SeaWorld behind on bills by millions
Lags in payments to contractors, including those building Iron Gwazi and Ice Breaker
A growing number of contractors are pressuring SeaWorld to pay its bills.
In Orange County alone, vendors have filed at least 56 liens totaling about $16 million since April, according to a review of public records by the Orlando Sentinel. The disputed contracts are stacking up at other SeaWorld properties including in Tampa and California, records show.
SeaWorld has touted the building of new rides and attractions in its mission to grow attendance. But after the company shut down its theme parks in March because of the coronavirus pandemic, the company appears to have fallen behind on payments for some of those projects, including its highly anticipated roller coasters Iron Gwazi at Busch Gardens Tampa Bay and Ice Breaker at SeaWorld Orlando.
The pandemic indefinitely halted both rides originally set to open this spring.
Orlando-based SeaWorld Entertainment concedes it has fallen behind on some bills and says it is working to catch up now that its parks have reopened.
Rocky Mountain Construction, the builder of Iron Gwazi, filed in Hillsborough County late last month a lien for $3.5 million out of $9 million it said it was owed. The company did not return a request for comment.
Premier Rides, the Baltimore ride manufacturer of Ice Breaker, said it hasn’t been paid $2.7 million out of $8.2 million in Orange
County, according to a lien filed
June 10.
“We’re concerned SeaWorld has a stated fiscal strategy of deferring payments to their key suppliers and vendors, but we’re hoping to work it out with them,” Premier President Jim Seay said in an interview.
“A contract needs to be upheld,” Seay added, while acknowledging, “I’m also a businessman. I understand the challenges any entity, whether it be SeaWorld or other big operators, I can understand the challenges they’re going through.”
Seay points to his company’s long history of working with the SeaWorld — Premier built Tigris last year at Busch Gardens — and said he hopes they keep working together in the future.
Among the other Orange County liens, Canada-based ProSlide Technology said it is waiting on $642,000 out of $1.9 million for designing and installing a water slide at Aquatica Orlando.
And one lien appears to be for a thrill ride that hasn’t officially been announced at SeaWorld Orlando.
St. Louis-based PGAV Destinations sought a $271,967 payment for doing architecture and designing on a “penguin coaster” in a June 4 lien. SeaWorld would not comment on whether it was a new ride but at its San Diego park, the company is building a dive roller coaster themed off the Emperor penguin.
ProSlide and PGAV did not return messages for comment.
Downtown Orlando-based general contractor Balfour Beatty Construction filed two liens in April for a total of $6.1 million for projects at SeaWorld Orlando and Aquatica Orlando. Balfour declined to comment.
Late with payments
In early April, when the Sentinel reported on the first liens filed, SeaWorld acknowledged it might have to pay some vendors late because of the shutdown, which led to 95% of its workforce to be furloughed without pay. Thousands of employees are coming back to work now as the theme parks return.
Asked about the additional liens, the company responded with a statement.
“We thank our vendors for their partnership, understanding and patience during this unprecedented time. As we re-open our parks and begin to generate revenue again we are working with our vendors to complete all outstanding payments,” SeaWorld Orlando spokeswoman Lori Cherry said in the statement Monday.
The 56 liens filed against SeaWorld’s Orange County properties during the past three months are nearly five times the number of liens filed for all of 2019, when vendors sought less than $1 million in payments, according to a Sentinel review of comptroller’s records.
When asked if $16 million in liens is a significant amount, legal expert Matthew Salerno warned it’s difficult to say without knowing the total cost of the construction projects and because COVID-19 has shaken up the business world and all normalcy.
In 2019, SeaWorld spent $172 million on capital expenses for new rides, attractions and maintenance, according to a company filing.
Salerno, a lecturer at Case Western Reserve University’s law school, isn’t familiar with the inside details of SeaWorld but spoke to the Sentinel to share his expertise in business law.
Filing liens isn’t uncommon for major capital projects that employ several layers of contractors and subcontractors, he pointed out, adding that construction companies filing liens are exercising their legal rights to make sure they get paid.
It’s also too early to tell if the liens are a red flag of SeaWorld’s deeper financial troubles, Salerno said.
Interim SeaWorld CEO Marc Swanson didn’t directly address the issue when the Sentinel asked about the liens during a June 9 interview. But Swanson stressed the theme park operator has a strong future ahead and good strategies in place to recover after the tourism industry’s historic shutdown.
“The first step of that, obviously, is getting getting the parks reopened,” Swanson said as the Orlando parks and Busch Gardens welcomed back visitors on June 11 for the first time since March 16.
Lawsuits in California
As of Monday, it doesn’t appear the companies filing liens against the Orlando parks have taken legal action in the courts. A lien is a claim on a property to ensure payment of a debt.
But that’s not the case at Sea World San Diego, one of the 12 theme parks run by SeaWorld Entertainment.
Level 10 Construction, based in California, is helping build the new penguin-themed roller coaster and accused the California park of not paying millions of dollars and knowingly breaching the contract, according to new federal lawsuit filed on June 8.
SeaWorld San Diego owes $3.3 million from the original $11 million contract, the lawsuit alleged.
Level 10 filed an amended lien May 12, and when no payment came, sued in the federal Southern California District.
“The Contract provided that (Level 10) would be paid for its work, labor, materials, and services. Payment for the work was not conditioned upon Sea World San Diego’s theme park being open for business to the public,” the lawsuit said.
As vendors say they have stopped getting paid, SeaWorld still charged annual passholders for their monthly installments, according to another lawsuit, while others complained on social media or to the Sentinel they had trouble getting refunds on tickets when the parks closed.
In California federal court, a San Diego resident sued May 8 and is asking for class action status to represent passholders, who she says were charged more than $5 million while the parks closed in the pandemic.
“SeaWorld has made the unconscionable decision to keep charging its thousands of customers monthly membership fees while closing its amusement parks as the novel coronavirus, COVID-19, rages throughout the world and the United States economy has gone into a deep recession,” according to the lawsuit filed by Lisa Kouball, who paid $48.99 monthly for her pass.
SeaWorld declined to comment on the lawsuits.
Meanwhile, the company has borrowed money to increase its cash reserves during the pandemic. The company had stockpiled slightly more than $400 million as of April 30, according to a May 8 research note from investment banking firm Stifel.
“Looking at liquidity, (SeaWorld) now has over 18 months of cash cushion which gives them ample room to fend off any lingering top-line challenges COVID-19 throws its way,” Stifel’s note said.
56 liens in 3 months
In Central Florida, SeaWorld vendors filed at least 56 liens from the time the parks closed in March through Monday, which was the fifth day the parks had reopened, according to public records available through the Orange County Comptroller’s Office’s online database.
Orange County Utilities sought nearly $429,000 in a trio of water/ sewer liens filed late last week.
Other vendors seeking payments ranged from larger companies that erect steel or design attractions to smaller businesses hired to do more basic tasks, such as installing drywall or electrical work. All but nine of the businesses are located in Florida with many based in the greater Orlando region.
If SeaWorld stops paying construction bills, it can have a trickle down effect on the local economy because uncompensated contractors can struggle to pay their workers and other expenses.
“It’s huge. If you do the work and you don’t get paid, you have to pay your people. You have to pay the supplier. It just becomes a legal mess,” said Mark Wylie, president of Associated Builders and Contractors’ Central Florida Chapter. “The only people who win after that are the attorneys who represent each side.”