Figures v. Dreams

New York City's little Mayor Fiorello LaGuardia jammed his hat on his stubby stubborn head, and flew west. At Chicago last week he descended to do a little troubleshooting. At lunch in the Hotel Sherman he sat down with 700 advertising men. At his left he had Mayor Kelly, who had a World's Fair at home five years ago; at his right he had Charles G. Dawes, whose brother Rufus successfully financed Chicago's Fair. Little Fiorello's job was to convince them all that New York's is a lot better. Said he:

"Don't believe these stories about hamburgers selling for a dollar and a half. They cost a dime and they're not transparent or synthetic. . . . We have put a soul into this Fair. . . . It is the last word in the application of the genius of man. . . . Our Fair will not be remembered for any hootchy-kootchy dance--and a fan means nothing to us."

In several respects New York's Fair outstrips Chicago's: its World of Tomorrow cost more than thrice Chicago's $47,000,000 Century of Progress, is twice its size, and at the end of its first year will probably have a deficit three times as big as Chicago's $5,000,000. (The Century of Progress closed its second year in the black.) Fond of booming, expansive ciphers, honey-tongued Grover Whalen prophesied for his Tomorrow 60,000,000 customers, when he unveiled his big show last April 30. Today the books of the Fair give an instructive financial history of the biggest world's fair ever. Set up like most world's fairs as a supposedly self-supporting promotion enterprise, like most, it is far from breaking even. Beyond the halfway mark (August 9), the Fair's figures revealed the reason for Mayor LaGuardia's Chicago plea. They showed in round numbers:

Paid admissions................................................$6,220,000

Concessions (8 to 25% cut of gross business of restaurants, amusements, etc.).................................................................. ....1,800,000

Fair's concessions (gross of Perisphere and other Fair shows) ....................................................................... ........ 915,000

Service charges (cashier & equipment hire, water, maintenance, etc.) ....................................................................... 850,000

Resale of electricity (submetered to exhibitors, etc.) ....................................................................... .........420,000

Space rentals......................................................... 250,000

Royalties (on souvenirs, etc.)................................. 90,000

Miscellaneous........................................................16 5,000

Total Operating Revenue:............................. $10,710,000

Payroll (6,000 employes, recently reduced from 7,000) ....................................................................... .... $3,810,000

Purchase of electricity (from Consolidated Edison) ....................................................................... ..........100,000

Operation & maintenance (cleaning, repairs, power, equipment, rental, promotion, etc.).....................................................1,615,000

Interest (on bonds & bank loans).......................... 320,000

General expenses (stationery, printing, telephone, telegraph, insurance, etc.) ....................................................................... ..........760,000

Total Operating Expenses..................................$6,605,000

Net Operating Income........................................$4,105,000

From this operating profit of its first 102 days (82 days to go), the Fair paid $2,314,990 to a trustee towards retirement of its $26,995,000 of 4% bonds, and $1,659,665 to reduce a $3,500,000 bank loan. That left very little in the kitty. It had on August 2 about $1,613,000 of cash and accounts receivable, quick assets, which amounted to only about 40% of its quick liabilities. For the Fair had still to retire a $1,700,000 bank loan, had $4,113,000 of unpaid and past due bills. Of its unpaid bills one was most pressing: $2,700,000 owed to contractors.

To pay off that debt and to replenish his working capital Grover Whalen last week asked his bondholders to agree: 1) to waive their claim on $2,800,000 of gate receipts (first 40% of gate goes to bondholders); 2) to lend the Fair the $1,250,000 already paid into the sinking fund for the bonds. Meanwhile, the Fair prepared to go to the banks for an additional $750,000 loan. By week's end not quite half (51% necessary) of the bondholders, who have received, besides interest, only one 5% payment on principal, had agreed to the plan.

For part of this sorry fiscal plight Fair officials blame labor. They made a deal with A. F. of L.'s New York Building & Construction Trades Council to employ only union labor. The contract called for no work stoppage because of jurisdictional disputes between local unions. But work did stop while unions haggled over which should pull what cable, etc. Construction was slowed up and in the closing rush to complete the Fair on schedule, overtime charges ate into the budget. World's Fair officials maintain labor disputes raised Fair costs about $2,000,000, cost exhibitors and concessionaires another $2,000,000. To that unlooked-for expense was added another: $1,588,000 spent to build a Hall of Nations (for foreign participants), which Congress refused to pay for, after indicating that it would foot the bill. (But the Government did put up $3,505,000.)

