Walking on water: the aquarium drains its cash reserves to make up for the expected shortfall of $ 14 million
The Aquarium of the Pacific’s multi-million dollar expansion, Pacific Visions, celebrated its first anniversary with closed doors. His theater’s 300 seats were empty and remained empty for much of the year, along with all of the aquarium’s indoor exhibits, due to the coronavirus pandemic, which has strained the icon of the city.
Aquarium managers and staff started the year with high expectations. As the first full year with the expansion, the number of participants was expected to exceed previous years. In fact, CFO Anthony Brown said the first two months of the year were 6% ahead of expected attendance and earnings.
“But then it all came to a screeching halt,” Brown said.
Following orders from Governor Gavin Newsom, the aquarium closed in March and remained closed until mid-June, when it was allowed to reopen, inside and out, at 25% of its capacity. The aquarium remained fully open for a total of 19 days before being forced to close all indoor exhibits again in early July following the increase in hospitalizations linked to COVID-19.
The outdoor exhibitions of the installation remain open to the public at 25% of their capacity.
“We have all the security measures in place: social distancing, online ticketing, face mask requirement, temperature checks – anything we can think of,” Brown said.
The aquarium budgeted $ 38 million for operating expenses in 2020, with $ 2.6 million of planned unrestricted profits that would then be reinvested in capital improvements. Following the closures and restrictions, Brown said he expected a shortfall of at least $ 14 million.
Luckily for the aquarium, there is some relief from its financial woes. Brown explained that the construction of Pacific Visions, which was delivered on time by Clark Construction and funded largely by donations, was $ 6 million under budget. With the permission of donors, the aquarium reallocated these funds to make up for losses.
The aquarium also received a loan from the Payroll Protection Program, under the federal CARES Act, in the amount of $ 3.5 million. The aquarium strives to use the loan as much as possible for salary expenses, to maximize the loan amount that will be forgiven by the government, Brown said.
As part of its business model with the city of Long Beach, which owns the facility, the aquarium has an operating reserve of $ 5.8 million, Brown said, noting that these funds can be used to compensate for the remaining losses. Earlier this year, Long Beach City Council discussed a $ 2.2 million loan to help the much-needed aquarium, an option that is still on the table, Brown added.
Despite his various relief funds, Brown said that “the only thing that is certain is uncertainty.” He explained that the deficit estimates are based on the possibility of reopening the interior by mid-September, which may or may not be allowed depending on the state of the pandemic. If the aquarium is forced to keep its interior closed, the financial pressure will only be exacerbated.
“If we exhaust all of our cash resources, it will really leave us in a difficult position next year,” Brown said. “It will definitely be a challenge.”
The average monthly aquarium operating expenses are approximately $ 3.17 million in a typical year. While the monthly expense has been reduced to around $ 2 million, most of the costs just can’t be overlooked, while still keeping the aquarium alive, literally and figuratively.
“If one person walks in or 10,000 people walk in, the collection still needs fresh, clean water, it needs food and care,” Brown said. “Running an aquarium doesn’t have a lot of variable costs that you can just reduce when attendance is down. “
On July 28, 1,200 people visited the aquarium, up from 6,400 on the same day last year. On holiday weekends, such as July 4, Brown said it’s not uncommon for 11,000 people to visit the aquarium in a single day, a prospect out of the question for the foreseeable future.
The aquarium predicted a total of 1.66 million visitors for the year, with the summer months being the busiest, but Brown has now said they would be lucky if they hit 700,000. drastically reduced attendance, the entrance fee has been reduced by two-thirds because most attractions are not open.
During the summer months, the aquarium would normally have around 400 employees, which includes seasonal hires. After 82 layoffs and 100 time off, Brown said the workforce was just over 200.
“We are in a critical situation,” said Brown. “The important thing for us is to remain a nationally recognized aquarium, not only for our large collection, but for the topics and information we bring to the fore on climate change and the rising sea level. sea. The Aquarium of the Pacific is a very special institution and something the city should be really proud of.