Promises of a really big show
Near DeSoto, Kan., limousines, high-price suits, fancy pictures, and visions of glory and profit line the road Dorothy, Toto, the Tin Man, the Cowardly Lion, and the Scarecrow once tread. At the end of the road, a man still sits behind the curtain — only we Midwestern rubes have yet to be able to pull back the curtain.
For the past decade, officials at the Oz Entertainment Company, d.b.a. The Wonderful World of Oz, have impressed Kansas legislators and local and state business leaders with expensive renderings, tales of development, and the promise of making Kansas a giant tourist destination with all the big business opportunities and profits that goal entails. Meanwhile, Kansas’ state and local officials salivate at the prospect of increasing their tax revenue coffers.
Even so, nearly every local official with an interest in knowing about Oz asks what’s become a standard question: “Who’s the man behind the curtain?”
When it comes to Oz “visionary” Robert B. Kory, each layer of curtain is thicker than the last. Kory depends on some very savvy public relations people — and an office staff that pushes pretty pictures of what looks to be a very expensive amusement park — to help him stay under wraps.
Moreover, it’s clear Kory doesn’t talk to the media. While trying to run down Kory, I ran squarely into Oz PR man extraordinaire David Westbrook of the high-power Corporate Communications public relations firm. He is an amiable, soft-spoken man who has worked for Kory on the Oz project since 1998. The first call I made for this story was to Westbrook. I called his office as many as three times a day over a 10-day period in an effort to get an interview with Kory.
At first, Westbrook said that Kory wouldn’t do an interview because of “the sensitive nature of negotiations” that involved the transfer of 9,065 acres of the old Sunflower plant from the U.S. Army to the state of Kansas, then to Oz.
After explaining to Westbrook that the scope of public subsidy and public expenditure for the project warranted an interview with what has been termed the “engine of the Oz project,” Westbrook promised to make a “deal” with me. I had to interview Westbrook first so he could see where the story was going. Such screening is not uncommon in journalism, and mostly it’s a way to determine if a story will be “safe.”
After the interview with Westbrook, I continued with my phone exercise. Occasionally, calls were returned, sometimes by one of Westbrook’s two assistants, sometimes by Westbrook. The calls yielded standard public relations promises of something soon. One promise hinged upon Westbrook’s calling Kory’s California office after it opened, then getting back to me with information on where Kory stood on an interview.
But the phone was silent — until Westbrook called with a last-minute promise of answers to written questions I faxed to Kory’s Los Angeles office. During the whole process, requests for Kory’s biography and photograph were answered with promises of their being in the mail.
The mailbox is empty.
Robert Kory is a Los Angeles entertainment attorney. He received a bachelor’s degree in philosophy from Yale University in 1973 and went on to the University of Chicago law school. According to various media sources, he became a devotee of Transcendental Meditation (TM), a program of the Maharishi Mahesh Yogi.
TM is a mediation method that constitutes one to 20 minutes of meditation twice a day. Information from the TM Web site claims that TM is “the most effective technique available for gaining deep relaxation, eliminating stress, increasing creativity and intelligence, and attaining inner happiness and fulfillment.” Kory worked for TM in the 1970s, and the program served as the foundation for six self-help books he wrote through the 1970s and 1980s, one of which is titled TM Program for Business People.
His first entree in local business came when he joined Michael Love, Thomas Hulett, and local businessman Gus Fasone in Sandstone Entertainment Group in the late 1980s. The company managed Sandstone and Memorial Hall in the early- to mid-1990s but ran aground financially and had to be bailed out by the Wyandotte County government.
Beyond that description, the man behind the curtain is an enigmatic figure loved and cherished by his friends but largely unknown to his critics.
Fasone pitched the Oz idea to a skeptical Kory in April 1991, according to Amusement Business magazine. Kory reportedly went through a period of due diligence to see whether the idea would float. Convinced it would, Kory latched onto Fasone’s idea. Kory became the principal driver behind the project. Since 1991, Kory has developed a vision of a multi-million-dollar theme park based on the popular movie The Wizard of Oz and the late-19th century books by L. Frank Baum.
Kory negotiated rights to the Oz characters through Turner Entertainment. The full details of the deal with Turner, now Time Warner, are not public. But according to a feasibility study by Economics Research Associates (ERA), an L.A.-based land-use economic consulting firm specializing in recreation economics, the Oz project lists as expenses payments to Time Warner and the Baum family of $2.9 million.
Kory’s park was edged out of Wyandotte County for the NASCAR racetrack, it seems, because Kansas Speedway Corp. had a solid plan with real investors. According to Kansas state Sen. Chris Steineger, a Kansas City, Kan., Democrat, Oz repeatedly broke promises of keeping groundbreaking and opening dates, leading to questions of the company’s financial wherewithal and seriousness about pursuing the project without a great deal of feeding at the public trough.
