Twenty miles? 200 miles? 2,000 miles? Wall Street may be a long way from your facility, but with the current economic situation, financial issues have come much closer to home for many aquatics professionals. The housing crisis, volatile stock market, frozen credit, falling consumer confidence andrising unemployment are impacting public and private operators in all sectors of the industry. You?ve probably seen or experienced it yourself in some way.
On the public side, rising prices and falling tax revenues a direct result of the record numbers of home foreclosures and slowing retail sales are creating fiscal crises of epic proportions.
How bad is it?
As of Jan. 1, 2009, California, whose economy is one of the largest in the world, was in a state of fiscal emergency as lawmakers attempted to come to consensus on how to address the state?s $11.2 billion deficit.
The Golden State is not alone. ?Forty-one states faced or are facing shortfalls in their budgets for this and/or next year. Over half of the states had already cut spending, used reserves or raised revenues in order to adopt a balanced budget for the current fiscal year, which started July1 in most states,? according to a November 2008 report from the Center on Budget and Policy Priorities. The report found 31 states and the District of Columbia also had additional mid-year budget gaps.
In response to the fiscal crisis, last month the governors of New York, New Jersey, Massachusetts, Ohio and Wisconsin requested that the federal government provide $1 trillion in aid over the next two years to the nation?s 50 states. According to the five governors (all Democrats), the aid package request is supported by other governors and would help pay for education, welfare and infrastructure because state governments face steep budget deficits amid the deepening recession.
On a local level, many budgets are still being finalized, but a number of municipalities and public school districts also are facing budget gaps. As of press time, Philadelphia lawmakers were scrambling to account for a $1 billion shortfall in the city?s five-year spending plan; Columbus, Ohio, officials faced a $75 million deficit; and the Tucson (Ariz.) City Council needed to reduce spending by $10 million.
As a result, officials across the country are considering spending cuts, meaning less money for ?nonessential? ?recreational? services such as aquatics. It?s no industry secret that pools are expensive to operate and historically, public swimming venues have never been community cash cows.
The fiscal problems in Philadelphia have led officials to close 68 of the 81 city pools, along with other reductions. In Tucson, most year-round pools were shut down for the winter. Other places facing previously approved or potential pool closures include Toledo, Ohio; Tulsa, Okla.; Dallas; and Luzerne County, Pa. To avoid pool closures, other communities have already, or are considering, raising admission prices and/or cutting hours of operation.
Privately owned pools are being affected, too. With the housing slump and more vacant homes, homeowners associations across the nation have less money to open their pools, and many waterpark and private swim club operators are holding their breaths, waiting to see whether price cuts and promotions will draw crowds this summer.
The lack of available credit has hit private waterpark resort operators particularly hard, forcing some to shut their doors. According to reports, facing nearly $4 million in unpaid construction liens, the Maui Sands Resort in Sandusky, Ohio, filed for Chapter 11 late last year, only six months after opening. The Three Bears Lodge in Warrens, Wis., and Double JJ resort in Rothbury, Mich., also recently filed for Chapter 11. Properties in Bellevue, Neb., North Little Rock, Ark., and Columbus, Ohio, reportedly are facing financial troubles as well.
New projects may be the most vulnerable. According to industry experts, approximately 20 waterpark resort projects are stalled as developers wait for funding, thanks to credit markets that are at a near standstill.
What does it all mean for the coming summer? It?s still early, but one thing is clear: Tight budgets mean less money to adequately maintain health and safety standards, even though many operators may need even bigger-than-normal budgets for things such as recrea-tional water illness protection, compliance with the new federal Virginia Graeme Baker Pool and Spa Safety Act and other upgrades.
Other parts of the industry are being affected, too. Lack of health inspections is already a serious a problem and with budgets tight, it?s bound to get worse. For instance, in El Paso County, Colo., the health department budget has been cut more than $2 million, and Acting Public Health Director Kandi Buckland told the local ABC affiliate last November that her agency would no longer be inspecting the more than 300 pools in its jurisdiction.
Budget cuts also mean less money to pay lifeguards in spite of potentially larger crowds. As consumers began to cut back last summer, municipal pool operators in Silver Springs, Md., and Doylestown, Pa., reported capacity crowds, attributing the numbers to the fact that people now had less money to travel outside their communities.
In fact, local tourism remained steady in 2008, and this trend translated to profitable seasons for many public and private waterparks, based on anecdotal evidence. Entertainment industry giants Six Flags and Cedar Fair reported modest increases in attendance, and community waterparks such as Rowlett?s Wet Zone in Rowlett, Texas, and Sun Splash Family Waterpark in Cape Coral, Fla., saw similar increases. Cash-strapped consumers are likely to spend their limited entertainment dollars closer to home again this summer. And though potentially smaller staffing budgets might pose a challenge with larger crowds, solid attendance could be one silver lining in the economic storm clouds.
Additionally, pool patrons are a dedicated bunch and in these tough times, it appears many are willing to step up and support their pools. In numerous communities, swimmers have voiced opinions at city council meetings, contributed to fund-raising drives, and supported legislative efforts to maintain financing for pools.
Perhaps nowhere is this public support for pools more evident than in Canada. When the Toronto School District announced its intention to close 39 school pools because of lack of sufficient operational funding, parents and students launched a successful campaign to keep the pools open. Former Toronto Mayor David Crombie was brought in to help find a solution, and the province provided the school district with $4.1 million to keep the pools open for the current school year. A permanent financial plan is pending.
To provide some perspective and help you get a handle on the good and the bad in the current situation, we went straight to pastPower 25 honorees. These established industry experts weigh in on where things are, where they might be going and what operators can do to navigate these difficult times