Sink or Swim
The carrier is being readied for a public opening on June 5 (the anniversary of World War II’s Battle of Midway). Midway’s arrival was the culmination of a dozen years’ effort by Alan Uke, founder of the San Diego Aircraft Carrier Museum (SDACM), its board of directors and politically connected proponents. These include most of the last decade’s state and local elected and appointed officials, as well as leaders in the San Diego business and tourism establishment.
Bringing Midway here was the brainchild of Uke, 51, a multimillionaire Del Mar entrepreneur and inventor. A visionary with marked persuasive abilities and the self-described project “arsonist,” he lit a fire under a core group of committed supporters of the power elite and retired senior naval retirees.
The museum concept emerged from Uke’s failed 1992 congressional campaign. It retains marks of a disciplined political operation, with spokesmen staying carefully on message.
“This is a big Navy town,” says Uke. “An outsider would expect a huge naval museum.” About 40 percent of the region’s population has direct or indirect naval connections, supporters note. Uke says San Diego, with its naval history, presence and status as the cradle of naval aviation, must have a naval museum located on an aircraft carrier at Navy Pier.
“I want this museum to talk about culture and trade and history,” he says. He wants to educate children about the realities and carnage of war, and help them understand most wars are not as antiseptic and casualty-free as Operation Desert Storm.
A group of about 35-40 well-placed volunteers spearheaded efforts to transform Midway into a floating naval museum. John DeBlanc, retired group vice president for government relations for General Dynamics in San Diego, was an early Uke recruit. DeBlanc has an emotional tie: “It was my dad’s ship, and there was so much family history involved.”
For Rear Admiral Riley Mixson, USN (Retired), who spent 22 months “married” to Midway—skippering her from 1984 to 1986—it’s been a labor of love. “We’re trying to keep the historical nature and have attractions ... to try to bring the ship to life and not be a dry museum,” he says.
The San Diego Convention & Visitors Bureau (ConVis) has been one of the strongest Midway boosters. “One of the most common questions [from meeting planners] is ‘How do I get my group on a carrier?’” says Sal Giametta, ConVis vice president for community relations.
Many view the event business as a “zero-sum game,” but ConVis president and CEO Reint Reinders says convention planners are always looking for new venues, and that other attractions and event facilities will not suffer significant losses because of Midway. He says creating onboard exhibition and meeting space will cost $15 million over 10-15 years. Reinders anticipates defense-related corporations will underwrite many high-dollar exhibit spaces in exchange for naming rights.
Ed Fike, former editorial page editor of the old San Diego Union, who joined the executive committee of SDACM at the outset, is likewise enthusiastic about Midway’s prospects. “Nothing’s been built in San Diego that wasn’t opposed,” he says. “Great projects excite opposition.”
And there has been opposition. Installing the 968-foot-long Midway at Navy Pier stirred controversy from the beginning. For some, the carrier’s late arrival under cover of darkness seemed a metaphor—slipping into their consciousness much as a stealth-marketing campaign hits unsuspecting consumers.
Former San Diego Union-Tribune critic-at-large Welton Jones, a longtime skeptic and retired Coast Guard Reserve captain, remains unconvinced of the ship’s value and historic character.
“This thing is a real white elephant,” he says. “Carrier veterans told me off the record that using this ship as a museum was an insult to the history of naval aviation. It’s not heroic. It has no association with San Diego.”
It’s not even particularly historic, Jones says, countering supporters’ claims of illustrious wartime service, from Korea through Vietnam to the Persian Gulf. “This ship has never had a shot fired at it in anger. It’s never had any enemy action against the ship. ... It sat off the coast and sent bombers off.
“People are not that interested,” he says. “I am here to tell you this is a flop in the making.”
Other local critics have stepped back from open opposition and adopted the attitude “It’s here now; we have to deal with it.” Some say their patriotism was questioned when they publicly opposed the Midway.
