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Navy Pier Inc. looks at closing, but claims it’s not going out of business

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Illinois

* One of the Midwest’s largest tourist attractions is in serious trouble. Press release…

Per State and City orders, Navy Pier was closed to the public from March 17 to June 10 to help curb the COVID-19 pandemic. Since its reopening, the organization has sought to find solutions that would enable it to continue its operations with the safety and security measures currently in place. While we have been able to resume partial operations and safely welcome guests back to the Pier, we are seeing only about 15–20% of our typical summer attendance, making it difficult to generate revenues that support our standard operations.

Navy Pier has operated as an independent nonprofit organization since 2011. Although the organization maintains facilities on publicly-owned property, Navy Pier does not receive any public tax dollars to support its operating costs. The Pier relies on generous philanthropic support from individuals, foundations and corporations with the majority of revenues earned through operational income, such as rent and fees from on-site partner establishments (restaurants, retail shops, cultural anchors, etc.), private events, consumer and trade shows, parking and ticket sales from attractions.

To date, the Centennial Wheel and other Pier Park attractions—a primary source of revenue—have not been able to open and operate. On-site cultural anchors, such as Chicago Children’s Museum and Chicago Shakespeare Theater, have also not yet reopened. Additionally, the Pier has extended rent relief to all of its on-site tenant partners. The parking garages have also seen a significant drop in parking activity, even with discounted parking rates currently in place. And all private events, consumer/trade shows and other bookings have been canceled in our East End event facilities. We rely heavily on these sources of revenue. Furthermore, restrictive capacity limitations for many of our events, restaurants and venues have prevented the Pier from resuming full operations and offering full experiences to guests. The loss of those earnings has been devastating to the organization’s budget, resulting in a projected deficit of $20 million.

With the support of the government funding program, the CARES Act, we were able to temporarily retain staff through the Payment Protection Program (PPP) loan. Our hope was that once we reopened, revenues would be restored at a more sustainable level. Unfortunately, that has not been realized.

Financial Adjustments

To help limit costs, Navy Pier has implemented the following financial adjustments and measures:

• Navy Pier President and CEO has taken a 44% compensation reduction and the executive leadership team members have taken a 33% reduction since mid-May
• Many full-time administrative staff members have been furloughed
• Planned capital improvements have been postponed
• Hiring of critical positions has been suspended
• Contractual services have been significantly reduced
• Budgets have been drastically reduced
• As of Monday, July 27, we made the difficult decision to reduce our full-time administrative staff through layoffs (approximately 20 percent of our employees, totaling 11 positions, in addition to 9 trades workers)

These decisions are not ones that were made lightly and were done after a long and careful review of the Pier’s projected financials with knowledge that many good people would be affected. As an organization that cares deeply about its employees, we held off on making these changes for as long as our finances would allow.

PPP Loan

Navy Pier sought and secured a PPP loan, which granted the organization $2.5 million to help preserve the salaries and benefits for eight weeks to retain 55 full-time administrative employees while revenue generation was completely halted during the Pier’s closure. The loan also made it possible for Navy Pier to retain and provide essential job training remotely with pay to 170 part-time seasonal guest service and Pier Park employees to prepare for summer and retained 26 full-time tradespeople, 21 whom were previously laid off who were able to return and begin preparing the Pier for its impending reopening.

As outlined within the parameters of the PPP loan, funds were used to cover up to $100,000 of each full-time employee’s salary, support benefits, satisfy rent/mortgage payments, cover utilities, etc.

Unlike other similar nonprofit cultural institutions, Navy Pier does not receive public funding from city, county or state tax revenue, nor does it have an endowment to rely upon. The PPP loan was a critical source of funding that is helping to bridge the gap created by the Pier’s closure and lost revenues.

Comments

According to the Sun-Times, the CEO was making more than a half million/year. https://chicago.suntimes.com/2020/5/12/21256429/navy-pier-coronavirus-stimulus-ppp-payroll-paycheck-protection-program-marilyn-gardner-sba

Comment by SouthSide Markie Tuesday, Aug 11, 20 @ 1:09 pm
It’s been a patronage haven for years. Just look at the ridiculous salaries of the E.D. and other executives and who they are and were they come from. Crains a year ago or so reported on the outrageous salaries being earned.

Comment by Hard D Tuesday, Aug 11, 20 @ 1:12 pm
=== It’s required to pay slightly more than $3 million on those this year. Patel wouldn’t say how it will make those payments.===

Woah.

Factoring in the $50+ million in debt too, this is dire.

Comment by Oswego Willy Tuesday, Aug 11, 20 @ 1:20 pm
“According to the Sun-Times, the CEO was making more than a half million/year”

It doesn’t receive state/local funding. Why is this relevant? UofI President gets $600M and is increasing to $800M in 3 years; NIU President makes $450M.

Comment by 1st Ward Tuesday, Aug 11, 20 @ 1:25 pm
South side Markie - good find nobody can justify over a million dollars in salary for the 3 top executives. That in itself shows out of control that place is with its spending. And all three tied to Daley just crazy to say the least

Comment by Hard D Tuesday, Aug 11, 20 @ 1:26 pm
– UofI President gets $600M and is increasing to $800M in 3 years; NIU President makes $450M. –

I think you mean K rather than M.

Comment by Leigh John-Ella Tuesday, Aug 11, 20 @ 1:28 pm
Executive compensation was 4.6% of expenses in most recent figures I could find. Navy Pier had over 65 million in revenues and 200 million in assets recently.

