Current Affairs

With a flawed business model and shaky leadership, the U.S. National Whitewater Center could be entering its make or break season

On this beautiful spring Wednesday at the U.S. National Whitewater Center, the crowd is a little light. Jeremy Simonsen, thirty-four, and Jennifer Rodriguez, twenty-nine, are off today from their jobs at Gaston Memorial Hospital. They're sitting on a bench, chatting, soaking up the sun, watching the whitewater rush by. Simonsen, who lives uptown, has been coming to the whitewater center since it opened nearly two years ago. He runs or bikes the trails here about twice a week, sometimes more when it's warm. He's a loyal patron. In fact, when the center instituted a parking fee earlier this year, he didn't mind. "It's only thirty-five bucks per year and I think that's reasonable, considering I don't pay for anything—the trails and everything are free."

That's been the problem for the U.S. National Whitewater Center. People are visiting, but they aren't spending money. That's the main reason the center hasn't been meeting revenue projections. The reason why it missed three loan payments last year. Why it has had to rely on money from city and county governments to cover costs. And it's also what has led to scrutiny on how the whitewater center is being managed and questions as to whether it will succeed financially. Even with recent and planned changes, the sprawling center on the banks of the Catawba River faces an uphill paddle.

Jeff Wise has a target on his back. As executive director of the whitewater center and as one of the people who's been involved since the facility was just an idea eight years ago, he's most responsible for its success or failure. Wise manages the center's 350 employees (at its seasonal peak), and he became the focus of attention when it was reported last fall that his organization had failed to make three loan payments on the $38 million it borrowed for construction.

Reports of the center's failure to make the payments kicked off a series of news stories that outlined how much money the center was "losing." While Wise admits that many of his revenue projections didn't pan out, he contends that it is not accurate to say that the center is losing money. He says the center made an operating profit of $2 million during its first year. "It's not that we're losing money," he says. "We're just not making enough.

"The problem is that when you owe $38 million in loans you have to generate more than $2 million total in order to pay all of that back," he says.

Wise says the center brought in almost $8.9 million operating income in fiscal year 2007. It spent $6.8 million. Despite repeated requests, he would not reveal the actual revenue projections.

A rocky start led to early problems. Tucked away on 307 acres in the far west corner of Charlotte, the whitewater center opened in September 2006 after a series of construction delays. It missed its first summer, the key season for an outdoor facility. And only the two whitewater channels opened. The restaurant wasn't ready—a tent housed a temporary café. The rock climbing wall wasn't completed either. The gift shop and conference center were months away. The access road was unpaved.

"A lot of times you just get one shot at a customer," says Tim Burson, a professor of economics at Queens University of Charlotte.

"If they're coming in and it's not what they expected—it's hard to get there, the roads are bad, and from what I hear some of the neighbors on that access road are rather unpleasant. All of that factors in. If you don't have a good first experience you may be reluctant to go back until you hear from a lot of different people that it's better."

And it is better now. The road is paved. River's Edge Bar & Grill serves burgers made from locally sourced beef, crispy fried pickles, and juicy pulled-pork sandwiches. Rafting, kayaking, and rock climbing are the most popular activities. A Mega Zip line is in the works.

In late April the center hosted the U.S. Olympic team trials for whitewater slalom. About 130 international athletes competed over three days. Officials were hoping for 30,000 attendees. Only 18,000 came, but they viewed it largely as a success. Area media outlets covered the trials, giving the whitewater center much needed positive press after months of reporting about its financial state. Coverage was also picked up nationally and the trials aired two weeks later on MSNBC. But this type of event won't be happening every weekend—more like a couple of times a year at best. So the whitewater center has to be able to succeed beyond its relationship with USA Canoe/Kayak, the U.S. Olympic Committee body that's based here.

And, in fact, the center has been drawing plenty of people. But the increasing attendance has revealed a flaw in the center's business model—there aren't enough ways for those people to spend money.

"We had 600,000 people come out here in the past year, which was double what we had projected," Wise says. "We did extremely well in terms of getting people to come out here and check the place out. But only 21.6 percent of those people engaged in any revenue-generating activities. We've got to do a better job of getting them to come back after they've checked the place out to spend some money with us and engage in the activities."

Wise expects the zip line, which will cost $18 to $20 to use and span about 1,000 feet across the center's hillside, to be a popular attraction. It also recently kicked off the Subaru River Jam, a free Thursday night concert series scheduled to run through the summer. The center hopes the concert, held on the patio of the River's Edge restaurant, will entice concertgoers to drop cash on food and drink. More than 500 people turned out on May 22.

The big new idea: a $5 parking fee implemented in March. It had previously been free to park. An annual parking pass is $35.
"When you've got the vast majority of your people coming and just hanging out, they're an expense," Wise says. "So we had to figure out some way to get them to start covering their cost. That's where we came up with the $5 [fee]. And so far that's been very effective." Wise says he's not ready to reveal specific figures.

If the center doesn't make it, or falls further behind, we're all on the hook. Collectively, the governments of Charlotte, Belmont, Gastonia, and Mount Holly, along with Mecklenburg and Gaston counties, have pledged up to $12 million to cover any operating shortfalls during the center's first seven years. The center has received a total of $1.7 million so far from the six entities, including $1 million earlier this year from Mecklenburg County.

