Patriotism & Etiquette: A Failed Football Team Owner Takes on the NFL

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Yes, Donald Trump owned the New Jersey Generals of the failed United States Football League. And yes, Donald Trump failed in his bid to purchase the NFL’s Buffalo Bills in 2014. So there might be something personal in his recent attacks.

And why is this showing up on Final Days?

Well, when I started Final Days of Conventional Wisdom back in the 1920s, the concept was to explore how we relate to the planet and to each other as humans. And this is very much a human issue.

The polarized nature of a fight over free speech vs patriotism that is being dragged out between the grassy fields of the NFL (and the wooden floorboards of the NBA) and the carpeted halls of the White House has set the internet afire with lots of false information. So, it’s fact check time.

WE ARE REQUIRED TO STAND FOR THE NATIONAL ANTHEM.

The etiquette for conduct during the National Anthem is codified into US law, as laid out in the Flag Act , signed into law by President Roosevelt on June 22, 1942. The stipulations for the National Anthem appear in Title 36 (Patriot Societies and Observations) of the United States Code, Section 301, as follows:

(a) Designation.—The composition consisting of the words and music known as the Star Spangled Banner is the national anthem.
(b) Conduct During Playing.—During a rendition of the national anthem—
(1) when the flag is displayed—
(A) all present except those in uniform should stand at attention facing the flag with the right hand over the heart;
(B) men not in uniform should remove their headdress with their right hand and hold the headdress at the left shoulder, the hand being over the heart; and
(C) individuals in uniform should give the military salute at the first note of the anthem and maintain that position until the last note.
(2) When the flag is not displayed, all present should face toward the music and act in the same manner they would if the flag were displayed.

There are two important things to note here:

First, the wording of the code states “should,” not “must” or “shall” as is often found in law, meaning the code is a recommendation rather than a mandate.

Second, this code is non-enforceable. There is no criminal action that can be directed to those who do not stand for the National Anthem and/or place their hands on their hearts or salute. The only persons required by law to salute would be active servicemen in the military or other government employees whose codes of conduct within their departments require they conduct themselves in such a manner.

While players are not breaking the law when not standing or being present for the National Anthem, they could be violating team or league conduct rules, but that is a contractual issue, not a criminal one.

One last note on this section: Title 4 (Flag and Seal, Seat of Government, and the States) of the United States Code, Section 10 states:

Any rule or custom pertaining to the display of the flag of the United States of America, set forth herein, may be altered, modified, or repealed, or additional rules with respect thereto may be prescribed, by the Commander-in-Chief of the Armed Forces of the United States, whenever he deems it to be appropriate or desirable; and any such alteration or additional rule shall be set forth in a proclamation.

Although the President is prevented from changing the code regarding conduct for the National Anthem (as it’s in a different Title of the code), this does allow him to add or alter rules of conduct regarding the flag itself. In other words, he could circumvent the issue of standing for the Anthem as a song by decreeing it mandatory to stand for the flag as an object when the Anthem is played.

NFL PLAYERS WERE NOT PRESENT AT THE SIDELINES FOR THE NATIONAL ANTHEM UNTIL THE MILITARY PAID THE NFL MILLIONS TO MAKE IT HAPPEN.

The National Guard recently paid various NFL teams millions of dollars over a four year period to bring in color guards, have returning soldier reunite with their families during games, and to be a primary advertiser in broadcast media and on websites, all as part of a recruitment campaign centering on NFL fans, after it determined that a similar campaign with NASCAR wasn’t working.

Omitted  from this claim is the fact that the NFL began returning the money last year to the federal government after complaints were levied by a number of US Senators.

However, this isn’t why players started leaving the locker room for the sidelines during the Anthem. The practice began as a response to the events of Sept 11, 2001, as a message of solidarity and patriotism – an expression of free speech as exemplified in the First Amendment.

IN EXCHANGE FOR SUPPORTING THE MILITARY, THE NFL WAS GIVEN TAX EXEMPT STATUS AND PAYS NO FEDERAL TAXES

There has never been any tax exemption deal involved with the teams’ National Guard arrangements nor the NFL’s support for the military and troops. The only tax exempt status in the NFL was for the League Office, which had been considered a nonprofit “trade association” under the law since 1942. In 2015, the League Office voluntarily gave up its tax exempt status after continued public confusion between its duties and status and that of the NFL as a whole. Meanwhile, each of the 32 NFL clubs has always been considered a for profit business by the IRS and has paid federal income tax on all revenue, including ticket sales, merchandise, and broadcast rights.

