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Will the $590M New York Wheel Project Ever Break Even?

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There are brave plans to build the world’s tallest Ferris wheel in the North Shore of Staten Island. Developers expect that the colossal attraction will help turn the St. George Ferry Terminal into a bustling tourist destination. The price tag for the 630-foot-tall wheel, however, keeps rising. It is now estimated to cost $590 million, which is more than twice the initial projection. The project has run into unexpected expenditures, which is common for an endeavor of this size. The similar massive Ferris wheel projects in Beijing, Berlin, Melbourne, Singapore, Dubai, Dublin, and Orlando faced similar funding or construction issues. “Frankly, not many of them make money.” says Dennis Speigel, tourism consultant, regarding the large wheels.

The risk for the undertaking increases along with the size. A smaller wheel would not only cost less and be more easily maintained, but would have options for sale after a few years if it could be moved. Also, such a large wheel necessitates a tremendous number of riders to make economic sense or dollars. Each of the wheel’s 36 cars can carry 40 passengers, allowing up to 1,400 riders per 38-minute rotation.

The wheel is Staten Island also has a higher risk because it is meant to generate new tourism, not feed off of existing visitors, as in other places. For example, the 200-foot wheel at Chicago’s Navy Pier attracts about 10 percent of the already vibrant locality which has roughly 10 million visitors annually. “Any one-off attraction can be a very risky venture,” said Robert Hunden, head of Hunden Strategic Partners of Chicago. “Whether it’s the world’s largest Noah’s Ark or the world’s largest wheel, there’s just not a lot of comps out there for a developer to say: ‘Hey, this did really well in 10 other places.’”

Currently, around 2.5 million tourists ride the Staten Island Ferry annually. Developers project that the New York Wheel will have 4 million riders per year. Tourism experts, however, doubt the possibility of so many visitors. “That would be more than Six Flags Magic Mountain in California, more than Six Flags Over Texas, Six Flags Over Georgia,” said Speigel. “I mean, 4 million people? No way.” Based on comments from developers and information from Hunden Stratetgic Partners, in order for the wheel to break even, it would need to attract approximately 3 million visitors a year at $35 per person.

Construction on the project has been shut down since July, due to a dispute with the original contractor. Still, despite the delays, many hope and believe that the wheel can still resurrect Staten Island’s allure. Located only five miles south of Lower Manhattan, the city Economic Development Corp. is also opening the city’s first outlet mall there this Spring. The wheel project itself will include a restaurant, shop, playground and theater, enticing tourists for a whole day of activity. “The developer’s forecasted income stream and financing details have been carefully considered,” said a NY Wheel spokesperson. “Although increased costs bring challenges, they are being addressed and resolved.”

By Ellen Cans

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