Hard times for park

Its eagerly anticipated debut spoiled by a deteriorating economy and dismal attendance figures, the Hard Rock Park sought bankruptcy protection this week and has been shut down until at least next spring.

The owner, HRP Myrtle Beach Holdings LLC, vowed to reopen the $400 million Grand Strand attraction in time for the start of the 2009 tourism season if by then it can successfully renegotiate its debts.

The company estimated that both its liabilities and its assets are between $100 million and $500 million but was not more specific in its bankruptcy papers, which were filed Wednesday in Delaware. Various providers of goods and services are owed $7.1 million.

HRP Myrtle Beach said it plans to "move swiftly" to cuts costs, shore up its balance sheet and steer the park toward profitability.

"By taking these actions, we intend to reopen in 2009 with a much stronger financial position," the company said on its Web site.

The 50-acre park, which had 2,000 mostly seasonal workers on its payroll during the peak summer months, said this week it would reduce its work force to 75 permanent employees immediately.

It's unclear what will become of season passes and other tickets that already have been sold. That's an issue to be decided by the U.S. Bankruptcy Court, the company said.

Five years of planning went into Hard Rock Park and the timing of its opening could not have been worse. Gas prices were soaring, the nation's mortgage crisis was spreading and tourism along the Grand Strand was slowing.

The thrill-ride attraction — described as the first amusement park with a rock-and-roll theme — struggled mightily on the attendance front from the start.

The $50 per-person admission charge was criticized as being out of the reach for many potential visitors, forcing HRP to reduce prices. Management also scaled back operating hours and reduced payroll.

Executives had once estimated they could accommodate as many as 20,000 to 30,000 visitors a day, where the main attraction is a 15-story roller coaster named for legendary British rock group Led Zeppelin.

Between the April opening and this week's closing, the attraction generated $19.7 million in ticket sales, according to a court filing. Based on an average $50 admission fee, that translates into roughly 2,700 paying customers a day, well off the early projections.

The first signs of serious financial ails emerged earlier this month, when one of the park's early backers wrote down its entire $10 million investment to zero. In a statement, Tel Aviv-based Africa Israel Investments blamed the move on "liquidity difficulties the park is experiencing."

"The stars were clearly not aligned for them to get going this year, some of which was their own doing and some of which were other factors," said Don Schunk, a research economist at Coastal Carolina University who studies tourism.

Schunk said it's questionable whether HRP Myrtle Beach can reorganize its finances, drum up new investors and turn its business around by next year given the troubled national economy.

"With the kind of markets we have right now that's a challenge for any business," he said.

HRP Myrtle Beach licensed the Hard Rock name from the company that owns the famous restaurant chain. It also issued bonds totaling at least $305 million to help build the park. It said its interest payments on that debt were current as of this week.

The park operator also said that since April it burned through a $15 million bank loan secured by the rides and real estate. As the subprime mortgage meltdown engulfed the financial industry, HRP said, its lender, Deutsche Bank Trust Company Americas, would not extend it any more credit.

Steven Goodwin, HRP's chief executive and chief financial officer, said in a court document that the frozen credit markets combined with "lower than expected attendance levels" resulted in a " liquidity crisis" for his company.

A lack of advertising dollars also contributed to the downfall. HRP Myrtle Beach acknowledged that it did not spend enough to promote its attraction to travelers beyond the Carolinas, a near-fatal misstep in Chad Prosser's view.

Prosser, head of the state Department of Parks, Recreation and Tourism, said that while the Grand Strand brings in some 14 million visitors a year, a costly new business venture such as an amusement park cannot count on that market alone to survive.

"It's very tough to get people to change their old habits or try something new," he said.

Hard Rock Park needed to spend tens of millions of dollars in marketing to poach vacationers who otherwise would drive right past South Carolina for Orlando's theme-parks, Prosser said.

"The challenge here is they needed to aggressively develop a new market ... They needed a lot of money. They didn't have it and didn't spend it," he said.

HRP Myrtle Beach said its bankruptcy reorganization plan will include a new marketing campaign that will position it "properly" for a reopening next year.

The Associated Press contributed to this report. Contact John McDermott at 937-5572 or jmcdermott@postandcourier.com.