“They always had some story or excuse or reason why they had to change and forestall their plans,” Steineger says.
While opening dates were extended past the park’s initial target opening of 1995, NASCAR whizzed by Oz. “The Oz promoters and Kory wore out their welcome with Wyandotte County,” says Steineger. “Especially at the mayor’s office, they had blown their credibility. County officials wouldn’t return phone calls. They (Oz) continued to put off deadlines and never came up with a workable plan. They got shut out and weren’t wanted.
“About the time that happened in 1997, the Sunflower Army Ammunition Plant near DeSoto was about to be surplused. Now, here’s a chance to get more than 9,000 acres in one of the wealthiest counties in the USA, along interstate-quality highway, with a willing seller. So they stepped up to the plate and shifted their focus to Johnson County.”
“Kory is brilliant, visionary, a very thoughtful guy, a good negotiator,” says Westbrook, a 30-year veteran of the public relations business. “I think he has the ability to identify value that could be mutual value, that could be derived from the establishment of a business relationship. He keenly understands that transactions are made when everybody wins. He also has got an effective way to get people to understand and be inspired by his great vision.”
But on the amount of public support needed for the project, including public infrastructure and services, Kory has been silent. Kory and Oz hired ERA to conduct a feasibility study for the Oz project. ERA lists in a summary of project financial sources some $202 million in state-issued Sales Tax and Revenue Bonds (STAR bonds) and $70.4 million in tax increment financing, most likely to come from Johnson County. Also included are some $35 million in public infrastructure improvements.
The ERA study was completed at a time when the Oz project was slated to cost a total of $761 million. That figure has now been revised to $771 million.
The biggest subsidy is the land where the Sunflower Army Ammunition plant stood near DeSoto. The Oz project has for nearly three years depended on free access to those 9,065 acres.
Bill Sheldon was vacationing in Colorado in mid-January, as he does every year. But the ranch the freelance writer and his family regularly visit wasn’t far enough from Kansas to keep him from hearing of The Wonderful World of Oz. The $771 million project that’s slated to land near Sheldon’s Kansas home had come to visit him in his hotel room. He had received calls all week from people he worked with in Taxpayers Opposed to Oz (TOTO), a citizens’ group.
Oz officials, including Kory, were meeting with the Army, the General Services Administration (GSA), the Kansas Department of Health and Environment (KDHE), and the Kansas Development Finance Authority (KDFA).
Kansas state officials, the federal government, and the Army have been discussing the terms of transferring the Sunflower land to Kansas — land that will immediately be conveyed to the Oz Entertainment Company. Unlike the federal government, the Army, through the GSA, can only transfer land to a state government entity.
But absent at the meetings were the general public and elected representatives of the people who will be directly affected by the mammoth project. At least one lawsuit has been filed under the Kansas Open Records Act regarding negotiations held concerning Oz.
“We, as neighbors and residents of the area, have never sat down and talked about anything with them,” says Sheldon, a TOTO member. “It’s just been incidental that we have met anyone from Oz or Robert Kory at the few public meetings they have held. We have heard him (Kory) talk, but that is it. The Oz folks must think we are little ants on the wall. If they can pull the wool over the eyes of the federal government, the Kansas Senate, and KDFA, why the hell worry about the public?
“To me this sounds like five guys and a bottle of scotch. Kory keeps making it work. Their basic business plan for building a theme park and attracting 3 million people a year has never been examined by independent experts — only by people Oz pays to do it. I don’t know how much they personally invested in this thing, but at the most, it is only a few million. The rest will be other people’s money.”
The land is half the battle in a deal in which local and state taxpayers supposedly are protected from having to sink their money into cleaning up hazardous waste on the land for the Oz theme park project. Westbrook says the company will spend no public dollars on cleanup, a refrain that surfaces every time public subsidies are mentioned in relation to the project.
But then there’s the money it will take to build the park and develop supporting businesses. Kansas designated the Sunflower land a redevelopment district, opening the possibility for Oz to gain access to public subsidies for development.
Kansas has also obliged Oz with legislation allowing some $250 million of STAR bonds to be issued through the KDFA upon satisfaction of environmental requirements. The KDHE, under the supervision of the U.S. Environmental Protection Agency (EPA), sets those conditions. Private investors buying the bonds will survive if nothing comes of the project, but the state’s investment credibility may still suffer with its name attached to bad bonds. Plus, any revenue from development — by anyone — of the Sunflower district will be subject to litigation by unruly bond investors. In addition, Oz has asked for a 1-cent sales tax levied only in the redevelopment district to pay off the bonds.
