. Motorists would park on the beach right up to the surf--there were few parking lots then--and when big bands like Tommy Dorsey’s finished playing in the ballroom, the audience would help push the cars back onto the road.

Rendezvous Ballroom Burns

The Rendezvous, however, burned down in 1966, the day after a rock group called the Cindermen played there. It was replaced by condominiums.

The Fun Zone almost ended up as condos, too. The original owner, a man named Al Anderson, filed for bankruptcy in 1957 after a teen-ager was injured diving off Anderson’s dock and sued. In 1961 Anderson sold the Fun Zone for $305,000.

In the 1970s, as waterfront real estate appreciated, the owners of Southern California’s bigger seaside amusement parks realized that they could make a lot more money using the land for something else. Pacific Ocean Park in Santa Monica was razed in 1975 and the Pike Amusement Park in Long Beach bit the dust three years later.

Developers also began to covet the Fun Zone’s more modest three-quarters of an acre, which overlooks the thickets of sailboat masts in Newport Harbor and affluent Balboa Island--like a moated castle--just a few hundred yards across the water.

In 1972, a developer bought the park and persuaded the city of Newport Beach to let him tear it down and build 47 expensive condominiums.

State Rescues Fun Zone

Only state intervention saved the amusement park from extinction. In 1974, the newly formed California Coastal Commission said condos would conflict with the commercial character of the neighborhood.

The Fun Zone property changed hands a few more times. By 1981, it was sold for $3.75 million, but it drifted along with the rest of the neighborhood, getting older and shabbier.

In 1985, Los Angeles lawyer Jordan M. Wank tore down the old Fun Zone buildings. The new Zone--a spiffier, cleaned-up version of the old honky-tonk Fun Zone, with 30 yacht slips instead of an open beach--opened in 1986. Then last year Wank sold it to Haruo Nakahara, who is said to own more than a dozen restaurants around Osaka through a private company called Shintoyo Ltd. He also bought a small office building in Los Angeles in 1987, his first U.S. purchase.

Nakahara is part of a second wave of Japanese real estate investment in the United States. The giant life insurance companies and real estate concerns got here first and have already lumbered over the landscape, picking off the big buildings that were for sale.

Smaller Investors Mop Up

Now the smaller investors are mopping up, buying properties too small for the big guys to bother with.

Like Japanese buyers are sometimes said to do, Nakahara may have overpaid, according to some local real estate experts.

Here’s why: A couple of the small shops in the Fun Zone building are empty, like missing teeth. The merchants sometimes fold shortly after moving in. A photo shop, for instance, lasted only two days.

“Stores go in and out of there like yo-yos,” said one local real estate agent.

At one point, the shops in the new Fun Zone building had an 80% turnover rate, said the building’s former manager. Business booms in the summer--30,000 people got on the Ferris wheel last August, for instance--and dwindles in the doldrums of winter, when the Ferris wheel has only about 4,500 riders a month and business tails off for the Fun Zone’s bikini shops and fast-food stores.

“This neighborhood lives and dies with the sun,” said Mel Fuchs, a local real estate broker with an office around the corner.

Traffic Strangles Peninsula

Then there’s the traffic: Two-thirds of the Balboa Peninsula often strangles on traffic on Friday and Saturday nights, most of the cars filled with young cruisers.

When you finally get to the Fun Zone, there’s often no place to park. The narrow, sandy peninsula is no more than 500 yards across at its widest point and the houses squat cheek by jowl on both the ocean and bay sides. There are few places left on which to squeeze a parking lot.

“The parking problem may well be insoluble,” said Bret B. Bernard, an associate city planner assigned to study the neighborhood. Many homeowners on the peninsula oppose more parking, he said, believing it will only draw more tourists and more traffic to the already crowded peninsula.

And then there’s the neighborhood’s acute case of retailing schizophrenia: You can often find expensive restaurants next door to the typical tourist shops found at many California beaches.

Residents, who get more affluent toward the end of the peninsula, “feel the area needs more neighborhood services, like dry cleaners,” said Bernard.

T-Shirt and Bikini Business

But that’s not likely. “It’s at a point where it can get more schlocky or less schlocky. But more and more, it’s becoming a T-shirt and bikini business down there,” he said.

Nakahara was aware of these problems when he bought the Fun Zone property, said Yoji Nobunaga, his U.S. investment adviser.

“We knew a little bit of the history of the Fun Zone, but we also knew it was a good location,” said Nobunaga. “Nakahara’s typical of the middle-market investor from Japan. They’re very careful, and they’re very shrewd business people. He won’t buy just anything.”

The Fun Zone appealed to the Japanese restaurateur because he could buy the building and the land outright. Most commercial buildings in that part of Newport Beach, says Nobunaga, are built on leased land. The Japanese tend to hold real estate for a long time, and the Fun Zone’s three-quarters of an acre on the dense peninsula can only increase in value.

Looking for Buyers

Meanwhile Tunstall has been looking for buyers for the amusement park equipment for several months. Dressed in denim jacket and jeans, he strolls the waterfront on his way to get coffee--anything to delay the oiling of the bumper cars.

Tunstall and Speth started working at the old Fun Zone as eighth-graders in the 1940s. Their dream was to own the place. Speth, now a Fountain Valley firefighter, bought the Ferris wheel right out of high school and ran it for years.

Tunstall opened a bicycle dealership in Fountain Valley, which grew large enough to allow him to retire at 39 and indulge his passion for carnival rides. A small train runs around the barn at his farm and an old tilt-a-whirl swirls nearby, all bought from vanished amusement parks.

Three years ago Speth and Tunstall came back to run the new Fun Zone’s rides. It wasn’t quite the same. The old Ferris wheel, a 1918 portable model made by Eli Bridge Co., was gone. (The company was so named because its investors thought the Ferris wheel business might be a bust, and the company would have to switch to bridge building.) The old Ferris wheel was too aged to have lasted much longer, but Tunstall still speaks wistfully of finding parts of the old Ferris wheel a few years ago in the debris from the construction of the new Fun Zone.

Ferris Wheel Profitable

The two men bought a new Ferris wheel for about $60,000. It generates one of the biggest pieces of a yearly profit of about $370,000 before taxes, according to Speth and Tunstall. (The arcade games are the most profitable attraction, followed by the bumper cars, they say.) That profit is on sales of about $1 million a year, the two men said, an enviable profit margin.

“We don’t have any product costs,” said Tunstall, sipping his coffee at a table overlooking the harbor. “We’re not giving people something like a hamburger for their money.”

They’re selling, they say, because they don’t want to spend all their time running an amusement park. Among those interested in buying are several big Southern California amusement parks, Tunstall said. Nakahara, too, has made an offer, said Tunstall, although it was below the $2.5 million he wants.

“If the Japanese bought the rides, they’d definitely have the cash flow to make this project work,” said Tunstall. “But they have to make a serious offer.”

Whoever buys, it seems likely the little amusement park will be around well into the next century. With the bumper cars, the Ferris wheel and the rest comes a 13-year lease with a 10-year option. Altogether, there are 22 more years to go on the lease.

Zoning Restrictions

The zoning and code restrictions on the lot are also tight enough to make building something else there difficult. The city of Newport Beach allows construction only to a maximum of three stories. And offices--which one owner once proposed for the site--aren’t allowed by the zoning. So it appears Nakahara is going to be in the amusement park business for some time. And that’s OK with him, said Nobunaga, his investment adviser.

“Of course, we have quite a few things to do to make it more attractive,” Nobunaga said.

“But the Fun Zone will stay the Fun Zone.”