"It would not have [been built] without some level of public partnership," says Charlotte City Councilman John Lassiter in defense from criticism of public spending to support the whitewater center. But he also makes it clear how the funds are intended to be used. "It is not a public facility, it's a joint venture. And ultimately it needs to [generate] cash flow on its own to cover its expenses. Our money, and the money of the other governmental agencies, is for stop-gap and backup funds as opposed to operational exposure. And that's the message we shared with Jeff when he came and talked about where they were for the year."

Lassiter is referring to a presentation Wise made to City Council in February that outlined the center's financial status. According to a report in the Charlotte Business Journal, some members of council and other local government agencies want to see a change in management at the whitewater center. Wise, who was president and CEO of Consentsys, a company that sold clinical information management systems to hospitals, before becoming executive director of the whitewater center, did a great job selling the concept and getting the idea off the ground, but some say he's not fit to run such a large organization. Lassiter says more accountability from management is needed, but he stops short of saying that new leadership is necessary.

"It's always a challenge to go from the leadership you need to create an idea and then ultimately manage it long term," Lassiter says. "That's true for a wide variety of business organizations. I think the [whitewater center's] board of directors understands that and is putting a certain amount of rigor back into the management of operations. We hold fairly high standards for operations and profitability and if they want the city to continue to play the role of financial partner, it's got to perform."

Professor Burson from Queens says this is an all too common scenario. "There are two different agendas," he says. "You have the people who are trying to get it done because it's good for the community. But are they necessarily the people who know anything about operating that type of facility? Probably not."  

Where most seem to agree is that the whitewater center needs to do a better job of marketing.

"I have two sons, [ages] fifteen and twelve," Burson says. "They like being outdoors, they like sports. My family probably fits into the demographic [the center is] looking for, but I think part of it is they haven't done a very good job of marketing the facility. It's just not something that pops into my mind as something I would do. I don't see any billboards on the highway, or hear any commercials on the radio, or see any on TV."

Marketing Manager Troy Rutten says they have done "some print and radio and a couple of billboards," but they have a small budget for advertising. He says he's confident that enough people know about the facility, but the challenge is to get them to come out.

"We talk to a lot of people and they say, ‘Yeah, I've been meaning to come out there.' We're still looking for that hook to get them out here. So we try to create as many events as possible to get them out here, to give people that extra push to say, ‘Oh there's a concert going on out here tonight or a kids festival.' So we try to market that through a big grass-roots push, trying to get in front of as many people as possible."

But not only must the whitewater center market to people who've never visited the facility, it needs to appeal to those who may have visited the center early on and were left with less than favorable first impressions.

"It's no question that those first impressions are important," Lassiter says. "Folks had difficulty getting there, and not having all of the facility open for the participants can affect your viability. That's why it is critical that they have a very successful 2008. I think they recognize what their weaknesses were in the way the facility opened in pieces and was hard to get to. Now that we're about to have full access and all of it is open, there's no time for excuses. It's time to meet the promises that all of us had when we got behind the project to begin with."

Even as the center adds more moneymaking activities, it may create a new problem. It may be trying to do too much.

Many comparable facilities lease some of their operations to private companies rather than try to manage them all. The Ocoee Whitewater Center in Copperhill, Tennessee, which is managed by the U.S. Forest Service, leases many of its commercial services to twenty-four private companies.

"We don't do the commercial rafting, however we provide a lot of the guidance and permitting process for private companies to do that," says Sherry Hicks, manager of the Ocoee Whitewater Center.

The Tennessee facility, located on the Ocoee River, was constructed for the 1996 Olympic canoe and kayak slalom competitions. Hicks knows firsthand the growing pains experienced by Charlotte's U.S. National Whitewater Center.

"Because we were very new and there wasn't one like us anywhere else, we kind of had to feel our way along the first couple of years to figure out what we could do, what would work, and what wouldn't work."

Hicks says the Ocoee center wouldn't be able to make it without government money. "The money we generate on the site goes right back into operations and maintenance of the site. We're subsidized by appropriated funding from the federal government. Were it not for that, we would not be able to operate solely on the revenue we generate here. We're probably about 50-50 government and earned income."

Charlotte's whitewater park may also face challenges standing out in an increasingly crowded market.

"For years about all we had was Carowinds," says Burson. "And now we've added professional sports, we've added the whitewater center, and certainly the NASCAR Hall of Fame will be big. From that standpoint the city is moving in the right direction, as far as offering people from outside the city a way to entertain themselves for a few days or a week."

"It's a much more, in terms of competition, crowded field than it used to be," says Scott Anderson, marketing and public relations manager at Carowinds. "You have a lot of things that weren't around here during this park's first twenty years of operation."

The whitewater park's financial situation has kept its marketing budget small at a time when locals and visitors still don't know much about it. At the other end of the spectrum, Carowinds, despite being entrenched locally, markets like mad. Anderson says Carowinds tries to introduce at least one new element a year, and the park spends big bucks marketing that new element as well as the overall park.

Wise, ever the optimist, sees the crowded field as a plus.

"It's real beneficial now to be in this market as compared to five or ten years ago," Wise says. "We look at it from a visitor and resident standpoint. You have to have a whole plethora of opportunities for people to get out and engage themselves, their minds, their bodies, whatever it may be. So it's real important that we partner with the other organizations. Because ultimately that's the reason we did this—we wanted to make this a more interesting place to live and visit."

Now if they could just start paying their bills.

Jarvis Holliday is a freelance writer in Charlotte.

 

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