Nub of the Fair's predicament: that its operating profits are not high enough because of disappointing attendance. On August 9 its paid admissions numbered 13,026,285 (pass admissions, 4,398,534; public school pupils in free, 588,000).

At that rate (128,000 paid daily average) Grover Whalen will have about 24,000,000 admissions by the Fair's close next October 30--a little better than one-third his prediction. With luck, attendance might increase in the cooler autumn months, total 32,000,000 at season's end. Last March a Gallup poll said 13,000,000 people planned to attend the Fair, 19,000,000 hoped they could. Last week another poll showed that: 1) two-thirds of the planners had made 2.3 visits apiece to the Fair; 2) the remaining third were going this fall; 3) the hopers were still hoping.

What has kept the attendance below estimates is anybody's guess. Some guesses: 1) entrance fee too high; 2) unfavorable reports of high food prices, etc. (an 85-c- dinner, 40-c- lunch, can be got at the Fair but its swank restaurants charge five times as much); 3) New York City itself is too much competition for any world's fair; 4) antagonism of country's press toward New York; 5) absence of community pride among New Yorkers; 6) hard times. Whatever the reasons, the Fair failed to get its expected Big Push in July. (For that month its average daily attendance was 137,456, only 6% better than Chicago's record.)

Loudest boast of dressy, horsy Grover Whalen was what the Fair would do for New York City. He talked about a billion dollars worth of business to be split between the Fair and the city. A good guesstimate last week was that the Fair had brought not more than $100,000,000 of extra spending to the city. The available facts:

>> July department store sales were up 2% (U. S.: 3%) over 1938 (a poor year). But smart Lord & Taylor President Walter Hoving reported a 47% increase the first week of August, attributed 75% of it to Fair visitors.

>> Only about 3,000,000 out-of-town patrons have visited the Fair. There they stayed an average seven hours, spent an average $2.06 apiece ($1.44 plus admission. Coney Island average: 16 1/4 -c-).

>> American Express has done "easily half" the Fair business it had anticipated. Since the Fair opened, Baltimore & Ohio traffic has been double 1938; Pennsylvania Railroad up 20%; New York Central a meagre 5%.

>> Business of 34 big Manhattan hotels is up 50% from last year, but others show only a slight increase.

>> The day the Fair opened, Manhattan restaurant business took a nosedive, is now 15-20% under last year.

Unable to pull his top-heavy Fair out of the red this year, Grover Whalen is faced with the problem of running it a second year. But there he will tangle with the League of Nations. In 1928, under the League's friendly wing, 22 foreign nations formed the Bureau of International Exhibitions. Under its rule signatories cannot participate in any fair longer than six months. That would mean curtains for next year's World of Tomorrow, because, if the nations which erected buildings tear them down, there will be ugly gaps in the Fair's landscape.

Like many another treaty, this one can be stretched. It was stretched when many signatories put up their own buildings in defiance of the Bureau's designation of the New York World's Fair as a Category 2 fair (meaning it must build pavilions for foreign exhibitors who are supposed to build them themselves only at Category 1 fairs).

Whether the 22 foreign nations who put up their own pavilions* will return next year (if Whalen can raise the money) remains to be seen. At present they are angry because: 1) they have spent $55,000,000 to date; 2) they have exceeded their budgets; 3) overtime payments to labor cost them $5,000,000 they hadn't figured on (the Fair's figure: $1,000,000); 4) trucking charges have been exorbitant; 5) Grover Whalen and Washington have ignored their protests (they were warned in advance that they would have to employ U. S. labor, that it would be expensive).

Meanwhile, flamboyant Grover Whalen, fearing a fiscal fiasco, has done an about-face. Most of his customers have agreed that his Fair is a whale of a show. To haul more of them in, he began month ago to reduce rates for parking, weekend admission, etc. Fortnight ago he fired his publicity director, hired a new one: sharp-nosed New York Daily News Reporter Leo Casey. In came swing bands, duck-catching contests, more fun for the folks, a better tone in the daily press. And glossy Grover Whalen actually got down on his knees for his Fair. Cameramen had him on the floor, ogling an infant.

*The other 38 are housed in the Fair's Hall of Nations.

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