A cadre of downtown residents objects to the giant carrier “walling off the bay.” That was a central objection in the February 2000 California Coastal Commission staff report, which recommended rejection of the Midway proposal unless significant changes (later adopted) were made. At the final commission hearing in March 2001, emotional appeals from “a roomful of cheering veterans in aloha shirts, waving American flags,” as one observer recounts, helped influence the final unanimous vote of approval.
Resentment lingers among recreational boaters. They believe Uke’s $8 million procurement from the state’s Harbors & Waterways Revolving Fund in 2001—to pay for repairs to Navy Pier to accommodate Midway—was an orchestrated raid. Promoted by former state Senator Steve Peace, then chairman of the Senate Budget Committee, this last-minute acquisition of tax revenue—paid by California boaters into a special fund normally reserved for building and repairing recreational boating facilities—still rankles boating advocates.
“We tried to stop it, but Mr. Peace had too much muscle for us,” says Harry Monahan, government relations consultant for the Southern California Marine Association.
Midway supporters frequently cite a 1990s poll indicating 85 percent of San Diegans support bringing Midway into San Diego Bay. The current level of support is hard to quantify. For the ship’s well-publicized arrival, and the move across the bay to Navy Pier, crowds seemed to number in the hundreds rather than the thousands.
Like it or not, Midway is here. So can it become economically viable? It’s tough to predict. The museum’s finances are complex.
Start-up and build-out cost estimates for an aircraft carrier museum range “upwards of $20 million,” says Channing M. Zucker, executive director emeritus of the Historic Naval Ships Association in Virginia Beach, Virginia.
“By grand opening, we will have spent $6 million in improvements—in getting Midway here, refurbishing it and outfitting it as a museum,” says spokesman Scott McGaugh. He says transporting and opening the ship is an $8 million project, including $2 million in cash reserves required by the Navy, a condition of donating the ship to the museum association.
Of that $8 million, about $2 million was raised through contributions prior to the ship’s arrival. The remainder is in a low-interest bank loan personally guaranteed by board members, according to Uke and McGaugh. SDACM’s Form 990s—nonprofit tax returns—and other sources confirm SDACM has raised about $2.5 million in cash.
Museum government relations chair DeBlanc says fund-raising more than doubled after the Navy announced transfer of the ship. “We knew we wouldn’t be able to raise large chunks of money until we had the ship,” he says. Plans for major donor and membership programs were developed by consultants who designed successful programs for the San Diego Zoo and the Hall of Champions in Balboa Park.
“The real fund-raising campaign is starting right now,” says Reinders. “The projections are achievable. We have very good terms on our loan, and a lot of people in the community are standing behind the loan.”
Uke and McGaugh say the multimillion-dollar loan can be paid off from business income. But that income also has to cover operating expenses, such as maintenance. Particularly on the hull, maintenance costs are an ongoing issue for any large ship. The Navy normally dry-docks active carriers every five years.
Rust never sleeps. Museum officials say the hull is in excellent condition. But the ship was last dry-docked in 1986—18 years ago.
Ongoing maintenance is critical. While none of the four other carrier museums in operation in the United States has ever been dry-docked, deferred hull maintenance can result in catastrophic expenses. Historic ships expert Zucker says the museum battleship U.S.S. Texas, before dry-docking in 1988 after 40 years in the water, was nearly lost. Repairs cost more than $11 million.
Uke anticipates an annual budget of $6 to $8 million, depending upon actual revenues. Several studies prepared for SDACM during the planning stages proposed maintenance budgets in the million-dollar range.
Where will the revenue come from?
CIC Research, which conducts studies for ConVis and the San Diego Port District, developed attendance projections for SDACM in the 650,000-780,000 range. During the Navy review process prior to the ship’s transfer, that estimate was revised downward, at the Navy’s insistence, to 440,000. Visitation of 440,000 at the average ticket cost of $10.50 would bring in more than $4.6 million per year.
