This is about an article at the website of Bloomberg Businessweek. Business Week was formerly an independent magazine, now it’s part of the Bloomberg international news agency, headquartered in New York. Their article is Noah’s Ark Depends on Faith in Default-Plagued Debt: Muni Credit.
From our recent post, Ken Ham’s “Ark Encounter” Bonds, you already know about the bonds being issued to finance the proposed Ark Encounter project, which is owned by a company controlled by Answers in Genesis (AIG). AIG is the on-line ministry of Ken Ham (ol’ Hambo), the ayatollah of Appalachia. It also owns and operates the infamous, mind-boggling Creation Museum.
It appears that Bloomberg has seen all the documents, and they routinely report on the bond market. Their analysis is far more sophisticated than ours. They say, with bold font added by us:
Given the default history of unrated municipal debt, investors may have to pray for the success of bonds being sold to build a full-scale replica of Noah’s Ark.
The northern Kentucky city of Williamstown plans to offer $62 million of securities next month for affiliates of Answers in Genesis, a Christian nonprofit that operates the Creation Museum upstate. Proceeds will help build a 510-foot (155.4-meter) wooden ship, the centerpiece of a planned biblical theme park called “Ark Encounter.” Bond documents project the venue will attract at least 1.2 million people in its first year.
$62 million? We had estimated that the total of the bond issue was only around $40 million. Let’s see what else they say:
Investors who buy $100,000 of the taxable securities will get a lifetime family pass, bond documents show. Yet they may not get their money back, given the track record of unrated munis. Of the 438 issuers currently in default, 93 percent initially offered bonds without a credit grade, according to Concord, Massachusetts-based Municipal Market Advisors.
You gotta have faith. They discuss some similar bond issues that failed, and then say this:
Industrial-development bonds, like those for Ark Encounter and the Nebraska venue, represented 28 percent of the failures, the most of any segment. “The history of theme parks and specialized projects like these has not been very good,” said Triet Nguyen, a managing partner at Axios Advisors LLC, a municipal-research company. “This is the first one I’ve seen in a while that reminds me of those debacles from the early days of the high-yield market.”
It doesn’t look like they’re optimistic about Hambo’s bonds. Let’s read on:
The documents cite at least 39 risks to investors, ranging from the potential for the animals to catch infectious diseases to the unclear constitutionality of tax incentives for a biblically themed attraction. There’s also no assurance that projected results, which are based on data gathered as early as 2008, will materialize, bond statements say. Nor is Answers in Genesis backing the debt. Bondholders’ sole revenue stream comes from money spent at Ark Encounter. The park “may never achieve positive cash flow,” which documents say would lead to default.
That sounds pessimistic, but documents that accompany the issuance of securities are required to list all the risk factors. The lawyers always toss everything in, in order to avoid being accused of misleading investors. Bloomberg knows that, but they’re definitely not drooling over this deal.
Then they discuss the Creation Museum and offer this interesting bit of news:
Attendance has declined every year since the museum opened in 2007, offering documents show.
There have been rumors about declining attendance, but Hambo has never admitted it before. The lawyers must have insisted on that disclosure. That’s how it is when one is issuing securities. All the skeletons have to come out of the closet.
Okay, that’s enough excerpts. You can click over to Bloomberg and read it all. Then, go ahead and buy a few of Hambo’s bonds if you like. What could go wrong?
Copyright © 2013. The Sensuous Curmudgeon. All rights reserved.
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The Sensuous Curmudgeon 
ACTUALLY Noah’s ark has been found by Ron Wyatt , just take a little time and look at his videos , they simply speak for themselves . http://www.youtube.com/watch?v=uPRo7Q-7yQQ
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A wealthy person who might be interested in supporting the park would probably just donate the money and take the charitable deduction.
Any other qualified investor will invest elsewhere. Someone at HamLand is getting bad advice on this deal.
Ruffusmd; well yes, they do speak for themselves. They say, hey look at me, I’m insane!
The Bible is right once again: not Genesis this time, but Revelation. Because the Apocalypse is near. A financial one, for Ol’ Hambo.
I loved that they called it a theme park and not a museum or part of a museum.
ruffusmd: According to the (long, boring) video you link to, Noah had implements or utensils of aluminium on the ark. That might seem reasonable to a naive 21st century citizen of a rich first world nation, but please permit me a long quote from Wikipedia:
The bonds are being sold now but according to the bond documents the ark encounter will not open until April of 2016. That means that about $8 million in interest payments, which are due twice a year, will have to be paid before the first dimwit walks through the turnstiles to see the thing. If AiG is not going to make the interest payments who is? Ark encounter will not be earning any revenues during that period.
There have been about $8
billionmillion in donations and another $5 million collected from advance sales of lifetime boarding passes that could conceivably be used to pay the interest but on its recently released fiscal year 2012 Form 990 AiG is listing about $5 million in prepaid sales as a liability that was not on last years Form 990 but there has not been an increase in cash and securities listed under assets that would be expected. It appears to me that much of the money collected so far in donations and prepaid sales has already been spent acquiring the land, obtaining permits and doing design work.The only other source of funds to pay interest for the next two years would be funds raised from the sale of the bonds themselves. That could be why the $62 million dollar figure is so much higher than SC had initially estimated. That has the feel of a Ponzi scheme to it though.