NASCAR IS MORE PATRIOTIC THAN THE NFL

While it’s true that all drivers and team members stand for the National Anthem before races, NASCAR’s relationship with the Stars and Stripes has been sketchy. In July 2015, the combined raceways that host NASCAR released the following joint statement:

“As members of the NASCAR industry, we join NASCAR in the desire to make our events among the most fan-friendly, welcoming environments in all of sports and entertainment.

“To do that, we are asking our fans and partners to join us in a renewed effort to create an all-inclusive, even more welcoming atmosphere for all who attend our events. This will include the request to refrain from displaying the Confederate Flag at our faciities and NASCAR events.

“We are committed to providing a welcoming atmosphere free of offensive symbols. This is an opportunity for NASCAR Nation to demonstrate its sense of mutual respect and acceptance for all who attend our events while collectively sharing the tremendous experience of NASCAR racing.”

The new policy was a request, not a ban, most likely because NASCAR knows its clientele and understands that an outright ban would result in a disastrous outcome for the stock car racing league. Efforts to encourage fans to exchange the Battle Flag of the Confederacy for the Stars and Stripes at tracks went unheeded and sportscasters have noticed continuously more and more Confederate flags appearing at races, especially after NASCAR issued its support for the Confederate flag’s removal from the grounds of the South Carolina statehouse.

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THE ISSUE OF KNEELING HAS NOTHING TO DO WITH RACE. IT IS ABOUT RESPECT FOR OUR COUNTRY, FLAG AND NATIONAL ANTHEM.

That’s a direct quote from our President’s personal twitter account. He’s both right and wrong. Decorum calls for standing during the anthem and placing one’s hand over one’s heart (unless a member of the military or a veteran, in which case it’s the military salute). Doing otherwise is considered by etiquette to be an act of disrespect….which is is why the kneeling began. In much the same way as the Blank Panthers salute during the 1960 Olympics, today’s athletes are using a platform of defiance against established patriotic protocol to convey a message of social injustice existing within the country’s legal systems. Unfortunately, between the President’s non-stop tweets and the numerous teams joining in the protest, much of the message was lost and it was re-framed by some as not being a social justice issue, but an action of defiance against the nation as a whole and the President specifically.

AND NOW….A MOMENT OF PATRIOTIC TRIVIA:

Prior to passing of the Flag Act in 1942, Americans saluted the flag with the Bellamy Salute, named after James Bellamy, author of the Pledge of Allegiance, and devised by James B Upham, who described it thus in his publication The Youth’s Companion:

At a signal from the Principal the pupils, in ordered ranks, hands to the side, face the Flag. Another signal is given: every pupil gives the flag the military salute — right hand lifted, palm downward, to align with the forehead and close to it. Standing thus, all repeat together, slowly, “I pledge allegiance to my Flag and the Republic for which it stands; one Nation indivisible, with Liberty and Justice for all.” At the words, “to my Flag,” the right hand is extended gracefully, palm upward, toward the Flag, and remains in this gesture till the end of the affirmation; whereupon all hands immediately drop to the side.

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From their simultaneous inception in 1892, the Bellamy salute and the Pledge of Allegiance went hand-in-hand, until the NAZI party in Germany and the Republican Fascist Party in Italy appropriated a similar technique, at which point, in the United States, the hand was realigned to cover the heart, as codified into law by the Flag Act.

 

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This Photo is Both Very Real and Very Fake

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In this post, I’ll be analyzing why hundreds (perhaps thousands) of people believe this photo is either fake or from an earlier date than advertised, through a discussion of bubbles, belief systems, and morality. But before I get there, it’s important to understand the technical side of the argument.

To help me analyze the photo, I enlisted the assistance of two friends, Stephen Low and Hans Kummer. We compared the photo to a screen grab (below) taken from the first drone video shot by Lincoln O’Barry of Dolphin Project, a video that was deleted from Facebook less than an hour after posting, and to Dolphin Project’s second drone video. Our objective was to use the best available material to compare the Seaquarium’s image to other images taken around the time the park claims theirs was shot.

