» A whimsical craft runs into the Minneapolis Park Board’s hard business realities
John Kerschbaum, owner of Gondolas on St. Croix, wants to bring one of the Venetian boats to Lake Calhoun for rides and romance. The Minneapolis Park and Recreation Board staff says it’s a great idea.
That’s where the agreement ends.
Kerschbaum and Don Siggelkow, Park Board general manager of administration and development, have very different views of how negotiations played out during the past year. As Siggelkow sees it, the two sides were far apart on profit sharing and other details. From Kerschbaum’s perspective, the Park Board broke off conversations last summer when he thought the two sides were close to a deal.
In recent years, the Park Board has investigated any number of private sector partnerships to add park amenities and boost its flagging budget. Siggelkow said a half-dozen times a year, people such as Kerschbaum will pitch a new business idea on park property.
Examples include Calhoun’s Tin Fish Restaurant, a new bike rental business in Minnehaha Park and Wirth Park ski rentals. The gondola negotiation is the latest in a series and offers a window into how such deals get done.
Lake Calhoun has seen gondolas before; the Park Board had a concession for a couple of years in the mid-1980s through a company called Venice on the Lakes, according to former owner Tony Minnick, who lives near Lake Hiawatha.
Minnick said he rowed for Kerschbaum in Stillwater in 2003 and encouraged him to pursue a Minneapolis deal. Minnick would again like to row on the Chain of Lakes, he said.
The questions are, who will do it and under what terms?
Siggelkow said the Park Board could still reach a deal with Kerschbaum but, “it depends on how much he is willing to go with the parameters we outlined for him.
“We were very excited about getting a gondola down at Calhoun that would go out on the Isles. We all still think it is a good idea. At this junction, we are looking for other operators to see if they can come in and do a similar thing.”
The vision
Kerschbaum offers a variety of gondola packages on the St. Croix, according to his Web site, http://www.gondolastcroix.com. For $95, couples get a 45-minute ride (and can bring their own picnic baskets). For $150, couples get a one-hour ride and a gourmet picnic basket with nonalcoholic beverage. The Gondola Elegante ($295) includes a five-course meal at a Stillwater restaurant followed by an hour-long ride from a gondolier in 17th-century garb.
Kerschbaum, 47, said in an interview earlier this spring he anticipated Minneapolis rates would be similar.
His background includes stints as a Boundary Waters guide, he said. He still runs a small tree-trimming business.
Why gondolas? He said one day he saw a picture of a gondola in the paper and “a light bulb went off.” He spent $25,000 to get a gondola of his own, traveling to Venice to get it. He is now in his fourth season on the St. Croix.
He knows a retired businessman who lives near Lake Minnetonka with a gondola Kerschbaum could use on Lake Calhoun.
“To me, it is a natural fit,” he said of the Chain of Lakes. “It is a no-brainer.”
In a recent interview, Siggelkow said he had not heard from Kerschbaum in a month. Kerschbaum’s sister, Megan, said he has been busy and is negotiating a deal in Hudson, Wisc.
The disputes
Kerschbaum said the Park Board initially asked for 20 percent profit sharing. Siggelkow said Kerschbaum initially offered 5 percent.
Siggelkow said a profit-sharing deal depends on the lease length and the business’ up-front investment.
This summer, for instance, Wheel Fun Rentals is leasing Minnehaha Park space to rent its specialty pedal cycles for $7-$25 an hour.
The owners are investing $48,000 in the cycles, Siggelkow said. The Park Board gets 15 percent of the gross. If the business hits its $125,000 revenue target, the Park Board would get $18,750. The company has a one-year contract, and the Park Board has a one-year renewal option.
For the gondola deal, Siggelkow said the Park Board had certain requirements. It wanted 15 percent of gross, which would have netted the Park Board an anticipated $18,000, similar to the bike deal.
“It is not worth our while unless the park system benefits to some level,” he said.
According to Siggelkow, Kerschbaum wanted to build a new dock to load and unload customers and construct a kiosk for ticket sales, which was problematic. “I said, ‘People kind of frown on us putting a lot of structures up around the lake, for good reasons. We try to minimize that stuff,'” Siggelkow said.
The Park Board also wanted Kerschbaum to work closely with the Tin Fish, which operates the restaurant on Calhoun’s north end. Tin Fish also handles the Park Board’s canoe and pedal boat rentals.
Siggelkow said he asked that Tin Fish handle Kerschbaum’s on-board catering and gondola ticket sales. He noted the north end is congested with the sailing school and yacht club, Tin Fish and the canoe rentals.
“The businesses are too small to have it mucked up around there,” Siggelkow said. “For park patrons’ sake, we ought to have a central place to rent their canoe, pedal boat or pay for a gondola ride.”
Protecting the business
Kerschbaum said he could negotiate any number of Park Board’s issues. He is willing to meet the Park Board’s 15 percent profit sharing number. If the Park Board is opposed to having another kiosk on the lakeshore, he or his staff person could work in the sun.
He is willing to work with Tin Fish as an exclusive caterer, though he didn’t want to be locked in if the partnership doesn’t work out. “I don’t know anything about the Tin Fish,” he said. “What if they don’t have a product that works for me at a price that works for me? That all has to be negotiated.”
Kerschbaum seemed most concerned about having someone from the Tin Fish book the gondola rides. That person would have to run credit cards, handle cancellations, refunds and gift certificates. He would want to train the person so the business ran to his standards, he said.
He worried that if business got hectic and Tin Fish’s staff person got swamped, his work would be the first to slide, which would only be natural, he said.
“Somebody I don’t know and have no control over running my business, and representing my business on that level, I have an issue with,” Kerschbaum said. “I don’t need a question mark.”
He said he thought the two sides were still talking when conversations died last June.
Future procedures
Siggelkow said the Park Board has talked about having a once-a-year event where the Park Board issues a request for proposals (RFP) for new business opportunities in the park system.
It probably isn’t the best public process to decide on business deals on a first-come, first-served, basis, he said. He also acknowledged that entrepreneurs that came up with new ideas want to be rewarded for their creativity, too.
He did not know if there were other gondola operators out there or not, but issuing an RFP “would let everybody have a fair shot,” Siggelkow said. «
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