Could Privatization Be In The Louisville Zoo's Future?
Things are looking up at the Louisville Zoo these days. Its new baby elephant, Fitz, is the current hot attraction. Officials say the zoo is the most popular nonprofit attraction in the area. But rising costs associated with operations and higher pension bills have the city interested in privatizing the Zoo’s management -- a move that would be in line with national trends.
Attendance is up this year, with nearly 12,000 more visits this year than January through October 2018. That’s despite having to close for 10 days to deal with a large sinkhole that opened up in an undeveloped area of the zoo’s property this spring.
So why is the city considering spinning off zoo management to a private company?
Zoo director John Walczak told the Metro Council's budget committee in August that the attraction is dealing with factors outside its control. Visits and revenue were down last year due to excessive rain. And healthcare costs for employees have increased 70 percent in the last 7 years, he said.
"We have to deal with this in a comprehensive system sense because this isn't just impacting the zoo, it's impacting all of our Metro," Walczak said. "Our biggest impact has been cost of staff and the impact of decreased revenues because of 68 inches of rain last [year]."
Louisville Metro is interested in capping its allocation to the zoo at its current level, which is about $5.3 million this year. Back in 2013-14, the allocation was under $3 million, according to budget committee chairman Bill Hollander (D-9).
City government is looking to cut costs wherever possible as its pension burden continues to increase over the next several years.
To that end, the zoo targeted 14 companies that could take over its operations with a request for information that went out in late August. It was a preliminary step, and the deadline for it passed last week. The zoo received one response, spokeswoman Kyle Shepherd said.
"As part of our due diligence, we will continue to engage with firms expressing interest, as well as the Zoo Foundation Board and Metro Council, to help inform our future zoo management and operating strategy," Shepherd said in an email to WFPL.
Walczak told the budget committee that there are only a handful of companies that are interested in managing zoos.
More than 70 percent of accredited zoos in the United States are managed by outside parties, often private nonprofits, said David Walsh, the president and CEO of Zoo Advisors, a consulting firm based in Philadelphia. But he said that task shouldn’t be given to companies without expertise.
"This is not like outsourcing a golf course or outsourcing your convention center, which a lot of cities have done," he said. "It takes some unique skill sets from an animal management side but also from overall -- managing a guest services, and a zoo in and of itself is kind of like a small city."
The city is considering privatizing management of its golf courses, too, although Metro Council recently approved a measure to raise greens fees to potentially avoid that change.
In many cities, a local nonprofit with a connection to the zoo takes over operations, though in some cases a new organization is created for the purpose, Walsh said. There are some for-profit operators, too, but they're more likely to run aquariums than zoos.
Typically, visitors don't notice much of a difference when zoo operations change hands, Walsh said. His firm advises zoos to raise prices when they're adding something new, like an exhibit, rather than when operations management changes.
The Louisville Zoo most recently raised its rates in March, when it also implemented different rates for buying tickets online rather than on-site, and different prices for weekdays and weekends, spokeswoman Shepherd said.
Focus on finances
Walsh said a long-term financial commitment from the city is important because zoos are expensive to operate.
According to Walczak, that commitment can take a few forms. In some cities, there's a dedicated funding stream via a property or local option sales tax. He said the most likely mechanism in Louisville is a continued budget allocation.
He also said new attractions and events could be a boon. The Louisville Zoo plans to deliver next spring on what he said is a top request: a sloth exhibit.
"We will be having special encounters with a sloth for a significant upcharge," he said. "Believe it or not, there are people that will spend $150, $250 to sit and view a sloth close up, possibly get the opportunity to touch it."
Walsh, of Zoo Advisors, said it’s important to have new experiences to bring in fresh visitors or to get people to come back. The zoo then makes money off of admissions fees, but also concessions and souvenirs -- like a large Fitz the elephant plush toy that is selling for up to $65 at the Louisville Zoo’s gift shop.
Weather is a major factor in zoo attendance, but Walsh said baby animals can give a boost. For example, the Cincinnati Zoo, turned its famous hippo Fiona into a tourist attraction in her own right.
"With some good marketing and kind of carrying the story forward like Fiona, they have been able to have some lasting impact with that," Walsh said.
Most of the time, though, that baby animal boost is just temporary.