Westwood, Kan., Mayor Bill Kostar says no state official has asked for information on the company or an analysis of the project as a whole. “We didn’t pass the project, the legislators say, but STAR bonds,” Kostar says. “Then, Oz was off to the KDFA and KDHE saying they had the support for their idea.” The KDFA and KDHE are looking not at the company but at the nature of the deal by which the Sunflower property will be remediated and redeveloped.
“Local, state, and federal taxpayers will have to ante up at least $168 million in sales tax revenues, job training programs, and county and federal road improvements,” says Sheldon. “They are sure to ask for tax abatements or tax increment financing. It’s a huge gimme in which the public does not get paid back for 30 years — and that’s if anyone shows up to buy a sweatshirt.”
The Oz project has grown, with federal and state governments’ involvement, to a point where no one in Johnson County can say no. Kostar says the project has become similar to “cornfield building. We subsidize building on undeveloped, prime land because 50 percent of a new development is still more money then the payoff of assistance to building on existing public infrastructure. When did it become the role of government to maximize its own revenues? And in this case, literally choosing one business over any other?”
Although Oz must apply for the STAR bonds and any job training grants, the elements of public financing have already been included in the Oz budget. Pinning down the Oz budget had been difficult, but according to the ERA feasibility study and other sources: $259 million in STAR bonds issued by the KDFA; $20 million in Job and Economic Development Grants; $70.4 million in tax increment financing; and $35 million in public infrastructure to form highway exchanges and roads. Local and state taxpayers also will have to pay for public services, which neither Westbrook nor county and state elected officials, and state and federal agency officials seem to acknowledge.
“Why did they walk away from land in Wyandotte County?” asks Sheldon. “They realized they can get 9,000 acres in Johnson County, and that’s not too damn dumb.”
Kostar puts the land transfer simply as 9,065 acres’ “being given to Oz for a promise of environmental remediation. If you look at the financial proposal and talk to the people, it’s just dreaming.”
No one knows the extent of the mess at Sunflower. The ammunition plant made, at different times in its history, shells, ammunition, and rocket propellant. The EPA has identified at least 54 parcels of land covering nearly three square miles with contamination from more than 40 years of operation of the plant.
Johnson County businesspeople and most elected officials seem concerned only that the environmental problems at the site will be taken care of without taxpayer liability. In part, they rely on the insistence of Kansas legislators, Johnson County officials, and spokespersons from federal agencies that the public’s money be kept separate from the money required to clean up the Sunflower site.
“We had to have the legislation in place to be absolutely sure of a guarantee of a cleanup by all others involved in the property other than taxpayers,” says Johnson County Commissioner Johnna Lingle. “There was to be no county tax dollars and no commitment from the county. While I am opposed to tax increment financing of the project, the cleanup cost range is from $40 million to $130 million. That is not real cheap.
“At the same time, Kory understands my questions. He is very personable, but this is business. It’s the same as a personal friendship. Kory has attempted to be forthcoming but is dependent upon those he hires to provide correct information.”
The park’s completion starts with Kansas’ taking the land. According to KDFA attorney Rebecca Floyd: “We do not want to be in the chain of title for longer than it takes to sign the papers. We will have it for the nanosecond it takes to put signatures on the transfer document. The document then takes the state out of liability, because we can say that we could not have caused any environmental damage while we owned the land. Being in the chain of title exposes us to those kinds of claims.”
The problem is that no one seems to know the extent of contamination of the 54 sites. The EPA has been at work at the plant site since 1991 investigating the extent of the contamination and determining the best methods to clean up the mess. According to Ken Herstowski, the EPA Sunflower project manager, the work being done is mandated by the Army under a federal agency cleanup requirement.
“We are not done determining the amount of contamination at the site,” Herstowski says. “We don’t have the information needed to select methods of remediation.” Cost estimates for complete cleanup of the Sunflower site range from $38 million by the Oz company to more than $120 million by the KDHE.
The negotiations throughout mid- and late-January were to ensure the public would not get stuck with a cleanup bill. Oz is proposing a $45 million prepaid, third-party guaranty, says KDHE head Clyde Graeber. Graeber was in charge of making sure Oz had the money to remediate the property. He says anything less than an airtight pledge from the Oz people for complete cleanup would have stopped the deal.
But, Graeber says, that guarantee has been assured. “Essentially, it will be in the form of a $45 million bond,” he says. “We had to be sure that all the money for the total remediation of all the property was there. If cost for cleanup runs over $40 million, the Army has agreed to assume remediation from that point forward. There will be an additional pollution liability insurance policy that will provide additional dollars for remediation if the Army did have to come in over the $40 million.
