Family feud rattles Holiday WorldApril 5, 2013
By JEFF SWIATEK
The Indianapolis Star
INDIANAPOLIS — In the southwestern Indiana hamlet of Santa Claus nearly 70 years ago, an Evansville industrialist had an inspiration. With little there for children but a post office that handled Santa letters, why not offer something more. Much more.
So Louis J. Koch opened a theme park, with a Mother Goose ride and a toy shop of elves.
Years later his son Bill and later his grandson Will took the vision further. Much further. Monster roller coasters. Giant water slides.
Today, Holiday World & Splashin’ Safari draws more than a million visitors each year.
But the park built by generations of a family to entertain families is now splitting a family apart.
Will’s widow, Lori Koch, and brother Dan Koch are fighting for control of the family legacy. Lori wants to pass the park on to her three children. Dan, a lawyer from Florida who once ran the park, says he now pines for a return.
Perhaps because of expectations of closeness, family feuds tend to be wrenching things. The Koch feud is that and more.
Dan and Lori have quit talking to each other. She fired him as interim president and kicked him off the company board. He said her demands could destroy the park.
Holiday World is and always has been synonymous with families. White-haired family matriarch Pat Koch stars, at 82, in the park’s TV commercials. The food — baked chicken, green beans and cheesy macaroni — takes its cue from the dinner table, and the soft drinks — free, a first in the amusement park industry — cater to the whims of children and the pocketbooks of their parents.
On a recent sunny day, Lori, 51, cruising the park in a golf cart as roller coasters jutted into the sky, admitted to feeling pained by the family strife.
“It’s hard, it’s difficult, I’m torn,” she told The Indianapolis Star. “Who wants to be at odds with your family?”
Days earlier in Fort Lauderdale, Fla., Dan, 48, spent 90 minutes on the phone talking fondly about Holiday World past and present. While discussing the feud, though, he became somber, thinking of being cut off from the place where he spent summers as a boy since he was 7.
“Any kind of family business, there’s tension,” he said. “I’ve got to be positive and move forward.
I’d like to return in some lesser role some day. I’ll work anywhere, maybe pick up trash.”
At stake in the quarrel is control of a business with broad economic impact on Indiana. In addition to the 1.2 million visitors the park draws each year, it supplies part-time jobs to 2,300 people. One appraisal puts the park’s value at $109 million.
But for all the disagreement in the ownership battle, there is one thing both sides agree on: They weren’t prepared for the Koch family to fracture as it did.
One tragic event can do that.
Holiday World was fathered by a man who liked children. He had nine of them.
Louis J. Koch got the idea for the park when he visited Santa Claus. He noticed that the tiny town held little to enchant children besides a giant Santa statue and a post office that answered Santa letters from children around the world.
In 1946, Louis and his son Bill, newly returned from naval service during the war, opened the nation’s first theme park. Nine years later a man named Walt Disney would open the nation’s second theme park in California.
Santa Claus Land started with a Mother Goose train and a toy shop with elves. It grew fast in those thriving post-war years. A gift shop was added, a restaurant, a wax museum, more rides.
By 1955, Bill persuaded reticent family members to start charging admission. Fifty cents for adults. Kids free.
Five years later, Bill married Santa’s daughter.
Pat Yellig, daughter of the park’s longtime Saint Nick, had spent 10 years as a nun and was some 16 years younger than her husband. They got right to work on building a family. In six years they had five children: Will, Kristi, Dan, Philip and Natalie.
As Louis handed control of the park over to his son, Bill started thinking big.
When Santa Claus needed housing, he built a town, forming its council and sewer company and naming 27 miles of new roads.
When federal officials began planning I-64 in Indiana, he lobbied the governor and transportation boards to route the interstate farther south, putting an exit seven miles from the town.
As Bill’s children grew, they all worked at the park. But only one was groomed to be his successor: Will.
Will earned an engineering degree from the University of Notre Dame and, like his father, had Santa Claus Land to thank for meeting his wife.
Lori Morris, a music education student from Walton, Ind., worked at the park as an entertainer.