Mindful of the high cost of carrier maintenance, Uke is organizing a separate foundation. “My plan is to have a $30-$50 million endowment fund [raised over the next five years], with $20 million reserved to kick off $1 million annually for maintenance, and another $20 million fund to pay for educational programs,” he says. Uke intends to provide adequate resources to dry-dock the carrier every 10-20 years.
Only two museums in San Diego have anything approaching this level of support: the San Diego Museum of Art, and the Museum of Contemporary Art.
Uke says that San Diego icon Malin Burnham’s “committee is going to raise $10 million,” and Wal-Mart heir John Walton has agreed to take a leadership role in the foundation. Uke says he has “several commitments of multimillion-dollar bequests” from former naval officers who “made a lot of money and want to do some things.”
Few local fund-raising professionals would speak on the record about Uke’s plans. One pro believes raising that much money might be possible over 10 years but that a shorter period was “unrealistic.” Another notes it’s easy to raise $1 million but very hard to raise $10 million.
Sara Wilensky, vice president for marketing communications for the San Diego Foundation, thinks it’s possible. She points to a new awareness of the importance of endowing nonprofits, as well as the sentimental nostalgia attached to the contributions of the now-disappearing “Greatest Generation” of World War II.
“It depends on how compelling the cause is for the individual involved,” Wilensky says. “[Endowing Midway] might appeal to this generation.”
Some more numbers: The nearby Maritime Museum of San Diego, which exhibits five historic ships including the Star of India, averages 150,000-200,000 annual visitors. Tickets are $5-$8; group rates are lower. In 2002, Arts & Culture Commission data show the museum brought in nearly $660,000 with 159,000 paid admissions.
Of other local museums, only the Reuben Fleet Space & Science Center in Balboa Park draws numbers similar to what the Midway is projecting. In 2002, the Fleet had nearly 513,000 paid visitors, producing nearly $3.2 million. The San Diego Museum of Art was next, with 256,000 guests bringing in almost $622,000.
Midway supporters point to the zoo’s approximately 3.2 million visitors a year (down from 3.5 million three years ago), and SeaWorld’s 4 million annual visitors—but those are attractions and theme parks, not museums.
How do attendance figures at the four other aircraft carrier museums in the country stack up to Midway’s projections?
Hornet, the newest of the carrier museums, opened in 1998 and is sited in Alameda on San Francisco Bay. Off the beaten track for tourists, it receives about 140,000-150,000 visitors a year, with $500,000 in admissions. Initial projections called for 600,000-800,000 annual visitors.
Intrepid in New York City draws the most of any carrier museum, about 531,000-650,000 annually. It has the added attraction of being paired with a destroyer, a submarine and now a Concorde aircraft. Yorktown, also grouped with several other ships outside Charleston, South Carolina, pulls in about 332,000 each year. Lexington, a single-ship carrier museum located in Corpus Christi, Texas, draws about 309,000.
But optimism abounds. SDACM executive committee member Fike has no doubts about the museum’s success. He says the museum developed its attendance and financial projections based on a consultant’s study.
“The nation is full of Navy veterans, perhaps a million within an hour’s drive of San Diego,” Fike says. “This was a professional survey. You have to put some faith in these professionals. We’ve done everything to base our attendance and income on conservative projections. We have every reason to be optimistic. We can’t fail.”
The Port District, it should be noted, is not taking any chances. Rich Gannon, real estate asset manager for the Port, says that while the Port has confidence the museum will be a success, it has in hand a letter of credit from the Bank of America guaranteeing $500,000 to remove Midway and return it to Bremerton, Washington, should the museum fail.
“That was a condition of the permit,” he says. “This is a start-up business. We have no idea if this will be successful or not. We needed to have an exit strategy to have enough money to return it to the Navy.”
Nobody likes to talk about exit strategies. But in this case, it seems practical to know there is one.
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