“The Oz people had to put up their own money to buy a financial guaranty and insurance policies. The Army can call on the insurance policies to do the cleanup. Oz also had to have a contractor that will accomplish a proper cleanup. There is a lot of unknown contamination and costs there at Sunflower. Oz has contracted with the IT Corporation for the cleanup, which is not a newcomer to the environmental cleanup field.”
According to Graeber, the bond for the initial cleanup will come from the Insurance Company of Pennsylvania. Other policies for pollution liability will be underwritten by AIG Insurance for the cost of unknown contaminants and American International Companies for remediation costs for known contaminants over $40 million. All are financially secure companies.
“The bond for cleanup is an irrevocable letter of credit to pay contractors’ costs,” says Graeber. “We can get another contractor if Oz failed or we had to fire their current contractor. It is almost like Oz giving me $40 million in my hand for the Sunflower site. That was in question for a long time and, in part, was keeping the process from rolling forward. The other is the magnitude of this project. There are a lot of details involved in the drafting of the consent and transfer documents to protect Kansas and keep them from the responsibility and cost of cleanup.”
Although the KDHE will oversee Oz cleanup efforts and Oz’s contractor, Herstowski says his agency maintains the same authority for cleanup oversight over subsequent owners of the Sunflower property as it does over the Army or any other agency. If all else fails, says Herstowski, the Army will be responsible in perpetuity.
Blaine Hastings of the GSA is convinced that Kory and other Oz officials are committed to the project. Information from Kansas state officials he has talked to, he says, indicates Oz has the money it needs for the transfer to go through. “Once the closing happens and the property is sold to the state, the mechanics for cleanup are in place,” he says. “That is what has taken us so long to negotiate. We have to be convinced that the cleanup will be to county standards. I wish the developer well. When the deal is done, the goal is not to be dependent on his success.”
Success or not, state Sen. Steineger says to look at the figures. If Kory and Oz get the land for the promise of a cleanup, their total price per acre, even at the high estimate of the cost of cleanup, gives them access to some very inexpensive land in a high-price county. If low estimates of cleanup costs are accurate, the land is a giveaway.
“Some folks have the cleanup costs down to $30 million,” Steineger says. Thirty million dollars divided by 9,000 is $3,300 an acre. Undeveloped lots in Johnson County run $40,000 to $60,000 for a quarter-acre. My concern is that the day after they get the title, there will be one more study — just like they had over and over again in Wyandotte County — and they find out Oz doesn’t make as much sense. Then they get to build houses and golf courses at fantastic profits.”
Cleaning up Sunflower entails remediation of solid-waste management units, some of which have nasty stuff from munitions manufacture. Others are no more than dumps holding construction waste. Alliant Techsystems is currently burning buildings under EPA supervision to deal with powder and propellant residue.
“The cleanup for the most part is the demolition of buildings, storage bunkers, and pipelines,” says Steineger. “They do that with an army of bulldozers. Other sites have no more contamination than spilled diesel fuel. For some of the sites, they can apply to the EPA and have a miniature waste landfill and save themselves a lot of money.”
Lenny Siegel of the Center for Public Environmental Oversight of San Francisco State University sees a conflict of interest in the way the cleanup deal is arranged. He believes the concept of transfer of contaminated land to a private party for cleanup to residential standards is, in theory, a good idea. “But the contamination at Sunflower is not adequately characterized,” he says. “A private company may eventually figure it out, but they are creating a situation in which the state wants development for tax revenues.”
So who’s watching the store? No one knows yet because the land transfer negotiations have taken place in private. “I have to assume the worst if the negotiations are done in confidence,” Siegel says. “No one has proven to the public that corners won’t be cut. It makes one a little suspect that they can pull it off. When Oz and the state go public with their information on cleanup, one hopes Oz proposals will be gone over well. But the easiest place to cut a break is on the cleanup.
“Also, from the one meeting I was in with Westbrook, he talked about the insurance policies. They don’t sell you insurance unless they think cleanup won’t cost as much as the premium. I have seen situations where a private company won’t do as much cleanup to keep costs down.”
Siegel says no miracle technology exists to turn rocket propellant and gunpowder into gold. “In order for a company to pay back the bonds, they will be tempted to cut corners,” he says.
Siegel’s group has watched many public-private deals. He says it’s unusual to have the federal government handle such an important deal outside the public eye.
Siegel also maintains that nothing about Oz makes the park a unique fit for the Sunflower property. Generally, a public entity seeks out a logical compatibility for land in a transfer. But neither the state nor the county set up a planning committee and sought proposals. “The developer has tried to get the property first and then try to get it worked out,” Siegel says.