The fact that none of the bond traders that BusinessWeek interviewed would buy these bonds is a strong indicator that if they want to raise $62 million dollars, ark encounter is going to have to have to offer more attractive yields which makes their interest payment problem much worse.
I think in 20 years when people drive by that site they are going to see an overgrown field with a large decaying wooden boat abandoned in the middle of the site.
Investors who buy $100,000 of the taxable securities will get a lifetime family pass, bond documents show.
What an incredible inducement to buy worthless bonds!
A lake with special effects will mimic the subterranean explosion that the bond documents say triggered the biblical flood.
I was not aware of a subterranean explosion triggering the flood. I always thought the heavens opened up and the rain flowed down from the earth-circling stratum of water high in the atmosphere.
The latter-day ark, eventually housing a petting zoo, will be built according to dimensions specified in the Book of Genesis in cubits, an ancient unit of measurement that bond documents say equals 20.4 inches.
Does this mean Ham will have two of every kind of animals or 7 if they’re clean? Speaking of which, who’s going to clean up after them!
“This is the first one I’ve seen in a while that reminds me of those debacles from the early days of the high-yield market.”
Yes, sometimes even the professionals can smell a scam and admit it when they see one.
Nor is Answers in Genesis backing the debt. Bondholders’ sole revenue stream comes from money spent at Ark Encounter. The park “may never achieve positive cash flow,” which documents say would lead to default.
Well, we all know this is the ultimate outcome. Ham’s faith only goes so far; certainly it won’t touch his personal wallet, that’s a given.
Ruffusmd, I hope that video that I watched about 3 minutes of was posted as something for us to mock but I was getting the impression that it was serious.
This whole thing sounds more and more like a scam and I don’t mean the standard creationist variety.
Ken Ham is 62 years old. He’s at retirement age. He’s put forth no successors to his organization. His museum is still fully functional and he should have enough money to retire comfortably.
Instead he is trying to start up an entirely new and risky venture. One that will take over a decade to fund and complete.
In itself it doesn’t mean a whole lot. However, Ham is not taking on ANY responsibility himself. He’s not taking out any loans or providing any meaningful guarantees. Meanwhile if the venture fails, Ham will receive ALL of the money. both from the bonds and donations.
Further expanding on this. Donors, will receive a life time pass……. Ham’s biggest supporters and the people who would visit the park the most will be able to do so for free and never make Ham any money.
Long story short Ham knows that the park will never be built. However, he’ll be quick to blame everyone else when it stops.
All he needs is 62 devout christians with million-dollar nest eggs to invest, and a love of petting zoos. Very do-able, sadly.
It may be built but it will not last long. They are taking on way too much high cost debt for the ark ever to have a positive cash flow. Ken Ham’s refusal to accept any financial responsibility for this project speaks volumes about his own confidence in its ultimate fate.
Anybody who invests in this project deserves the returns they get!
Stephen Kennedy: “There have been about $8 billion in donations and another $5 million collected from advance sales of lifetime boarding passes…”
That should be $8 million, not billion.
retiredsciguy, your right, if Hambo got $8billion in donations it would be a sure sign that the country has gone insane.
@Jim Roberts: To add to your point about aluminum, it wasn’t made into a metal until 1825. Which means it would not have been available for utensils some 4000 years ago. Had, ya know, the flood actually happened.
If it’s built, the ark might prove to be a good experimental platform. Since it will be a petting zoo, it can be used to measure the effects on animals of a year’s captivity in small pens in the a dark or semi-dark environment (it’s an ark, no artificial light permitted, right?), with a diet restricted to whatever food can be stored aboard for the full year. The animal’s pen would have to be of a size consistent with the room allotted to that animal on a full ark, and the food would have to be that which could be fitted into a similar proportional space on an ark with food for all the other animals. The support crew would limited to one very elderly couple and three younger couples, who would likewise be required to remain on the ark with the animals for a full year with no access to any outside communication or support. They could not have any canned or preserved food, but only what could be stored for a year using historically plausible means.
Oh, and no modern vet or medical services would be allowed.
Maybe Ham could apply for a research grant.
Ever been to a petting zoo? And I don’t mean one that features pole dancers. When my kids were little we went to maybe two petting zoos. Rather, they were parks that had a petting zoo on the premises. Nasty, stinky places. Most of the animals didn’t want to be touched and the only common animal was a lamb; all others being too big.
Look at what Hambo is offering for $62 million: an ark that you can LOOK AT, a Seven Plagues of Egypt fun-house ride, stinky petting zoo and, and, and, well, that’s it. Tower of Babel that, presumably, you can climb up, but not until Phase 2.