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Some background on my collaborators: Stephen was the first documentary filmmaker to shoot the Titanic – and the only one to do so with IMAX film cameras (Titanica). His other IMAX documentaries include Skyward, The Last Buffalo, Beavers, Fighter Pilot, Aircraft Carrier 3D, Volcanoes of the Deep Sea, and The Ultimate Wave Tahiti with Kelly Slater.

Hans is an archival image and media specialist. He was a consultant on the feature film Rebirth, a portion of which appears as a key component of the National September 11 Memorial and Museum in New York City. This year, Hans is continuing his duties as a Judge for the biennial Jackson Hole Wildlife Film Festival.

The most popular argument given against the Seaquarium’s photo is the perceived difference in water color from the drone footage. The first thing to understand is that water color is irrelevant when comparing the two images. Factors such as the angle of the shot, sunlight, distance, cloud cover, reflection, and even camera specifications can cause two different images taken an hour or so apart (based on the Seaquarium’s time stamp and the time of the first drone flight broadacast) to appear very different.

It is also very easy to change the color, brightness, and saturation of a photo within a camera, a computer, or even a phone before it’s distributed. If the photo had been taken on Sept 11, it could have been altered to create a more cheerful image. However, Hans blew up the image to inspect the pixels, as any changes to an image would typically create a slight alteration in pixels, but he was unable to see any. The time stamp on the image is 12:38 pm on Sept 11, but time stamps can easily be altered, so it’s also irrelevant. The only way to determine whether the photo is from an earlier date or was taken the morning it was posted, and to determine if it was altered in any way, would be to access the metadata on the original photo, which we do not have.

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The above two photos may appear different, but are of the same person taken at the exact same time from different angles by Dutch photographers Thijs groot Wassink and Ruben Lundgren

Our assessment is that, using the resources available, it’s impossible to tell if the photo is from the date stated, from an earlier date, or has been modified in any way, but it is a real photo. One thing that we found of interest is that during a period when every other zoo, aquarium, and animal attraction in the state (with the exception of Walt Disney World) reported on and showed via video and photos damage to their facilities, we did not see any such images from the Seaquarium until a few days later. Instead, the park released a carefully staged public relations photo of its orca, Lolita. In the background are two smiling employees in wetsuits. Analysis of video and photos of the park shows these two to be dolphin trainers. Speculatively, they could have just been stopping by to visit or to check on the white sided dolphins in the tank. Either way, their presence does not give any indication on when the photo was shot. The only thing we could actually determine was that the photo was composed in a way that it encourages the public questioning it (it’s far too cheerful for the day after the park was hit by a hurricane). The composition of the text that accompanied it on Facebook did not help either.

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But why would so many people be so quick to judge based on an assumed difference in water color? In 2011, Eli Pariser, the Board President of moveon.org, coined the term “filter bubble”. It’s the idea that when you do web searches or browsing, algorithms send you towards the type of material it believes you’d be interested in (such as animal rights campaigns or zookeeper discussion boards, depending on your taste), preventing you from seeing items that might present the opposing point of view. The concept that internet algorithms affect your personal viewpoint has been widely debated, but one thing is certain: we all live in bubbles.

Think of a bubble as your personal belief system. It is derived from your experiences throughout your life – including your interaction with family, friends, at school, at the workplace, your place of worship, the group of friends you associate with – and how everything you experience in life impacts you. Your belief bubble is also home to your morality, which, based on your beliefs, allows you to decide what is right and wrong (note that morality and law are two very different things). It’s very possible to share beliefs with someone who has a completely different moral standing. For instance, two people can believe “I love animals.” From that belief, one moralizes, “I love animals, so zoos are good because they allow me and others to see animals we could not in the wild,” while the other moralizes, “I love animals, but they are abused in zoos, so zoos are bad.”

When we strongly follow the beliefs in our bubble, two things happen to data that might counter our beliefs. First, we might consider all information outside our bubble entirely invalid or untrue. Over the past year, objectivity has been redefined to be the same as subjectivity. The concept “fake news” was originally used to define news sites with fabricated or unvetted facts. During the Presidential campaign and into his Presidency, Donald Trump appropriated the term to imply any news source that does not agree with him or does not provide the coverage he wants. This means that for a large number of people working within their belief bubbles, any intent to disprove verifiable facts is now validated by the actions of the country’s leader, regardless of whether they support the Administration or not.

