Financial Data Casts Doubt on Yosemite Plans

Yosemite National Park’s next concessionaire may be hard-pressed to pay off debts and still generate enough money to finance a park improvement plan and make a profit, according to concession financial documents never before made public.

“At best, this is going to be exceedingly tight,” said Los Angeles banker Jack H. Walston, a longtime park contributor who has examined the records.

The documents, which include five years of financial reports filed with the National Park Service by the current concessionaire, indicate that the Park Service may have unrealistic expectations about what it can accomplish at Yosemite in the next 15 years.

The current contract with the Yosemite Park and Curry Co. will expire in September and a new 15-year agreement will be issued to a new concessionaire to operate the park’s accommodations and food and recreational services. The Park Service operates the campgrounds.

Last year, Interior Secretary Manuel Lujan engineered the sale of the Curry Co. to keep the park concession out of Japanese hands. He made the move after MCA Inc., the Curry Co.’s parent corporation, was purchased by Matsushita Electric Industrial Co.

Lujan pledged the sale would result in more revenues for park improvements and allow the Park Service to assume ownership of all the Curry Co. buildings.

Park officials have said they expect to charge the new concessionaire $75 million in 1990 dollars over the life of the contract to pay for removal of some rustic accommodations, the construction of new motel-style lodging and the relocation of housing and offices outside scenic Yosemite Valley.

In addition, the new concessionaire would pay the $49.5-million price of purchasing the Curry Co. and then turn over the buildings to the Park Service. By acquiring the buildings, the Park Service hoped to gain a better bargaining position with future concessionaires.

“The secretary of Interior has painted himself into a corner,” said Walston, a member of the board of the Yosemite Fund, a nonprofit group that raises money for the park. “He has come up with a political solution that has no relevance to an economic solution.”

Daniel Jensen, executive vice president of the Curry Co., said the next concessionaire should be able to pay off the debt although the first few years would be lean. At issue is whether there will be money left for park projects.

“The Park Service is going to have to adjust expectations if they expect to get a good operator in there,” Jensen said.

Officials of the Interior Department and the National Park Service acknowledged that the next concessionaire may not be able to generate enough revenue to pay for all the planned improvements in the park in the next 15 years.

However, the officials said they do not expect the financial records will deter potential bidders for the park concession contract.

“To get the Yosemite contract is a feather in the corporate cap,” Interior Department spokesman Steven Goldstein said. “There is a great deal of status and good will that comes with that, and I think corporations have an interest beyond how much profit they can make.”

In the past, the Curry Co. has owned the buildings and paid less than 1% of its gross receipts to the Park Service.

But under the next contract, Park Service officials had hoped to charge the concessionaire enough to help finance the removal of 13% of the accommodations in the park, primarily from the valley, as well as to build motels and relocate concession offices and housing.

Although it is impossible to project the next concessionaire’s revenues and expenses without a detailed financial analysis, the Curry Co. documents indicate that the debt requirements alone could force the concession to operate at a loss in the early years.

The reports show that the Curry Co.’s annual pre-tax profits ranged from $8.6 million in 1991 to $14.1 million in 1989. The company’s net cash flow--the amount of money it has to spend each year--hovered at about $6 to $7 million annually.

Under the terms negotiated by Lujan, the next concession’s first payment to finance its debt would be $9 million.

If revenues and expenses remained at 1991 levels, the new company would be about $2 million short the first year, according to the Curry Co.’s Jensen.

If future net income remains at current levels, the concessionaire would have a net cash flow of about $90 million over the life of the contract while paying $102 million in principle and interest to acquire the company.

It is unlikely, however, that revenues would remain constant. Curry Co. records show that net income rose over the past 18 years, and it is reasonable to assume that the trend will continue.

The next concessionaire also could attempt to reduce its annual interest payments by entering into a financial arrangement with a third party.

Donald Green, executive director of Yosemite Restoration Trust, a nonprofit group that wants to run the concession and return its profits to the park, said he was not surprised that money would be so tight.

But he cautioned that the audited financial records submitted by the Curry Co. may not reflect the full profit potential of the company. Until its parent firm was purchased by the Japanese, the company had intended to again bid for the contract.

“If what you are trying to show is you can’t make any money in the park, then you would want to show low profits to discourage people from bidding and reduce the amount of money that might be paid in fees . . . “ Green said. “So there may be some interest to show lower profits in these years that are being examined carefully.”

The Curry Co.’s Jensen, however, called Green’s suggestion “outlandish.” He said the records fairly reflected the company’s operations.

Walston, who also is a member of the Yosemite National Institutes, an environmental educational group, and a former member of an advisory panel to the National Park Service, said the financial reports could be “subject to interpretation.”

But he said he fears the next concessionaire might be so strapped that maintenance would suffer. Because many of the park’s buildings are old, future upkeep costs could be substantial, he added.

Yosemite Supt. Michael Finley said the Park Service will require that the next concessionaire maintain the buildings. If the new company does well, it will be given preference when the contract comes up for renewal, he added.

In addition to the Yosemite Restoration Trust, other companies said to be interested in the contract are TW Services and The Fred Harvey Co., which operate other national park concessions, and Marriott Corp., which has concessions in state parks and airports.

“We will go out with a bid, and we will see which corporations come forward,” said the Interior Department’s Goldstein. “If no one chooses to bid, then obviously we would have to reassess, but we don’t believe that will be the case . . . Money isn’t the only reason (interested bidders) are calling.”