“Kory told the KDFA at a public hearing how important it was that the cleanup be done exactly right,” says Sheldon. “He said he was liable and his children were liable. We laughed because it’s everyone’s responsibility but his. He can get out of the legal responsibility any day he wants through bankruptcy. He just didn’t know what he was talking about, and I believe he was massively insincere. He is the mythical out-of-town expert. We are supposed to grovel when an idea comes to us from Hollywood. Well, there are just as many bad ideas in Hollywood as anywhere else.”
But the best idea includes getting access to a significant asset upon which to raise capital for whatever project Oz decides to take on. Oz attorneys have reserved no less than four corporate name designations with the Kansas Secretary of State: Oz Resorts Inc., Oz Development Inc., Oz Products Inc., and Oz Interactive Inc. Critics say that in the world of corporate chicanery, any one of the future corporations could pick up where the Oz Entertainment Company left off in the case of the company’s failure.
Floyd, with the KDFA, says, however, that the state may set up a standby trust to take the land if Oz Entertainment goes broke. The KDHE would then oversee cleanup before parceling out the land to other private owners. But the possibility of byzantine litigation among all parties involved in the case of Oz’s failure remains immense.
Johnson County politicians and business people have been lured to the project by the hope of creating the next Silicon Valley. There is frequent talk of a high-tech Kansas Highway 10 corridor feeding off the technology the Oz park will need to stay fresh and compete in a ever-more competitive tourism market. K-10, in many ways is seen as the Yellow Brick Road to the fantastic Land of Profit.
Westbrook says Kory has given nine years of his life to the Oz project in Kansas. Kory has recruited designers and consultants from the entertainment and theme park industry. “I have been to California to work at his offices and to talk to the investors,” Westbrook says. “He is very committed to this project…. There was not a work of literature in the western world that is more widely better known than Oz. It is a story that has a very appealing set of values, a story everyone knows from beginning to middle and end. And it’s a story that enables people to participate in the theme park experience with no requirements to be educated before they do. As a marketing proposition, this is very exciting.
“The real extraordinary part about Oz is that it will become the physical mecca for a global Internet play.”
Kostar sees such grand designs differently. “I have a real question of the legitimacy of the business and of the efficacy of the Oz Entertainment Company,” Kostar says. “If we were talking the same kind of deal with a Disney or an MGM/Universal, we might have a shot at pulling this thing off. But the whole deal has been one of insiders and behind-the-scenes negotiating. Their presentations at public hearings have been laughable.”
Sheldon, who lives near the Sunflower site, says residential development for Sunflower might present a field upon which Oz can play. Local officials would have more power in the normal development, and public concerns would be taken seriously. “But to come in and throw all the pictures at us and talk a Silicon Valley on K-10 made it sound like they’re going to the moon. I wish they would. But even more important, the technology they are talking about is out of date. The Internet stuff they talk about using is already available and being developed without them.”
But promoters say the project’s main attractions, what supporters call integral to “a heavily themed product,” seem to be digital interactive representations of Oz characters.
Overland Park Mayor Ed Eilert met Kory and Oz officials during a National League of Cities Conference in Los Angeles, where he saw an overview of programming for the Oz park. “It was a lot of technical gee-whiz stuff,” he says. “There was a focus on the technological side of what would be displayed at the park. For instance, there were interactive figures on a screen that were able to verbally interact with children in front row. I don’t understand how it all works, but it looked good.”
Siegel, who has followed the Oz project closely, says he is not impressed with the park idea. “There is no technological improvement to what they have mentioned that will satisfy my son, who can get it from the Web. I don’t have anything against theme parks. But Oz won’t blow the competition away with a few new technologies. There is nothing there to convince me to reorient my travel plans to go there.”
Parlor tricks aside, Kostar wants to know more about Oz before anything goes forward. “What about the company’s finances?” he asks. “They don’t own anything. They have no activities in the past. This seems to be the wildest Hail Mary pass. Are we really so desperate in the short term that this is what you do? My answer is no. That is valuable property along K-10 the size of Lenexa. Of that, 8,300 acres have no contamination. We are giving an asset to people we know little about. That is terrible public policy. I am not enthused at all about all this public subsidy and government intrusiveness in business.
“Here we have two people standing in front of public agencies and telling them they have no money and no assets. Then they tell the agencies they want to build a theme park. It is a breathtaking assertion.”
Kostar says the Oz company differs from many allegedly visionary companies like it in that Oz officials have spent a great deal of time and energy lobbying local and state elected officials as well as people who work with agencies involved in the land deal at all levels of government. “They were able to capture the tourism and economic development rah-rah,” says Kostar. “I get a sense talking to public folks that influential people in Johnson County don’t want this to happen but that they are all afraid to butt heads with anyone else.