In industries where conspiracies historically exist, such as tobacco, finance, and marine mammal captivity, it’s easy to come up with a plausible conspiracy theory. And anything that’s plausible can be believed to be truth.

Because the marine mammal captivity industry, going back to Marine Studios in 1938, has a history of fabricating its realities (to give just three examples: the original Shamu was advertised as a male – “King of the Deep”), secrecy (the overnight shipment of Orky and Corky from Marineland of the Pacific to San Diego) , and illegal activity (John Holer’s 1977 dumping of dolphins in the Gulf of Mexico, violating the Marine Mammal Protection Act), it becomes easier to believe that such a cheerful photo taken at the Seaquarium the day after a hurricane is fraudulent.

The second way we treat information outside our bubble, when we know it to be accurate but at conflict with our beliefs, is to either avoid it altogether in favor of something more aligned to what we believe, or to use a generalized explanation when presenting an argument. For example, both Howard Garret of Orca Network and I independently kept tabs on the weather hitting the Seaquarium during the storm. I used hourly data, eventually switching to minute-by-minute data, from a weather station at the University of Miami’s Rosenstiel School, located on the opposite side of campus from its boundary with the Seaquarium. Almost all winds came from the east, with the strongest sustained gusts from the EastSouthEast at 101 miles per hour. This led me to the conclusion that the orca stadium was protected from the winds by the UM campus’ buildings, which either deflected or channeled the strongest gusts.

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Garrett used an overall wind chart for the entire storm, using it to justify the winds were coming from the SouthSouthEast, which would be a direct hit on the stadium.

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So which one was accurate? This is, in many ways, like the argument about the photo. We’re both accurate and we’re both very wrong. There are so many factors that go into wind direction and velocity that two different people only a few hundred feet apart will experience different wind directions and speeds, thanks to variances in man-made and natural topography, pressure, and other variables. In fact, the only way to accurately measure wind velocity and direction at the tank would be to measure it at the tank itself during the storm, which neither of us had the ability to do.

So why the difference in approaches? I was targeting a general audience without focusing on any one belief system. Garrett utilized a more generalized graphic to support his argument that the orca needs to be released into his organization’s custody, so the graphic became a marketing tool targeted towards a certain group with similar belief bubbles. The axiom that less is sometimes more came into play.

While Garrett carefully chose his image to support his argument to his targeted audience, there are instances where the omission or generalization of data is taken to its extremes, and the message becomes propaganda, a practice of which both PETA and SeaWorld are very adept. The word “propaganda” often carries a negative connotation, but the practice is in actuality based in fact – even though it’s selective fact, and keywords are often used to influence both those with specific belief systems or those on the fence.

The omission of information in an argument can also act as a window into a person’s belief system. In August 2016, Brad Andrews, the Zoological Director Emeritus of SeaWorld Parks & Entertainment, and the company’s Vice President of Theriogenology, Todd Robeck, presented a paper on SeaWorld’s history of artificial insemination of orcas.

In the final portion of the paper, the authors lamented the ending of the breeding program, announced just a few months before by the company’s new CEO, Joel Manby. In the paper, the two never mentioned either Manby or SeaWorld as instituting the breeding ban. Instead, they blamed the anti-zoo movement for placing at risk both the captive whales’ futures and the research to sustain wild populations. By omitting SeaWorld’s and Manby’s decision to breed future orcas, they presented an argument that the company is infallible and that the anti-zoo movement is immoral. Their audience – zoo professionals.

Very often with belief bubbles, truth is certainly in the eye of the beholder. But there are other universal truths that affect everyone (although some people fail to accept these universal truths, such as flat-worlders). These are the scientific and historical truths, which remain true until evidence is presented to alter or disprove them, at which time another truth takes their place. From these truths, we can speculate on future actions or intentions, with documented evidence as the basis for our educational guess.

I will be presenting both my speculation and the evidence I base it on about SeaWorld’s future, and this calls for a disclaimer: the speculation I present is purely mine. It does not necessarily reflect on the beliefs of any of my employers or clients past, present, or future, and my complete employment experience in any capacity with SeaWorld is limited to an unpaid internship in the Aviculture (birds) department in 1987.