Who in their right mind would want to go there TWICE?!!!???
Contrast the Ark Park with a new theme park development that was just announced to be built, and open by 2015 in northeast Houston: $200 million dollar, Six Flags-styled theme park with rides and attractions, 90 baseball and softball complex, 40-acre water park, hotel and shopping complex and more. It’s being designed by former Six Flags executives, career theme-park managers, to replace the old Astro World that closed down about 10 years ago.
Check it out!
Ed wrote: “If it’s built, the ark might prove to be a good experimental platform …”
The experiment Ed goes on to outline sounds like the fundamentalist version of Biosphere 2 or Mars-500 (the 500-day simulated Mars journey that took place in Russia fairly recently). Sadly the “Flood-377” experiment would have to involve severe mistreatment of a great number of innocent animals, but ol’ Hambo could very fittingly take on the role of Noah’s mddle son Ham. (Now SHOW us just how the Noahs got rid of all the manure, and demonstrate the on-board laundromate while you are at it! We’ve heard all the theory at AiG; now let’s see if you can make it work in real life!)
Then, as docbill mentions, there is the promised fun-house ride presenting the Seven Plagues of Egypt. This will of course involve the rotting carcasses of the Egyptian cattle, a stinking river of blood, and finally the corpses of thousands of firstborn children. Such great educational fun for the entire deranged family!
When one thinks about the premises for this amusement park, you can not help but get the impression that people who would want to visit it are sociopaths and that those that bring their children are child abusing sociopaths.
OK, recently I visited Edinburgh, Scotland, and the “Scotch Experience” which explains how scotch whisky is made. It involves a ride! However, rather than the plagues of Egypt, we went through the barley selection process, the barley sprouting, the barley roasting, mixing with the water, fermenting, distilling and, finally, casking. That’s the Seven Plagues of Oban.
Och!
Well, I’ve done the ride and I wouldn’t do it again, not because it was lame, on the contrary, it was fun … once. Next time I’d wait in the gift shop or tasting bar. Somehow I don’t expect Hambo to have a tasting bar!
At the ark encounter, unlike other theme parks with scary rides, you can not tell the children this is all make believe and never really happened, you have to hew to the AiG line that this is all real history. The whole world being drowned is real, there were actually thousands of bodies of dead first born children in Egypt. It is pounded into these kids that there is a real omnipotent god that did these things.
Can you imagine the emotional trauma to children to truly believe they are completely at the mercy of a genocidal psychopath of a deity from whom there is no escape. Ken Ham constantly bemoans the fact his book “Already Gone” shows that two thirds of young Christians leave the church by the time they reach college age. He thinks it is because the church has compromised on millions of years. I am convinced that it is the expected result of these terrified youngsters attempting to escape such a cruel and abusive belief system.
doc, your mention of the “Scotch Experience” gave me an idea for Ham. Since his location is Kentucky, he could legally produce bourbon. He would have much more luck selling bonds for the construction of a new distillery and connected “Bourbon Experience” amusement park, which would feature whirly rides for the kiddies that would simulate the “joys” of getting stumbling down drunk. Meanwhile, their dads could be in the tasting room “experiencing” the real thing.
A brand name for his bourbon? Genesis®. “Best bourbon in all creation.”
I wrote this on SC’s original post about Ham’s Ark bonds on Nov. 13:
“So, who’s paying the interest, and with what revenue? The Ark Park obviously won’t have any revenue unless and until it’s built, so where’s the money going to come from to pay the interest? The other investors? That may have worked for a while for Bernie Madoff, but I can’t imagine how any “accredited investors” would fall for that scheme now.”
The question remains unanswered. Stephen Kennedy suggests the same “Bernie Madoff” scheme: “The only other source of funds to pay interest for the next two years would be funds raised from the sale of the bonds themselves. That could be why the $62 million dollar figure is so much higher than SC had initially estimated. That has the feel of a Ponzi scheme to it though.”
That doesn’t just have the feel of a Ponzi scheme; it is a Ponzi scheme.
docbill1351 mentions: “the Seven Plagues of Oban.”
I don’t know about those plagues, but Oban is the very best single-malt Scotch. And I have some experience behind that statement. Along with a friend who was also a fan of single-malt Scotch, I’ve tried a dozen or two different brands, one bottle at a time. They’re all very different. The study required a few years to complete, but it was important research.
rsg – your comment about bourbon reminded me of the first time I drove through Bourbon, Indiana. Like many towns, it has its name proudly displayed in large print on the city’s water tower – I had to think that was possibly the most bourbon ever gathered into one container!
@Douglas E — must be a happy place!
The ark will be built and God will get the Glory. Search your own hearts you know deep inside God is real and true. Ken Ham is awesome and God has used him in mighty ways. Easier for a camel to go through the eye of a needle than……………..
Oh James, what a naughty prankster you are!
A camel passing through the eye of a needle would make a good graphic to print on the face of Hambo’s bonds. “Easier for a camel to pass through the eye of a needle than for an investor to get his principal back.”