Queen Mary’s Troubled Waters
Many years ago, the French novelist Georges Perec decided to write an entire book without using the letter “e.” Impressed by this feat, I resolved to write a column about the Queen Mary without using the term “white elephant” even once.
A fixture on the Long Beach waterfront for 38 years, the dignified old liner is currently at the hub of one of the more baroque bankruptcy cases to land in court in years. This one features an apparent falling-out among the partners holding the ship’s lease, the allegation by a shadowy Indonesian investor that they bilked him of $12 million, and, underlying all else, the riddle of why no one has managed to coax a profit from the ship since she got to Long Beach.
Let’s stipulate that there’s something about the Queen Mary that can’t be measured in dollars. I know from personal experience that her function rooms are unique and charming venues for a wedding, bar mitzvah, or high school formal. She has certainly been part of Long Beach for so long that it’s hard to imagine the city without her.
Yet the ship’s sorry history is hinted at by the frequency with which local boosters call her “iconic,” a word that is often synonymous with “overvalued.”
Flush with oil money, the city bought the vessel in 1967 for $3.45 million to exploit as a municipal symbol, without thinking much about what to do with her once she arrived. The purchase soon became a municipal comedy in the “seemed like a good idea at the time” genre. Within a few years the city had spent nearly $100 million renovating the rusting, er, icon, and was soon contemplating how much it might recover by converting her to scrap. (The answer: Not enough.)
One problem with the Queen Mary is her permanent berth, which is so far from the main waterfront that she doesn’t figure in the city’s tourism redevelopment project, which includes an aquarium and retail mall at the site of the old Pike amusement park, from which the Queen Mary is visible only in the distance. City planners once briefly considered relocating her to the tourist zone, only to conclude that her sheer bulk would obliterate the shoreline views they were hoping to showcase for tourists and hotel guests.
As a hotel and restaurant complex, the ship has had a choppy history. In 1988, when Walt Disney Co. acquired Wrather Corp., the hotel firm that then owned the lease, the ship’s future looked bright.
Disney spent more than $2 million sprucing up the ship and her 365 hotel rooms. But the company’s real agenda was to set up a competition between Long Beach and Anaheim to host its next big theme park. In 1991, Long Beach lost to Anaheim, where Disney erected its California Adventure. A year later, Disney revealed that it had lost as much as $10 million annually on the Queen Mary and, calling her “a less than viable investment,” lobbed the keys back to city hall.
Long Beach subsequently leased the ship to Joseph Prevratil, a former manager for Wrather. Prevratil announced plans to attract hordes of visitors by eliminating Disney’s steep $17.95 admission fee and converting the dockside into a sort of pedestrian promenade.
But he hasn’t seemed to make a go of it. According to the city, revenue from the Queen Mary and its associated attractions fell to $33.7 million in 2003 from $40.3 million in 2000. (Figures for 2004 are still being audited.) Prevratil did persuade Carnival Cruise Lines to build a new terminal for its West Coast passengers near the berth, but the synergies with the Queen Mary are uncertain.
Meanwhile, relations between Prevratil and the city have soured. The disagreement is over Prevratil’s claim that his spending on dockside improvements entitles him to a credit against his city rent, which is based on a sliding scale of 3% to 5% of revenue at the Queen Mary. The city says it never formally approved the credit formula, and even if it did, Prevratil is claiming more than he would deserve. In March, after the amount in dispute reached $3.4 million, Prevratil sought Chapter 11 protection for his Queen’s Seaport Development Inc., which holds the lease, and dumped the whole dispute in a bankruptcy judge’s lap.
Complicating the bankruptcy is the arguably curious financing of Prevratil’s company. In 2003, Irvine-based Bandero paid $6 million for 24% of QSDI, an option to buy the remainder, and some indeterminate interest in the landside development rights at the Queen Mary.
Bandero then sold some portion of its development interest to an Indonesian investor named Adrian Waworuntu. He subsequently sued Bandero for fraud, alleging that the firm rooked him either by selling him development rights it didn’t actually own, or a smaller interest than he thought he was buying in the rights it did own. He later alleged that QSDI was in on the scam.
For the record, QSDI says it has nothing to do with the deal, Bandero denies the allegations, and the plaintiff is unable to communicate with his own lawyers, as he is currently serving a life sentence in an Indonesian jail for bank fraud.
Bandero’s court filings, meanwhile, hint that it’s unhappy with Prevratil’s management of QSDI, which sublets the Queen Mary to the nonprofit RMS Foundation, which Prevratil also controls.
Bandero recently got the court’s permission to examine both entities’ books to determine whether any pre-bankruptcy transfers between them or to Prevratil and other officers should be unwound.
Bandero’s lawyer, Vincent Coscino, says the audit doesn’t mean that there is anything improper about any transactions he knows about, and QSDI’s bankruptcy lawyer, Joseph A. Eisenberg, says Bandero’s curiosity is natural and routine.
But it’s hard to imagine such an intricate disagreement arising over a conventional hotel and banquet hall. Still, the Queen Mary isn’t conventional. She’s a symbol, even if Long Beach is still asking: symbol of what?
Golden State appears every Monday and Thursday. You can reach Michael Hiltzik at firstname.lastname@example.org and read his previous columns at latimes.com/hiltzik.