SPECULATION: Zhonghong Group is about to implement its business plan for SeaWorld.

EVIDENCE: The October 9 departure of David d’Allesandro marks the end of any Blackstone appointees on the board. The two others departing are former State Department appointees and their departure indicates that their experience in international relations is no longer needed. As of October 9, Zhonghong, SeaWorld’s largest shareholder, will have control of the board, allowing it to set policy. It is unknown at this time if a buyout offer is being made. The new rules instituted by the Chinese government on August 4 would require Zhonghong to provide evidence that an acquisition of or further investment in SeaWorld Entertainment would be beneficial to the nation and the Chinese people. This should not be too difficult to do, providing such an investment would allow acquisition of a large animal collection and the expertise of SeaWorld’s staff.

SPECULATION: The two Busch Gardens parks will remain in the SeaWorld portfolio, but SeaWorld San Diego will close within the next five years. Aquatica San Diego will be transformed into Sesame Place.

EVIDENCE: Rumors that SeaWorld was being pressured to sell the Busch Gardens parks came up during a recent Merlin Entertainments earnings call. The pressure came from one of SeaWorld’s largest shareholders (currently owning just under 15% of the company), Hill Path Capital. SeaWorld’s Q2 earnings filing with the SEC specifically warned against Hill Path’s intrusion.

Unlike the to Busch Gardens parks, the San Diego SeaWorld park continues to be problematic. The two new attractions, Ocean Explorer and Orca Encounter are failures at drawing attendance (as Manby stated during the Q2 earnings call, neither attraction will show a positive return on investment). New attractions in San Diego, including the Orca Encounter set, are modular in construction. Rides, with the exception of the submarine dark ride vehicles, are off the shelf, and this includes the 2018 coaster. This implies that recent attractions have been designed and selected for an easy move to another location. Brady MacDonald of the Los Angeles Times pointed out that the same off the shelf coaster model going into San Diego failed to increase attendance when installed at Busch Gardens Williamsburg, while Robert Niles of Theme Park Insider and the Orange County Register stated the obvious: LEGOLAND California’s recent announcement of a submarine ride through a real tank full of real fish has made Ocean Explorer obsolete.

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Submarine Quest at SeaWorld San Diego’s Ocean Explorer

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Submarine Adventure at LEGOLAND Dubai

Two other factors have the potential to negatively affect SeaWorld’s attendance. In 2018, Six Flags Magic Mountain, on the north side of Los Angeles County, will switch to a 365 day a year operation schedule. If Six Flags can make the park more family friendly, the primary tourism boundary for Southern Calfornia could realign from Universal Studios and Hollywood on the north and San Diego on the south to Magic Mountain on the north and LEGOLAND on the south, about 40 minutes north of SeaWorld. Figures from the San Diego Tourism Authority between January and July 2017 show that attendance at the county’s attractions has been decreasing from the prior year. The Tourism Authority tracks and combines attendance figures for SeaWorld, the San Diego Zoo, the San Diego Zoo Safari Park, LEGOLAND Calfornia, Sea Life Aquarium, Cabrillo National Monument, and the Midway Aircraft Carrier. When looking month to month, it becomes apparent the impact SeaWorld has on the market. The attractions industry in San Diego saw an overall loss of 15.6% in February (the end of the One Ocean show at SeaWorld), offset by a 24.1% increase in April (the Seven Seas Food and Wine Festival at SeaWorld).

The other threat to SeaWorld is the large scale OdySea Aquarium planned for the San Diego Harbor waterfront. This will bring a third aquarium, in addition to the Birch Aquarium at Scripps and Sea Life at LEGOLAND to San Diego county, this one in a highly trafficked area and in a redevelopment project designed to pull heavy attendance from both locals and tourists.

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The proposed Seaport San Diego, home of the OdySea San Diego aquarium. The site is in a high traffic area adjacent to both the convention center and the San Diego Children’s Museum.

The Aquatica park in Chula Vista is approximately a 23 mile drive south of SeaWorld. Attractions investment for this park has been restrained compared to the two other Aquatica parks, but as a Sesame Place park it can take advantage of both the additional distance from LEGOLAND, a primary competitor, and having a nearby multi-million dollar Gaylord family resort. A Sesame Place park in this location would fill the void caused by the closure of the Sesame-themed attractions at SeaWorld San Diego.