After a brief stint in California, Will and his bride returned to Santa Claus to start their own family.
In the 1990s, as Will took over the park, now called Holiday World, from his father, he put it on an expansion path that eclipsed attendance projections by theme park experts and surpassed the most optimistic of family plans.
Will built higher, longer and faster coasters that drew hordes of fans seeking ever-greater thrills. But his breakthrough was building water rides in the 1990s that essentially created a second amusement park. The cost: tens of millions of dollars.
Will also came up with the idea of free soft drinks.
“I said, ”˜You’re crazy,’ “ recalls Matt Eckert, then chief financial officer. But free soda drew even more guests, who spent even more on food and gifts.
In 2001, Bill died at age 86, and his five children — who held equal shares in the park — almost sold out. The park’s official history doesn’t mention the near-sale, but Dan said the siblings sought bids and the high offer came in at more than eight times earnings, far more than they thought the park was worth.
But the sale never happened. Will and Dan, grandsons of the founder and sons of the visionary, got cold feet.
Instead, Will kept building. In 2006, the new Voyage wooden roller coaster helped the park top the 1 million visitor mark for the first time. Four years later came the first water coaster, Wildebeest, drawing raves from fans and earning a rating of No. 1 water park ride in the world.
Will was bringing in one successful ride after another. Holiday World’s attendance kept climbing.
Then, on a June night in 2010, the Koch family was shattered by tragic news.
Will, who had struggled with his blood sugar for years, was found dead in his swimming pool by his family as they returned home from an evening out. The coroner ruled that drowning was the cause of death. The family attributed it to a diabetic attack.
He was 48.
This time the Koch family didn’t have a successor in line.
Will’s sudden death left Holiday World in crisis and his widow in grief.
“She cried and cried and cried,” Dan said.
Lori found herself in charge of her late husband’s estate, which held 60 percent controlling interest in Holiday World.
But she wasn’t a businessperson. She had run the park’s entertainment in the past but later kept busy raising three children.
With the park amid the peak summer season, Lori asked Dan to leave his law practice in Florida, where he had lived for the past 20 years, to run Holiday World in a pinch. Dan owned the other 40 percent of the stock. (By 2010, the two brothers had bought out their siblings.)
Dan answered the call and became interim president. He left Fort Lauderdale and moved into his mother’s basement near the park.
A 2002 agreement between Will and Dan said that if one died, his shares would be bought by Koch Development Corp., the family entity that owned the park, or by the surviving brother. The sale was obligatory and had to occur within 180 to 210 days.
The agreement’s terms essentially meant that Dan would become the owner of Holiday World. Koch Development’s only board members were Dan and his sister Natalie, who no longer owned shares directly.
The plan for ownership succession seemed clear-cut. But there was one problem: Lori and Dan couldn’t agree on a price.
The agreement laid out a formula that set the price at $541.93 a share for Will’s nearly 50,000 shares. That valued Will’s shares at nearly $27 million.
But Lori knew Will and Dan had bought their sister Natalie’s shares in 2009 for $653 a share. That higher price valued Will’s shares at $32.5 million.
Dan made it clear he wouldn’t pay the higher price.
The two sides began lawyering up.
In December, with the purchase deadline close, Dan arranged to pay the lower amount of $27 million. His financial package included a $6 million loan from his sister Natalie, whom he already owed $3 million for the shares he had bought from her in 2009.
Lori wasn’t budging. She refused to accept her brother-in-law’s money, returning his checks and notes and demanding the higher price.
As the end of 2010 neared, Dan put out an ultimatum: Sell Will’s shares by Jan. 7 or he would sue.
Lori didn’t sell. She sued instead.
The Koch family fight was on.
The Holiday World lawsuit is contained in two bulging cardboard attaches in the Vanderburgh County Courthouse.
They filled up over the course of two years as two sides of the same family traded charges.
Lori — on behalf of her husband’s estate — said her brother-in-law, and the family company he and Natalie controlled, breached the stock sale agreement by short-changing her on the price for the shares; not tendering the full amount for the shares by the sale deadline; and insisting that part of the purchase price be offset with a $2.7 million debt that Will owed the company.