“When you talk to some people Oz uses as supporters in their literature, they look sheepish. They won’t stand up and say they are against it. This deal is turning into one that dwarfs the Trizac fiasco with Union Station, in which the so-called economic development industry — the Kansas City City Council, the Land Clearance for Redevelopment Authority, and all the quasi-public agencies — were completely unaccountable.”
Countryside, Kan., Mayor Ken Davis says he also gets the sense that “the people at the county are waiting for this thing to go away. Sinking public dollars into development far away takes from older areas. Our municipality is in the center of Mission (comprising about six blocks), and we depend on the county for road improvements and programs. I just can’t see county officials saying no to Oz after this thing has rolled through the state. There just isn’t the accountability to the public.”
Oz officials have also been accused by members of the public attending their meetings of agreeing to whatever concern is raised, then changing the subject. “They are smarter than we are by definition,” says Sheldon. “But they have never done this before. Those of us who live here know the way development works. If it such a hot idea, why haven’t other theme parks come in here? When we talk to the Oz people about this, they laugh.”
Kansas state Sen. Ben Vidricksen, however, thinks Robert Kory is one of the best men he has ever met. “Kory is one of the most respected entertainment lawyers in Hollywood,” he says. Vidricksen says that a letter from Salomon Smith Barney backing the Oz project attests to Kory’s credibility. Repeated attempts to check Kory’s background in California, including research on the Internet and through contacts at the Los Angeles New Times, turned up nothing to support Vidricksen’s claim about Kory’s reputation within the entertainment industry.
“When I first met Kory in 1991,” says Vidricksen, “it wasn’t like he was a big, dynamic guy. He is a quiet, reserved individual, very intelligent. When I found out about his reputation in the entertainment field, I was very impressed with him. Any man with the perseverance through all the adversity he has been put through on this project already is quite a man.
“I have not asked about his financing, I have no reason to ask that. The investment bankers who put their $350 million in the investment know. I don’t even care about that. I will tell you one thing: All the people in the Oz organization are honorable people or he would not deal with them.”
Public officials in Johnson County have developed definite impressions of Kory. “My first impression of Kory was from the newspaper,” says Johnson County Commissioner Anabeth Surbaugh. “He was wealthy, supposedly had oodles of money, was very slick. I was surprised when I met him. He looks pretty normal.
“Basically, he is just a standard developer and looks like any other developer who comes into my office, from his demeanor as well. He seems to be consistent, confident, assured. He clearly thinks his project is the best on Earth, but all developers do. If they are smart, they know they need your vote and support and won’t oversell. Kory is excited about his project and as enthusiastic as they all should be.”
Eilert says, “Kory is a bright guy with a lot of ideas. He is committed, pending the ability to raise the financing. But that would be the case with any developer.”
Johnson County Commissioner Doug Wood relied less on first impressions than on further research, which included a trip to California to see Kory’s operation and some of the new technology the Oz park will supposedly rely on. “I felt easier about the substance of the project and abilities of people once I got to see with my own eyes who they were and what they were working on,” he says. “I began to develop a little appreciation of them knowing what they are talking about. I thought the way their organization was set up was pretty frugal. I liked that.”
Steineger says he believes Kory is “a creative, animated believer in the Oz project, of that I have no doubt. I will give him credit for perseverance in the face of adversity. No one can argue with that. He seems to hire or convince well-known people and Wall Street investment firms of the good of the project, but they work for whoever pays them.
“There is still a big question mark. We have no tangible proof that Kory has the acumen to pull all the partners together when he needs them to come together. We don’t know if he has money or access to money.” In the end, the Yellow Brick Road seems more a politician’s campaign ploy, complete with smoke and mirrors.
A search of corporate filings in Delaware, Kansas, and California indicates the Oz Entertainment Company’s revealed wealth is between $800,000 and $1.4 million. Promises and signed agreements with investors may make the company more valuable, and Oz has attracted some seed capital. Exact numbers have not been available.
Local investors listed in an Oz press release were J.E. Dunn, Turner Construction, Clarkson Construction, Garney Companies, Black & Veatch, and HNTB. Officials at Black & Veatch, a locally based engineering firm, could not be reached for comment. HNTB, a local architectural design firm, has done land-use work for Oz. And the rest did not return calls for this story. Outside of a dollar contribution from Dunn, the details of the other firms’ investment in Oz are not public.
Nearly all the construction companies stand to gain from the land transfer to private hands, even if Oz fails. At stake is the development of prime real estate after the cleanup, with vast profits if the local, state, and federal governments build infrastructure to the site, which is almost certain to happen.
But other people’s money is what development is all about. Over the past decade, developers in the Kansas City metro area have come to depend on a raft of pubic subsidies that include tax increment financing, property tax abatements, earnings tax abatements (in Kansas City, Mo.), publicly issued and sometimes publicly backed bonds, and taxpayer-financed road and infrastructure building.
