Kublai Khan and Citizen Kane
I’ve had quite a weekend. One day was totally dedicated to my kids and grandkids. They wanted to check out the American Dream, which is the newest metro-area attraction brought to you by the people who brought the Mall of America to Minnesota. That’s a family called the Ghermezian’s, and they bought the old Xanadu project that got mothballed in the 90’s. Xanadu was intended to parlay a location near the Meadowlands sports complex into a combination mall and family attraction that was going to make a fortune. I first heard about the defunct project that had sat half-built in 2011 when I started working on the New York Wheel project. There is a certain irony in all of that since the New York Wheel project now sits half-built out on the north shore of Staten Island (an area not unlike the Meadowlands). In fact, the Wheel was a planned metro-area attraction (in our case, a giant observation wheel) that was intended to draw the New York tourism market to a venue that had a family attraction and a luxury outlet mall. Both were a ferry ride from Manhattan. Both were going to hit the ball out of the park with top brand sponsorships.
In fact, the reason I heard about Xanadu was because they had planned a Pepsi-sponsored Ferris wheel that supposedly would allow riders to see the broadside view of Manhattan. There was a fully branded wheel (much smaller than the one we planned) sitting somewhere in a New Jersey warehouse. While I’m sure I heard that “on the street”, as they say, it was also confirmed by the Pepsi marketing people with whom we spoke seriously about a new, bigger, glitzier branding and sponsorship opportunity. Just to be clear, we were looking for a sponsorship client for $300 million, depending on when in the euphoric process you spoke with us. While some people thought we were crazy, a large New York life insurer signed a letter of intent for a twenty-three-year, $20 million/year deal that made us feel we were “there”. This was a pet project for the new Chairman of that insurer, but after 90-days and just after renewing the LOI, a new head of marketing joined the firm and kiboshed the whole thing. It was a clear case of NIH (not-invented-here), but I bet she dined out on our failure for months as the person who dodged the bullet. Of course, if they hadn’t pulled the plug we might not have failed. We will never know.
I encountered the Ghermezian family twice in my career. The first time was when I worked for a distressed Israeli property developer who had $3 billion of teetering, over-leveraged properties that I was hired to salvage. I met with every vulture and bottom-fisher that plied the waters of New York. We had a Times Square building that we were creatively tarting up to be a combination retail/attraction/hotel/condo. This was just the sort of thing that brought the Ghermezians in to sniff out the opportunity. We met with them as a group and a funny thing happened that I recall. The old man was talking to me as though I were Jewish (not an entirely unreasonable assumption in the circumstances – 80% of those I worked with at that time were Jewish). The old man’s son felt compelled to tell his father politely that I wasn’t Jewish. The octogenarian looked at me dumbstruck and just said, “How come you’re not Jewish?” I had never thought of it that way.
The family passed on the Times Square building, but guess who bought it after I left? His first name is Jared and his last name rhymes with Schmirchner and he’s married to the fairy princess of our magical land. The next time I ran into the Ghermezian family was when they bought Xanadu and started plans for rehabilitating it into the next great metro-NYC destination. They must have found that old Pepsi Ferris wheel in the warehouse and when they saw all our promotion for the wheel (we were quite a buzz-machine for a while) they started trash-talking and saying that their wheel was going to better than our wheel. It was so unbecoming and so unnecessary. The challenges we each had were enough to worry about. We didn’t need to cut each other down.
American Dream currently has an indoor ski slope (one of the rejuvenated attractions from Xanadu) in operation and a Nickelodeon indoor roller coaster extravaganza that must be 150,000 square feet. The kids enjoyed three big coasters, and a whole array of other rides. There is an indoor water park that looks close to opening, but there is no sign of the mall shops yet and there were almost no food and beverage outlets open. This is all after at least six or seven years of renewed effort, not including the construction time from the old Xanadu times. These projects are not easy.
On the way to American Dream we took the Staten Island Ferry to catch our ride. It was appropriate that our journey should take us past the scene of my efforts of six years on the north shore of that Island. The hulk of the wheel’s terminal and garage was as expected or better since the very costly terra-cotta cladding was put on to make the building look less brutish while it awaits its attraction. The Empire Outlets mall looks good on the outside, but with about 50% of the space leased, it is not the winner that was expected. Shopping malls are quickly getting dodo bird status in our changing world. I was also sorry to hear that the big multi-use project on the other side of the terminal, a place I was considering leasing space for a boutique theater (that’s my bullet missed), has now gone into financial rigor-mortis like the Wheel. Sigh. Big projects are hard and no one should think otherwise as they reach for that particular type of brass ring.
Kublai Khan, a Mongol warlord and emperor, got his pleasure-dome built in the thirteenth century by force of will. Orson Welles had Charles Foster Kane build his Xanadu in the early twentieth century just like William Randolph Hurst, Joseph Pulitzer or whomever you feel the film is based on. The industrialist media mogul was a modern-day economic warlord. Hearst Castle in San Simeon is thought to be the mysterious Rosebud Xanadu. I threw my wife Kim a 60th-birthday bash there in 2018 and I can say this; I’d rather rent Xanadu than try to build it. And with the pace of change in our economy, whether it’s a mall, an office tower, a hotel, a condo or an amusement attraction, I have a million reasons for thinking that the risks of project development are not for the weak of heart. In fact, I like the term Xanadu for that mythical place that cannot be attained. The El Dorado of the modern project arena. Samuel Coleridge and Orson Welles were weird characters in their own right. Neither the Khan nor Kane (note the similar names) were ordinary men of modest aspirations. There was a time I would have admired that. I’m either older and more timid or older and wiser.