SPECULATION: Manby is out, breeding will resume, orcas are headed to China

EVIDENCE: Joel Manby’s contract expires in April. Provisions within his contract provide for early termination either by Manby or the board. My speculation on his departure is based on two things: 1. the continued loss of attendance, revenue, and stock value during his period of employment. 2. the transition of control of the board to a new ownership group.

If Manby leaves, there is no certainty who will take his place. It could be an outsider. It could be Don Robinson, who is familiar with both Orlando and Asia, having overseen Disney resort and theme park operations in Florida and Hong Kong. But as Lead Independent Director, he cannot have a business relationship with SeaWorld other than sitting fees as a board member. Of course, that could change, especially if Zhonghong buys out the company, de-lists it from the NYSE, and takes it private. There’s also the possibility that the incoming Chair, Yoshikazu Maruyama, could take on the dual role of Chair and CEO.

If Manby goes, the bans instituted with orcas are likely to go with him. An attempt to appease the animal rights crowd, by all appearances the move backfired, especially in the San Diego market.

Transport of orcas to Zhonghong’s Chinese parks and their breeding will be important if the company wants to succeed in a highly competitive marine life park and aquarium market that is growing exponentially.  Next year, three high profile orca show arenas are scheduled to open to the public in Linyi, Shanghai, and Zhuhai. A holding, training, and “breeding” facility is being built in a fourth city, while other locations, including Sanya, are developing future plans for orcas.

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Orca stadium at Linyi Polar Ocean World under construction is slated to house two whales.

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Orca stadium (top of photo) at Shanghai Haichang Polar Ocean World. Haichang currently claims to have four orcas at a holding facility in Dalian.

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Original design for Chimelong Ocean World, located adjacent to Chimelong Ocean Kingdom in Zhuhai.

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Final design for Chimelong Ocean World in Zhuhai. This will be home for Chimelong’s orcas. The company claims to currently have nine in its possession.

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Recent construction photo of Chimelong Ocean World in Zhuhai. Special thanks to Michael Giskin for locating and sharing images of the Chinese facilities.

The majority of Chinese familiar with the American SeaWorld brand (as compared to the Australian park or the numerous unaffiliated Sea World parks and aquariums throughout China and Asia) identify it with orcas. Zhonghong could have easily just contracted for park design services from SeaWorld and leased or purchased animals for its parks without buying into the company. The fact that it paid 33% above market value for a 21% stake in SeaWorld indicates Zhonghong wants more.

SeaWorld’s inventory of killer whale genetic material is as valuable in China as live orcas. All of the other marine life park companies in China that will display live orcas obtained theirs from the Sea of Okhotsk in Russia, a population that lacks significant surveying. Zhonghong will have the advantage of being able to sell genetic material to Chimelong, Haichang Ocean Park, and the others, in order to create genetic diversity within the Chinese captive orca population.

Regarding the California orca law’s prohibition on export of both orcas and genetic material from the state, the provisions are as follows: 1. It is illegal to “Export, collect, or import the semen, other gametes, or embryos of an orca held in captivity for the purpose of artificial insemination.” There is no ban on removing genetic material from the state for the intention of research. Of course, that’s assuming that the genetic material is still in California at all; 2. it is illegal to “Export, transport, move, or sell an orca located in the state to another state or country unless otherwise authorized by federal law or if the transfer is to another facility within North America that meets standards comparable to those provided under the Animal Welfare Act (7 U.S.C. Sec. 2131 and following).”

There has been some debate on whether a state ban supersedes Federal law, in which Federal authorization would only be given in certain circumstances, such as an orca in San Diego under special permit, like Shouka. On the other hand, an easy way around any such issue would be to relocate the Florida orcas out of country and move the San Diego whales to Orlando. There is no provision in the law restricting orcas to “educational presentations” should they leave California.

So, that’s what I see in my bubble. My agenda is to share what I observe. My morals are to evaluate before rushing to judgement. My belief is that by sharing, my readers might notice something they hadn’t before, regardless of their beliefs. If you disagree with what I’ve had to say, I’m sorry that our bubbles didn’t overlap. POP.