Kansas state and local officials salivate at the prospect of the nearly 15 square miles of land in prime development area Sunflower represents. To them, the importance of land brought out of government control and into state and county taxing jurisdictions is immense.
“This is prime land in one of the fastest growing, wealthiest counties in the nation,” says Steineger. “The land has ties to Lawrence, lies on an interstate-quality highway, and is not far from business and population centers in Kansas City.”
“Ever since Oz got themselves associated with Republican power brokers in Johnson County and the state of Kansas, there has been little chance for anyone else to get that land for development. There hasn’t been a nationwide RFP process (request for proposal, a process in which developers for a project competitively bid) to other corporations. There have been no attempts to attract a company like Sprint or Boeing, or Intel or Microsoft, nor any other growth corporation. There have been no opportunities for any other developer to come look at the site and make a proposal. It’s all been steered toward and set aside for Oz developers.”
Vidricksen, however, puts a different spin on Oz’s departure from Wyandotte County. He says that Oz was half-through but for NASCAR. “They wanted that track in their area and the county felt better with NASCAR,” he says. “Because of the finances on the Oz project, it has moved slowly, but this is one of the most important things to do with Sunflower.”
Oz’s history plays against it when it comes to developing the theme park and the supporting amenities. Neither Kory nor his company has any commercial activities or experience in the theme park business. Moreover, Oz has a general lack of anything resembling a business structure that people can see.
“I have serious reservations,” says Lingle. “I will require much more detailed information and written documents. I will analyze everything before a decision. Right now, all the documents are missing. The federal, state and Oz developers are meeting to work out a consent order for cleanup. Then the state is working on a finance agreement. It is a giant jigsaw puzzle, and the only pieces we are responsible for are the conditional-use permit regulations for the location of a theme park in Johnson County.
“They may want TIF from the county. But I have no information. They may want to have the county install a $4 million road project. But there is little for me to analyze.”
Kory and his partners in Oz want to build a theme park similar to those now run by Disney and Universal. They say they will not compete with Worlds of Fun and Oceans of Fun and won’t touch the Royals during their summer operating months. It’s a different kind of attraction, one that will make Kansas City a destination.
The theme park idea has been alternately battered and praised, supported and derided. The pictures are slick, happy drawings of an entertainment venue for the whole family. Yet they are the same pictures that are dragged from office to office, from public hearing to private board room for several years now. The pictures seem, however, to depict a place filled with rides, much like any other amusement park. In fact, Amusement Business magazine identified the Oz park idea as one that duplicated many existing amusement park attractions.
Worlds of Fun and Oceans of Fun are long-established amusement parks with a combined 1.5 million attendance each year. But Kory and Oz maintain that the Oz park will attract a projected 3.2 million people with its consistent theme. Oz developers want to draw visitors from a wide age range. Although more traditional amusement parks draw visitors from the ages of 12 to 19, Oz officials say, the Oz theme park will pique the interest of all ages. In their favor for drawing older visitors — the people who will bring along kids — are three generations of people who grew up with Oz in movie theaters and on the tube.
Fasone’s original idea wasn’t genius thinking but that of a entrepreneur looking to make a buck. With the Oz name and rights to products in their control, Oz developers seek to make the park an entire family affair, with everybody walking out of the park through an expansive gift shop. There, visitors can take home a piece of real Kansas lore: dolls, coffee mugs, interactive software — and probably little Kansas Cities in plastic snow globes. Merchandising also works as a powerful draw to prospective investors.
In addition, the 55-acre park will be the center of a hotel and tourist complex covering some 1,750 acres when completed. The entire project, its supporters say, will serve as an engine for development all along K-10.
But little is known about where the Oz money is coming from. All financial information comes from either the company or its spokesman. Critics, such as Kostar, say that the company’s business plan is enormously optimistic and highly unlikely.
Most of the Oz projections and its momentum derive from a projected first-year attendance figure of 3.2 million for a 185-day season cited by Management Resources and the Oz Entertainment Company management analysis. ERA, the L.A. company, estimated that the break-even attendance would have to be 2.2 million. Management Resources is referred to in the ERA report, and is identified only as Oz’s marketing consultant.
“If you took all the states that surround Kansas and slid them all into the Oz project, they will make that 3.2 million figure,” says Dennis Spiegel, president of International Theme Park Services, a company that builds and runs theme parks internationally. Spiegel helped develop and build Kings Island in Cincinnati, a park that has 3.8 million attendance in a 180-day season.