It will be back to being the #1 tourist destination in Illinois very soon.

https://projects.propublica.org/nonprofits/organizations/274813461

https://navypier.org/assets/Documents/About/Navy-Pier-Inc.-2018-Audited-Financial-Statements.pdf

Comment by Lucky Pierre Tuesday, Aug 11, 20 @ 1:31 pm
” 15–20% of our typical summer attendance, making it difficult to generate revenues… Planned capital improvements have been postponed”

Not good news for the 222 room Navy Pier Chicago Curio by Hilton scheduled to open 3Q2020, or the Marina scheduled to open in 2021

Comment by Donnie Elgin Tuesday, Aug 11, 20 @ 1:33 pm
They went without public moneys so they could operate in the dark (no FOIA or Open Meetings), pay high salaries and higher Daley’s cronies. If they go bankrupt, the Pier’s still there - someone else can operate it.

Comment by Rasselas Tuesday, Aug 11, 20 @ 1:36 pm
“I think you mean K rather than M”

Greek (K) vs. Roman (M) numerals. Both are thousands.

Comment by 1st Ward Tuesday, Aug 11, 20 @ 1:40 pm
1st Ward, the Pier receives tax dollars.

Financial reports released last month show MPEA took an operating loss of more than $100 million in fiscal year 2018. Meanwhile, it received $154 million in tax revenue from car rentals throughout Cook County, hotel stays throughout the city, restaurant bills stretching from Chinatown to Lincoln Park, and ground transportation departures from O’Hare and Midway, as well as $32 million in state sales tax revenue.

Comment by James the Intolerant Tuesday, Aug 11, 20 @ 1:40 pm
== It doesn’t receive state/local funding. Why is this relevant? ==

According to the Sun-Times, “Navy Pier Inc. does get a big break on rent, though. It pays the city of Chicago and the state of Illinois just $1 a year to lease the pier, which is the state’s largest tourist attraction.”

Comment by SouthSide Markie Tuesday, Aug 11, 20 @ 1:45 pm
Willy, I’m not sure you’re understanding those two figures. there’s 57.9 mill in debt that requires a payment of 3 million.

That in and of itself isn’t dire in today’s climte. Money is cheap and lots of businesses are getting debts refinanced in the wake of COVID.

I don’t really have any idea how the debt to earnings or debt to revenue numbers stack up to best practices.

Intolerant, is the 100 million operating loss after the tax revenue or before?

Comment by round and round Tuesday, Aug 11, 20 @ 1:47 pm
=== I’m not sure you’re understanding those two figures. there’s 57.9 mill in debt that requires a payment of 3 million.===

I can read fine, thanks.

Servicing $50+ million in debt by having to pay $3 mil… both can be “wow”

Comment by Oswego Willy Tuesday, Aug 11, 20 @ 1:49 pm
=It will be back to being the #1 tourist destination in Illinois very soon.=

And in the meantime they’re carrying $58M in debt with virtually no revenue leaving them with no way to service that debt. Hope their lender is as optimistic as you are.

Comment by Pundent Tuesday, Aug 11, 20 @ 2:05 pm
“nonprofit cultural institutions”

ahahahahahahahhahahhaha

Comment by Soccermom Tuesday, Aug 11, 20 @ 2:21 pm
@Mr. Intolerant: admittedly it’s confusing, as the name MPEA would lead one to think Navy Pier was still a part and able to access those tax dollars, but it’s no longer part of MPEA and cannot.

Comment by Moe Berg Tuesday, Aug 11, 20 @ 2:21 pm
Navy Pier should be the Chicago City Casino. It’s perfect and has parking. Tourists would love it.

Put a casino on that pier; when we have a vaccine of course.

Comment by 33rd ward Tuesday, Aug 11, 20 @ 2:29 pm
The Pier is public property. To say it is privately run is pretty ridiculous.

With those large salaries I hope not a penny of PPP money went to the executive team after so many real, struggling, small businesses with real people couldn’t get access to that program.

Comment by Just Me 2 Tuesday, Aug 11, 20 @ 2:32 pm
Lucky. I agree it will be back to the number one tourist destination. But what will those numbers be down to. 50%? 25%? 10%?
As a 5 time a year tourist, I can see those numbers being much,much lower.

Comment by Blue Dog Dem Tuesday, Aug 11, 20 @ 2:46 pm
I want the Pier to survive and thrive. Hard to read anything about it without remembering this, https://www.chicagobusiness.com/article/20170721/ISSUE01/170729970/how-chicago-power-players-diverted-tif-funds-to-navy-pier.

Comment by Urban Girl Tuesday, Aug 11, 20 @ 3:08 pm
== Navy Pier should be the Chicago City Casino. It’s perfect and has parking. Tourists would love it. ==

And honestly it could probably be done in a way that maintains the existing uses as well. You could certainly structure the bid process to require that whoever gets the casino license must maintain the other operations.

However the powers that be have already decided they want to use the casino to spur economic development in disadvantaged areas. I get their thinking, I’m just not sure it will be as effective as putting it in a place that maximizes revenue. Maximize revenue and spend it wisely seems like a better idea to me.

Comment by Homebody Tuesday, Aug 11, 20 @ 3:21 pm
Chicagos’ tourism has taken decades to build. The numbers speak for themselves. It only takes a summer to destroy it. Ya’ll better get the train back on its tracks are you could be looking like Cleveland and Pittsburgh in the eighties.

Comment by Blue Dog Dem Tuesday, Aug 11, 20 @ 3:36 pm
Why is this a big deal? Suppose Navy Pier, Inc. defaults? Who is affected besides the lenders? Does the Pier close? Are the tenants’ leases canceled?

Comment by n-t-c2 Tuesday, Aug 11, 20 @ 4:26 pm
A patronage ridden insider deal from Day 1.
Perhaps example number 1 of why our State is in such a mess.

Comment by Back to the Future Tuesday, Aug 11, 20 @ 4:38 pm