A 15-minute boat ride in the gorge below Niagara Falls, called the Maid of the Mist, is the most lucrative paid attraction in Niagara Falls.
Two exclusive leases for the rights to use the banks of the lower Niagara, with Ontario and New York Parks, for the operation of Maid of the Mist boats generate annual revenues of tens of millions of dollars for the leases' owner, James Glynn. For 38 years, Glynn has held these leases, never having had competition for the rights to operate boats at the base of the Falls. That may change soon.
Last year, events unfolded that could unhinge Glynn's monopoly in Canada this year.
It began in January 2008, when Tim Parker, general manager of Ripley's Entertainment, wrote a letter to the chairman of the Niagara (Ont.) Parks Commission, Jim Williams, expressing an interest in bidding on the boat lease.
Ripley's is a worldwide entertainment company that owns the Believe It or Not Museum, the Moving Theater, Louis Tussaud's Waxworks, the Guinness World Records Museum and the $130 million Great Wolf Lodge in Niagara Falls, Ont.
Parker explained Ripley's Entertainment's interest to the Reporter.
"In this day and age, to be able to get to the bottom of the falls and actually feel the presence and the thunder and roar is an absolute attraction in itself. But how do you deliver the thrill? Do I think delivering that in a 15-minute ride, on a 15-year-old steel boat (as the Glynn's presently do) is the proper way to deliver it?
"In this day and age we have come a long way in attractions, and the way we deliver services to guests. Can it be delivered better? Of course."
Ripley's Entertainment's plan offers better boats, longer and more varied rides, nighttime rides and a pre-boat wonderland experience.
Maid of the Mist offers only one 15-minute ride, during the daytime on older steel boats without seats, bathrooms or refreshments.
Parker's Jan. 25, 2008 letter to Williams read in part, "I would like to know when (the Maid of the Mist) lease is due to be renewed and how another interested party would have the opportunity to bid."
In January, Ripley's filed a freedom of information request for the government's lease with the Maid of the Mist in order to determine how to competitively bid.
A month later, while Ripley's waited for a response, John Kernahan, general manager for the Parks Commission, suddenly started drafting a new lease for Glynn more than a year and a half before it was due. Glynn's lease expires November 2009. Behind the scenes was Archie Katzman. While other parks commissioners have served less than five years, Katzman, the vice chairman, has been on the commission since 1971, the same year the Glynns took over the Maid of the Mist.
Katzman has used his position to feather his family's nest. He procured for one son the contract to sell wines at park restaurants and for his other son the major contract for park cell phones.
In his late 70s, Katzman has had financial difficulties with a number of unsuccessful high-profile ventures, including a hotel, bowling alley and restaurants in St. Catharines, all of which were business failures.
By late February, Ripley's got its response regarding the Maid of the Mist lease. Strangely, the 34-page document had nearly all details -- including the date it was signed and when it will expire -- blacked out.
Ripley's could hardly be expected to bid based on that.
Ripley's appealed the redacted copy and won the right to have an exact copy of the lease. Parker was told it would take until April 17. As Williams and Kernahan worked feverishly readying the new Glynn lease, a scheduled "due diligence" board meeting on the matter was canceled.
Instead, a board meeting was scheduled on April 18 to vote on the Maid of the Mist lease. Behind the scenes, Williams, Katzman and Kernahan were lobbying the other commissioners on how to vote, without telling them of Ripley's interest in bidding.
In mid-April, Parker suspected the commission might act without giving him a chance. In an April 11 letter to Williams, Parker wrote of the difficulty in getting a copy of the lease, adding "we request ... commissioners defer making any decisions on renewing (the) lease ... until we have the opportunity to receive the copy of the lease and respond to the Niagara Parks."
Although never told of Ripley's Entertainment's interest, one commissioner, Bob Gale, sensed something was wrong.
On April 17, the day before the board meeting, he sent e-mails to board members telling them board leaders "were rushing the Glynn renewal ahead of schedule, without the due diligence. Why?"
Later that morning, he got the answer. Parker called Gale and asked if he was aware of his letters to Williams.
"Bingo," Gale said. "Now I knew why they were rushing the Glynn lease."
He immediately e-mailed the board to inform them of Ripley's Entertainment's interest. Members learned of it just hours before they were to vote on the biggest lease in the park.
Gale asked the board to wait for the next meeting to allow Ripley's a chance to compete, but was overruled by Williams, Kernahan and Katzman. Ultimately, a majority voted to renew Glynn's lease for 25 years.
Afterward, Gale resigned his committee chair of marketing and events, but remained as commissioner.
When the story broke, fingers began to point at Kernahan.
Why didn't he inform the board earlier that Ripley's Entertainment was interested? Why were they shut out of the process? Amazingly, Kernahan told the Niagara Falls Review in July, "I have seen no proposal from (Ripley's). I can't comment on a proposal I haven't seen. ... I'd be surprised, quite frankly, if he has one."
Meanwhile, Gale filed a disclosure of wrongdoing with the Integrity Commission of Ontario. The IC investigation, led by chief internal auditor Richard Kennedy, led to a summary report submitted to commissioner Lynn Morrison on Dec. 15. Valerie Jepson, spokesperson for the IC, confirmed the commissioner is reviewing the report.
Also under investigation is that at least one other company also tried to bid on the boat lease, a fact that was again not disclosed to members of the Parks Commission.
Alcatraz Media, one of the largest sellers of tours and tourism activities in the world, attempted in 2005 to be considered for a chance to bid on the Maid of the Mist lease. Alcatraz represents companies who provide more than 800 boat tours around the world.
Alcatraz spokesperson Bill Windsor told the Reporter he was rebuffed by Kernahan.
After having expressed interest three years earlier, Windsor wrote all 12 commissioners on Oct. 31, 2008. "I was not informed (the Maid of the Mist lease was up for renewal). A government entity should have an obligation to allow any interested parties to bid. Maid of the Mist is simply a concessionaire. They own some boats, as do many companies. There is no valid reason for claiming Maid of the Mist should have some kind of special rights."
Companies represented by Alcatraz that might be qualified and interested in offering tours include Hornblower Cruises, operator of the ferryboat services to Alcatraz and the Statue of Liberty; Circle Line Cruises, which operates cruises around Manhattan; and Red & White Fleet, which offers boat tours in San Francisco Bay.
All of these companies, unlike Glynn, have to compete -- often with each other -- for the right to serve the areas they lease. The Executive Council of Ontario is required to approve the lease between Niagara Parks and the Maid of the Mist Corp. In the past, approval has been virtually automatic, but because of the controversy, this year might be the exception, a source said. Right now, the ball is in the court of Integrity Commissioner Lynn Morrison. She can recommend the Ontario government not sign the new lease and put it back for open bidding, or she can do nothing.
The latter may be risky.
For if it turns out that there was collusion or a conspiracy to deprive the public of the best option for the leading attraction for the tourist town of Niagara Falls that resulted in an inferior service being offered, the onus of the mistake will fall upon the Integrity Commission.
On the other hand, simply bringing the process out in the open harms no one. If the Glynns -- who have the lease through 2009 -- have the best proposal, then let that be seen in the sunlight.
If another company can provide a better deal, the public wins.
Meanwhile, Parker confirmed that Ripley's still wants to bid.
"We have a marvelous package that will provide a new level of experience for the tourist ready to go to bid," he said.
| Niagara Falls Reporter | www.niagarafallsreporter.com | January 27 2009 |