“With that they will be able to service the debt,” Spiegel says. “Otherwise, it’s just too out of whack. If you look around the world, there is no project building at those levels, particularly in that market. First, it is remote. The further the guest gets away from the project, the less likely they are to visit. The math doesn’t work. No park other than the top five parks have drawn over 2 million in their first year. Why would they draw 3 million in Kansas?
“In that area, there is not a legacy of 30 years of theme park development, like Orlando, Florida. They have the movie, sure, but not the buildup that would draw that number of people to support that investment. We can look at Fiesta Texas in San Antonio that draws from a much denser market. It was built at a cost of $200 million in the mid-1990s and hemorrhaged for the first five years. San Antonio Sea World was the same.”
Spiegel says Oz depends on bringing new tourists into the area, but a park along the lines of the $771 million project needs to locate in an area that is already a destination. “They have no history or legacy right now,” he says. “I love the Wizard of Oz. It’s a great book, a great movie. But that alone won’t do it. I am sorry, wish it would.”
Harrison Price, who did the first market studies for Disneyland in 1953 and has been in the business ever since, says that Oz can do the kinds of numbers that Oz projects. He projected Oz’s capturing 2.8 million visitors when he did a market study for the park in 1992. Having been involved in two market studies since, he still believes. “The Oz theme is very strong,” he says. “If you look at the market they are shooting for, Disney is in that market. You have to look at other things. For instance, Worlds of Fun is a ride park and the other (Oz) is a highly themed park. In my opinion, there is room for both Worlds of Fun and Oz. They will be able to draw some 4.2 million people in that market.”
But independent economist and consultant Chuck Dehner finds fault with attendance estimates from industry sources. He closely examined Oz’s market studies and produced the only analysis not underwritten by the government or Oz. Dehner lives in the K-10 corridor. But his report, which he submitted to the KDFA Oct. 11, 1999, raises interesting questions.
Price’s estimates, Dehner writes, would put Oz third in a sample of 19 parks Price used. The average capture rate of the 19 parks in the Price study was 15.45 percent of their markets. Price’s estimate of 22 percent, and Management Resources/Oz’s estimate of 25.1 percent for the Oz venture are overly optimistic. Working from the average in Price’s study, Dehner estimates Oz attendance would reach only 1.97 million people, well below the break-even point of 2.2 million for Oz to work. “There is little room for failure or even average performance for Oz to pay operating costs and bond financing, and remediation funding is still not specified,” he writes.
Dehner found the amenities Oz needs to become a destination — hotels, resorts, a conference center — are not funded in the initial phase of the project, leading him to believe the 3.2 million figure is unrealistic. Dehner also writes that market studies for Oz include the need for public funding — the same public funding Surbaugh and Lingle say they have no definitive information on.
“The base assumption in the ERA report is that Oz will become a super regional draw,” says Dehner. “To do that you have to have a hotel center, and once that is accomplished, keep building more. When you start with the assumption that 3.2 million to 3.8 million people will show up, the numbers work. But you have to do different levels of attendance to find out where your fixed costs outrun revenues. At the break-even point of 2.2 million, they do not justify that they would cost-benefit (return more money in tax revenues than the public subsidies Oz receives) local governments.”
Due to the size of theme and amusement parks, the business is, by nature, inhabited by few people. Price also warned: “There are a lot of people with axes to grind. Some people in business and those close to the industry will say the projections for Oz are outlandish. No one has spent more time working on their project than the Oz people.”
But Spiegel, past president of the International Association of Amusement Parks and Attractions who is currently on the group’s board of directors, says: “I build them, operate them, and I am involved all over the world with parks. I have no personal ax to grind. The truth is that the market cannot support a $700 million investment.
“Worlds of Fun is a classic, well-run amusement park with the same kinds of rides as Oz — some are older and a little dated, but they are the same concept. The best Worlds of Fun can do is 1.2 million to 1.3 million visitors a year (Oceans of Fun receives from 250,000 to 300,000 a year). Why is Oz going to triple that? Worlds of Fun has been open now for 28 or 29 years and has skinned the cat every way you can skin the cat, drawing groups, club, churches, school. They broke 1.5 million attendance once. The population base is not great enough to sustain an Oz.
“We don’t need any more high-profile failures in our industry. It’s not well thought-through. I think the guys putting the project together ought to go look for the wizard and ask for the brains.”
Eilert says the problem he has is that “in all the information and discussion there is supposed to be a difference between the Worlds of Fun- or Six Flags-type of park versus what is proposed here. They are supposed to be two separate things. The question in the back of my mind is: ‘How are you going to get 3 million people to Oz?’ They can’t be open outside but four months out of the year.
“But the park being developed as presented may not be a significant requirement for them getting it off the ground.”
Contact Patrick Dobson at 816-218-6777 or email@example.com.