Dan counterclaimed, saying that the price for Will’s shares had to be set using the formula spelled out in the agreement and that his sister-in-law was out to wreck the family business.
Lori’s actions, Dan explained in an interview, would devalue his shares. Without a seat on the board, the owner of his shares would have no say in operations, finances or any other aspects of the company.
Will’s estate, controlled by Lori, “will wrest a controlling interest in Koch Development Corp. from the Koch family and place it in the control of the personal representative of Will’s estate for her to do with as she might desire,” his countersuit said. “This ... could partially or completely devalue the shares currently owned by Dan. ... It will disrupt if not destroy Koch Development Corp. as a family-owned operation.”
As the lawsuit heated up, Dan’s personal life was unraveling. His new law firm in Fort Lauderdale ran into financial problems while he was in Indiana and later dissolved. His second marriage had been heading toward divorce. To launch the firm and pay for the divorce, he gave himself a bonus and loan of $875,000 from Koch Development in the fall of 2010. Weeks later he gave his sister-in-law the ultimatum.
For all their maneuverings and stock price calculations, however, the legal filings didn’t reflect the other issue splitting the Koch family.
“The lawsuit was never about money. It’s about making sure her kids get the business,” Dan said. “It’s really a fight about transition — how it moves to the fourth generation.”
Dan said he thinks Lori and Will’s three children — Lauren, 24; Leah, 22; and William, 19 — are too young to step into positions running Holiday World or Koch Development and should work in outside jobs before they ever do.
Lori said she is just carrying out the wishes of her late husband, who wanted his own children to take over the business some day just as he had taken over the park from his father.
“I know in my heart Will had the intent for his kids to inherit this park,” she said. “This is their dad’s legacy for them.”
Dan acknowledged that he had agreed at one time to sell his shares to his brother. But now that Will is dead, Dan said he has visions of his own children, an 11-year-old girl and 9-year-old boy, inheriting the park.
For now, Lori’s children have the inside track to run Holiday World.
In December, a judge in the case ruled in favor of Lori and the estate, voiding the agreement that Will’s shares be sold at the lower price or at any price.
The ruling was a clear victory for Lori and the estate, which revealed in a court filing that the estate’s legal fees had topped $681,000. Lori acted quickly, replacing Dan as president with Eckert — the first person who is not a Koch to run Holiday World — and putting her three children on the board of Koch Development. All are college students, though two graduate this year.
“Dan did a great job for the two years he was here (as interim president),” Lori said. “I hope this can be a positive. He can go back to his law practice. Dan’s got two children down there (in Florida). I know I’d want to be close to my kids.”
A fourth person also was put on the board: Chip Cleary, a veteran amusement park operator from Long Island, N.Y., who was a friend of Will.
Cleary, 62, a former chairman of the International Association of Amusement Parks and Attractions, said his role on the board is to act as a sounding board and adviser for the Kochs, including Dan.
“I was very impressed,” Cleary said of Lori’s children. “They have very strong opinions on what they want to do. These kids are very, very talented kids. They have a great interest in that park.”
The family fight is not over.
Dan has appealed the judge’s ruling to the Indiana Court of Appeals. He argues that the county judge erred in excusing Lori and the estate from the obligation to sell their controlling shares to him.
Meanwhile, the park is set to open May 4 with $6.5 million in improvements. They include a four-slide water ride called Hyena Falls, a new first-aid station and a rebuilt high-dive pool.
Stretching over 100 acres, the park now dwarfs memories of the Mother Goose train from 1946.
Cleary said he doesn’t think the Koch family feud will derail Holiday World, which has received more Golden Ticket awards for best rides or park operations from Amusement Today magazine than any other theme park. He has seen parks survive the deaths of their founders, bankruptcies and other woes.
“Yes, there is this thing behind the scenes going on,” Cleary said. But “the underlying thing ... is most people come to a park because it’s a great park. I really believe that the park’s biggest times are ahead of it.”
Dan said he looks forward to visiting Holiday World this summer with his children. Whether it will be as the controlling shareholder or not, he can’t say.
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