Profit Must Come Before Restoration, Ship Operator Says : Queen Mary: Rough financial waters still lie ahead as city and preservationists look back over the year since decision was made to keep the landmark.

Preservationist Diane Rush cringes when she looks at the gift and souvenir shops that were recently installed on the historic deck of the Queen Mary, altering the ship’s original design.

Then she turns her attention to what has not been restored, such as the areas where crew members worked and lived, and the dining area where economy-class passengers ate.

The ship’s operator “is not putting anything into historic preservation,” Rush said last week. “He keeps trying to market the ship as a shopping mall or as a nightclub.” Rush is president of the Queen Mary Foundation, a nonprofit preservationist organization that has more than 200 members.

But as far as ship operator Joseph F. Prevratil is concerned, the shops and other tourist-oriented additions are a lifeline, the ship’s best chance to stay in Long Beach waters.

It has been a year since the City Council made the controversial, potentially costly decision to refuse a $20-million purchase offer in favor of keeping the landmark in town. As expected, Prevratil is scrambling to keep the ship afloat in rough financial waters.

“Diane Rush would like to see everything in historic preservation if it makes money or not,” said Prevratil, who provides free office space on the Queen Mary for Rush’s organization. “It’s been a difficult year. Everybody’s had a difficult year” because of the recession.

Prevratil insists that historical preservation is still on his agenda, but says the ship must first show a profit before he can spend money on restoration. The ship will probably finish the year about $4 million in the red, but Prevratil said he expects an operating profit next year.

Significant restoration is still about a year away, Prevratil said, and it could be longer if his plan to reverse the ship’s financial fortunes hits a snag.

The last operator of the city-owned ship, the Walt Disney Co., reported it lost millions of dollars annually before closing the ship at the end of last December.

The City Council awarded an operating lease to Prevratil’s nonprofit RMS Foundation Inc., which received a $2-million donation from local philanthropist Robert Gumbiner. Prevratil reopened the Queen Mary last February.

The new operator pinned his plan on one key change. He eliminated the admission fee, as high as $17.95 under Disney, in an effort to bring more people onto the ship. Once aboard, visitors were expected to spend money at the Queen Mary’s restaurants, shops and newly installed children’s rides.

But the plan did not work. Waves of people washed over the decks but many kept their wallets in their pockets.

Faced with anemic revenues, Prevratil decided last August to begin charging $5 admission for adults and $3 for children. Visitors were given “Queen Mary dollars” of equal value to spend aboard the ship.

Then Prevratil eliminated the Queen Mary dollars, signaling rougher financial waters. He also closed a dockside complex of shops and restaurants for the winter months, and moved some of the merchants aboard the Queen Mary.

Attendance has met projections and is expected to top 1 million this year, Prevratil said. He attributes the losses to start-up costs and to lost revenue from the free admission policy.

Some merchants on the ship are having a tough time as well. “I think because of the recession, it’s probably slower,” said Mary Martin, who owns the Greensleeves Boutique aboard the Queen Mary.

Nevertheless, Prevratil said he is optimistic the ship can survive.

Gumbiner’s $2-million donation has been spent, but Prevratil said he expects to secure a $2-million to $3-million loan this week to keep the ship running until the busier summer season. The operator said he is planning new attractions, but declined to release details.

As for historic preservation, Prevratil said he plans to start a nationwide fund-raising campaign next year and seek grants to restore portions of the ship.

Prevratil estimates that his organization will end the year having spent $4 million to $5 million on maintenance, such as refinishing the ship’s wood railings.

But the first major preservation project is still a dream. Prevratil would like to restore the ship’s elegant first-class swimming pool, which could cost hundreds of thousands of dollars.

Rush, the preservationist, considers the pool project a top priority. But she also wants to see quick restoration of numerous rooms, including the ship’s wood-paneled dining room for third-class passengers. It now serves as storage for chairs and tables.

Vintage furniture also is unceremoniously stacked in areas that once were used for crew sleeping quarters. “It’s sad to see them just piled on top,” Rush said during a tour of the ship. “Lots of the arms and legs of those chairs have been broken.”

The ship was built in Scotland and launched by Cunard Steamship Co. Ltd. in 1934. It was converted to a troop transport during World War II, and moved 800,000 Allied soldiers. The ship resumed its life as an ocean liner after the war.

Long Beach purchased the Queen Mary for $3.45 million in 1967, and then spent $66 million over the next four years to refurbish it. In addition to restaurants and shops, the ship includes a hotel, banquet center and historical exhibits.

Rush said she began to question Prevratil’s commitment to historic preservation in late September, during the weeklong celebration of the 59th anniversary of the ship’s launching. Dignitaries on hand for the celebration, including the ship’s architect and an original shipwright, came across work crews installing the new shops on the ship’s deck, Rush said.

“Our guests from Great Britain were still here and I was very embarrassed,” she said.

Rush said she plans to talk to City Council members to seek their help in making sure the ship is well-maintained and restored.

But she is not likely to find support for more historic preservation until the ship runs in the black. The council decided to keep the ship in town for five years to see if it could survive financially.

“The economic viability has got to be top priority,” said Councilman Warren Harwood, one of the ship’s strongest boosters. “Heritage and everything, that has to be secondary to the economic viability. Without economic viability, the ship will be gone.”