Berth of the Blues

After jet planes drained the profits from its once lucrative transatlantic passenger trade, Britain's Cunard Steam-Ship Co. sold the money-losing Queen Mary and Queen Elizabeth to American investors, who hoped to make a royal killing by converting the ships into dockside attractions. From the beginning, the new owners have been beset by problems. So far they have spent $40 million on the two uncompleted projects, and by every indication the money will not be recouped for years.

The city of Long Beach, Calif., bought the Queen Mary three years ago for $3,000,000, planning to transform her into a luxurious 400-room hotel, with a Museum of the Sea designed by Oceanographer Jacques Cousteau. Since then, conversion costs, paid for mainly out of the city's tideland oil revenues, have leaped from an original estimate of $13.5 million to $57 million. Work was delayed at the start while A.F.L.-C.I.O. construction craft unions won a jurisdictional victory over maritime unions, which immediately boosted labor costs by 50% . The completion date, originally set for the summer of 1970, has been moved forward three times and is now tentatively scheduled for next summer.

The financially troubled Diners' Club, which held the master lease on the ship's restaurant, hotel and convention center, recently withdrew from the project, after spending $5,500,000. Long Beach officials are now negotiating with a possible replacement, McCulloch Oil Corp., a company with some experience in British hand-me-downs. Two years ago McCulloch bought London Bridge and is reconstructing it as a tourist lure for its new town, Lake Havasu City, on the east bank of the Colorado River. "I still think the project is a good idea," says Long Beach City Manager John Mansell. "There are few births that don't give a little trouble."

The Queen Elizabeth's woes have become even more acute since Cunard sold the ship last year for $8,600,000 to an American consortium, which hoped to convert her into a hotel in Port Everglades, Fla. Unable to raise money, the group sank into bankruptcy. The Elizabeth is scheduled to be auctioned off Sept. 9, and her future is uncertain. The Port Everglades Commission, the municipality's governing body, has decreed that the ship must leave the harbor by December. The pollution-control office of Broward County, in which the liner is moored, has cited her smoky stacks as a hazard. Combining insult with injury, the county tax assessor recently ruled that the berthed vessel is legally a building, and assessed it for $5,700,000. The new classification means that the Elizabeth is one of the few buildings in the world that can hoist anchor and sail away--if only to search for a friendlier tax jurisdiction.

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