SeaWorld Entertainment and its parent company The Blackstone Group just made headlines with a much-anticipated announcement of a $100 million initial public offering. And though acquiring shares in Shamu may sound like a glamorous and profitable proposition, investors should carefully consider what, exactly, their hard-earned dollars are buying.
SeaWorld is a proficiently lucrative outfit, as the pending IPO prospectus makes clear. After posting losses in 2008 and 2009, the company netted $19 million in 2011, and $86 million in the first three-quarters of this year. Much of that revenue was generated by the public's love of whales and dolphins, especially the magnificent black-and-white orcas who are all given the stage name "Shamu."
But investing in the captivity of highly intelligent killer whales for public amusement carries with it considerable risks and drawbacks - not just financially, but ethically and morally as well.
By all scientific accounts, Orcinus orca, the ocean's top predator that travels up to 100 miles a day, is an exceedingly unsuitable species for captivity. Captive orcas suffer an annual mortality rate 2.5 times higher than their wild cousins of the Pacific Northwest. Among some pods, males can live up to 60-70 years in the ocean, with an average expectancy of 30, and females can live to 90 or more, with an average of 46.
At SeaWorld, most orcas have perished in their teens and twenties, often from exotic causes. At least two died from mosquito-borne tropical diseases.
Many captive orcas die young despite extraordinary efforts to keep them healthy. Trainers routinely stuff the gills of food fish with antibiotics, antacids and vitamins, and inject them with fresh water, because frozen and thawed fish loses nutritional value and fresh water content. Some orcas receive up to 80 pounds of gelatin per day to combat dehydration.
Some killer whales break their teeth on metal gates and must have the pulp removed with a power drill. The teeth are flushed several times daily to prevent deadly bacterial infections. Meanwhile. all captive adult males have dorsal fins that are completely collapsed, a grotesque disfigurement that is extremely rare in the wild.
Captive orcas are more likely to injure themselves, or each other, than those in the wild. And though there are no records of serious attacks by wild orcas on people, four humans have died in killer whale pools (three of the deaths involved SeaWorld's notorious 12,000-pound male Tilikum) since 1991 and several more have been injured.
About 15% of SeaWorld's orcas have committed serious acts of aggression against trainers, a dismal safety record that would never be tolerated in other industries. Orcas lunged at trainers, pulled them in the water, held them at the bottom, head-butted them, slammed them with tail flukes and breached on top of them.
Of course, the most infamous killing took place in February, 2010 at Shamu Stadium in Orlando, when Tilikum grabbed trainer Dawn Brancheau and violently rammed and thrashed her about. That preventable tragedy unleashed a fury of controversy and painful publicity, from which SeaWorld is only now beginning to emerge. The company is still fighting with the federal government in a costly series of appeals and other legal maneuvers in the Brancheau case.
But to those investors utterly untroubled by questions of animal welfare or worker safety, even SeaWorld admits these issues might pose a genuine risk to your returns.
The IPO filing conceded that "incidents or adverse publicity concerning our theme parks" could possibly "negatively impact our revenues and profitability." Indeed, any injuries "involving the safety of guests and employees, and the media coverage thereof, may harm our brands or reputation," it cautioned. "Such incidents have occurred in the past and may occur in the future." Social media only "compounded the potential scope of the negative publicity."
Other risks to your investment are the potential exposure of park animals to infectious diseases, and lawsuits by activist groups alleging that "we do not properly care for some of our marquee animals." the filing said.
And there is one other intangible and highly unpredictable factor. "Changes in consumer tastes and preferences for entertainment and consumer products could reduce demand," the filing warned, "and adversely affect the profitability of our business."
US consumer tastes may already be changing. A recent poll by Opinion Research Corporation revealed that only one-in-four Americans supports orca captivity, while a plurality, nearly 40%, opposes it. (One third was undecided). Among women, who often plan family vacations, opposition ran more than two-to-one (45% vs. 21%). Astonishingly, only 5% of women "strongly" support captivity.
Many people in the anti-captivity movement are appalled by SeaWorld's cash-raising tactic. But some see it as an opportunity. After all, what better way to stage a protest during a stockholders' meeting than showing up as a holder of SeaWorld stock?
David Kirby is author of Death at SeaWorld, Shamu and the Dark Side of Killer Whales in Captivity (St. Martin's Press 2012).