Lessons learned in Wild West World's closing
Lessons learned in Wild West World's closing
BY BILL WILSON - The Wichita Eagle - 5/1/2008 - original
The tale of Thomas Etheredge, who gave up success at the Prairie Rose Chuckwagon Supper to build one of the quickest amusement park failures in industry history, contains a multitude of business lessons. The story of Wild West World -- which opened about a year ago in Park City -- is equal parts Etheredge's substantial ego and a litany of business mistakes common to many entrepreneurs, according to a variety of people who were involved with the park.
Failure isn't unusual for an entrepreneur with a big dream, said Fran Jabara, founder of Wichita State University's Center for Entrepreneurship.
"Most of them fail like he did," Jabara said. "The numbers vary, but in the first five years, about 80 percent of startups fail. The value in failing, frankly, is in understanding why."
The park closed July 9, two months after opening. Park attorneys filed for bankruptcy the same day.
Etheredge remains the target of federal and state investigations surrounding his financial dealings in the months preceding the park's opening.
Some observers suggest Etheredge's naivete about construction helped the park's budget spiral out of control.
But Jennifer Nolte, Wild West World's first marketing director, traces the park's demise to Etheredge's controlling personality.
She recounts a day in spring 2006 when Etheredge told her he had resolved to never lose control of his life like he did in the late 1980s when he served prison time for securities violations.
"The average person is going to consult experts in the field, and he certainly had them," she said.
"His decisions were all ego-driven, not driven by sound business principles."
Most observers agree: Etheredge had no business plan or budgets and relied on a hodgepodge of private investors and small Wichita banks anxious for a piece of the most publicized local development in years.
"I don't think his goal in doing this project was to rip people off," said Park City Administrator Jack Whitson, whose city owns the parking lot and bridge leading to the park.
"In the back of his mind, he was going to hit a home run with this thing one day, operate it for four or five years then sell it off and retire a success."
What follows is a chronology of the park's business failure, gathered from document searches and interviews with former employees, investors, bankers, attorneys and other observers over the past year.
Etheredge, who is working as a manager at an alpaca ranch near San Antonio, did not return calls seeking comment.
Spring 2006
The dream was alive and well until about a year before the park's May 5, 2007, opening, according to accounts.
Sometime in early April 2006, Ryan Cole and Nolte joined Etheredge's marketing staff from Nye and Associates, a Wichita marketing firm.
"At that point Thomas was very open, sharing financial information and what a consulting service out of California was telling him on costs, budgets," Cole said. "He talked about a $1.2 million marketing budget and at Nye, we were very interested in a piece of that."
Etheredge recruited Cole and Nolte to join his marketing staff a month later.
There were storm clouds, though: Etheredge was already dismissing the counsel of theme park veterans on his staff. Staff meetings, Cole said, were Etheredge "lectures."
"Ron and Bo Berni (the park managers) had been in the theme park business since they were able to speak," Cole said. "Didn't matter to Thomas."
Meanwhile, Etheredge was approaching small Wichita bank branches for loans, trumpeting a $30 million appraisal for his park.
Park investors say Etheredge actually borrowed around $20 million to build the park.
According to bankruptcy court documents Tuesday, 581 claims had been filed against the bankruptcy estate totaling $23.2 million.
There was an anomaly in that bank financing, according to several sources: No bank took the traditional lead disbursement role, working with Etheredge to examine individual project disbursements.
Those checks and balances are critical in a startup business, Jabara said, giving an entrepreneur a sounding board as the project develops.
August-October 2006
The construction bills began rolling in during the summer, forcing Etheredge to find ways to increase cash flow.
"Thomas was always in the office asking how it was going, and I went through five corporate salespeople," Cole said.
"No one could perform to his expectations."
Whitson said Etheredge was an easy mark for contractors because of his lack of construction management knowledge.
Whitson said one contractor -- whom he declined to identify but described as a "critical part" of building the park's infrastructure -- demanded an extra $500,000 from Etheredge to finish the job.
"He told me, 'They're screwing me, but I have no choice but to settle with them because I don't want it out in the press I'm cheating people,' " Whitson recalled Etheredge telling him.
Losing control of building costs is a common and often fatal flaw with startup entrepreneurs, Jabara said.
"It's critically important to define the job your contractors are doing to get the price you expect," he said.
At the same time, Etheredge turned down a group of unnamed Wichita investors who wanted to buy into the park, sources said. Accounts differ about the percentage -- from 10 to 40 percent -- but the offer was refused.
October 2006-February 2007
The financial noose tightened and rumors of the park's insolvency began to surface.
Etheredge began in November 2006 to contact private investors, seeking anywhere from $50,000 to $1 million. For many, there was no documentation of the park's financial problems, just a promise of a "great investment."
In December, bankruptcy documents show, Etheredge began transferring the first of $410,000 from Restoration Farms -- parent company of the successful Prairie Rose Chuckwagon Supper -- to the theme park.
Those transfers concluded in January, when Whitson said Etheredge reportedly began trying to sell the park.
The cash flow problems bottomed out in February 2007, when Etheredge had to borrow $25,000 from Holger Wrede, a New York collector of Hopalong Cassidy memorabilia, to make payroll, according to bankruptcy court documents.
It's a sign that Etheredge plowed every available cent into completing the park and in the process violated a basic business startup rule: Keep significant cash back for a rainy day, Jabara said.
March-July 2007
Despite the financial problems, there were no outward signs that the park was in trouble, said Summit Church pastor Terry Fox, who had an office at the park until April.
Fox invested $50,000 personally in the park, and his church paid Etheredge $400,000 for land on the park grounds.
"We'd heard that he needed investors, that cash flow was tight," Fox said. "But up until the day of (closing), the throttle was wide open and the confidence was high."
Wayne Fuller, who replaced Cole on the marketing staff in June, said he was immediately struck by the park's lack of a business plan.
"There was not a budget that was ever implemented for any aspect of the park," Fuller said. "There was no control of expenditures by anybody."
Company credit cards and cell phones were unregulated and everywhere, he said.
Nonetheless, Fuller agrees with the majority of those involved in the park: Etheredge is a bad businessman, but he isn't a crook.
"If he was smart enough to intentionally defraud anyone, he would have been smart enough to not lose everything but the shirt off his back," he said.
But not smart enough to stick with the profitable Prairie Rose, from which Etheredge cleared between $1.5 million and $2 million annually, according to documents in the Prairie Rose's bankruptcy, which was filed Aug. 9.
That's the tragedy of Etheredge's story, Fox said.
"For most of us, then why not stop at the Prairie Rose and make it grow?" Fox said.
"But he couldn't. It wasn't in his DNA."