Final Details of Queen Mary Lease Being Worked Out

Perturbed by the delay in reopening the Queen Mary, Long Beach Mayor Ernie Kell told city officials this week to complete the lease with the ship’s new operator.

The Queen Mary, which once employed 1,200 full-time and part-time workers, has been closed since Dec. 29.

“We’ve got a lot of people here that were under the impression that they were going to . . . keep their jobs,” Kell said at Tuesday’s City Council meeting. “And I think there are some people out there being a little disappointed.”

The City Council was scheduled to approve some last-minute changes in the lease agreement with the prospective operator, Joseph F. Prevratil. But final details of the lease were still being worked out, City Manager James C. Hankla said.

On Dec. 22, the council awarded the lease to Prevratil, who initially wanted to run the ship with the financial backing of a for-profit group called Queen Mary Partners Ltd.

But last week Prevratil accepted the financial support of a nonprofit group backed by Robert Gumbiner, chairman of the board of FHP Health Care and a Long Beach philanthropist.

Hankla said he hopes to present a final agreement next Tuesday for City Council approval.

Assistant City Manager John F. Shirey said the terms of the lease would not change. The lease requires the operator to pay the city $165,000 the first year, and $240,000 a year thereafter, along with a percentage of food and beverage revenues.

The previous operator, Walt Disney Co., did not renew its lease after reportedly losing as much as $10.8 million a year on the Queen Mary.

Because of the change in financial backing, Prevratil has delayed the reopening of the Queen Mary about a week, to mid-February. Prevratil, who managed the Queen Mary in the mid-1980s, said he has been meeting with his management staff.

“The game plan is ready to go,” Prevratil said.

A recent lawsuit was a key reason Prevratil decided to accept the backing of Gumbiner’s nonprofit foundation, he said.

The Queen Mary Preservation Trust, an investment group that wanted to buy the ship, filed a Superior Court lawsuit earlier this month accusing the City Council of illegally awarding the lease to Prevratil. City officials have denied the allegation. Preservation Trust is seeking a court order to force the city to nullify the lease.

“There was some real nervousness there from some of the investors,” Prevratil said.

In addition, Prevratil said it would have been more difficult to meet the demands of the for-profit investment group. He would have been expected to generate a return of 15% to 20%, standard for venture capital.