 

US and Chinese Governments Investigate Parent Companies of Marine Life Parks

The DOJ logo is pictured on a wall after a news conference in New York

On Friday June 23, SeaWorld Entertainment released a short statement. The company has expressed that this is the only comment it currently has on the matter:

In June 2017, the Company received a subpoena in connection with an investigation by the U.S. Department of Justice concerning disclosures and public statements made by the Company and certain executives and/or individuals on or before August 2014, including those regarding the impact of the “Blackfish” documentary, and trading in the Company’s securities.  The Company also has received subpoenas from the staff of the U.S. Securities and Exchange Commission in connection with these matters.  On June 16, 2017, the Company’s Board of Directors formed a Special Committee comprised of independent directors with respect to these inquiries.  The Special Committee has engaged counsel to advise and assist the Committee.  The Company has cooperated with these government inquiries and intends to continue to cooperate with any government requests or inquiries.

The Security and Exchange Commission (SEC) and the Department of Justice did not provide comment on Friday when approached, but one thing is clear: in the United States, the government entity that investigates potential infringements of securities law is the SEC.  Investigations can originate within the agency, through whistle-blowing, or through a public complaint. How this particular investigation began has not been publicly disclosed.

If the SEC determines that laws or rules have been violated, its enforcement arm can take one of three actions.  It can rule on an administrative proceeding, basically a “cease and desist” order; it can file a civil enforcement action in a Federal Court, which could result in civil penalties; or if the SEC determines that criminal law has been broken, the case will be handed over to the Department of Justice as a criminal investigation.  In such cases, it is not uncommon for a simultaneous civil action to be pursued by the SEC.

Although it appears per SeaWorld’s statement that the Department of Justice is investigating potential criminal violations of securities law, a search through Federal Court filings does not show that any charges have yet been filed, meaning that at this time, the Department is still investigating the facts and that a determination of action has yet to be made.  Current SeaWorld CEO Joel Manby would likely not be a person of interest in this investigation, unless evidence shows that he was aware of the claims and their alleged invalidity after his hire in April 2015 and failed to take action to rectify the situation.

The August 2013 date corresponds to August 13, 2013, when SeaWorld’s second quarter revenue was announced at US$40 million less than anticipated, resulting in a stock selloff and subsequent drop in price of 33% over the course of the day. Two days later, the company announced its largest investment to date, the since abandoned Blue World Project killer whale exhibits.

In the same announcement on June 23, 2017, SeaWorld confirmed that Board Chair David D’Alessandro had been voted off the Board of Directors by shareholders and had tenured his resignation.  The Board has since requested and D’Alessandro has agreed to stay on as Chair another six months, through December 31 of this year.  According to the company:

. . . the Board took into account the potential impact of Mr. D’Alessandro’s immediate departure on the Board’s and the Company’s ability to successfully address certain challenges that the Company now faces . .

Although the company specifically mentioned the Department of Justice subpoena as one specific reason, others come to mind, from refinancing deals to potential acquisitions and international expansion.

One unknown in the equation is private investment firm Hill Path Capital, which raised US$303 million for its debut fund in January of this year. The firm has been purchasing SeaWorld stock, increasing its ownership substantially. In May, filings with the SEC showed that the company had acquired a 7.7% stake in SeaWorld. According to the most recent filing, on June 6, Hill Path’s ownership stake has now increased to 14.2%. Hill Path was founded by former Apollo Global Management manager Scott Ross, who was instrumental in Apollo’s acquisitions of Chuck E Cheese and waterpark resort chain Great Wolf Lodge. Ross also spearheaded the failed attempt to acquire theme park chain Cedar Fair (owner of Cedar Point and Knott’s Berry Farm, among others). Whatever the long term intentions, Ross and his management have met with the SeaWorld board and executives to address short term issues, such as governance, cost cutting, and immediate revenue streams.

Then there’s Zhonghong, the Chinese real estate and tourism company that now owns 21% of the company and has two of its executives seated on the Board of Directors.  As the final member of the Board with deep ties to Blackstone (he was appointed as Board Chair in 2010 when the company was a private Blackstone holding), D’Alessandro undoubtly had a role in negotiating the sale of Blackstone’s stock to Zhonghong and the deals with Zhonghong for design and development of Asian parks attraction, a number of which are expected to be animal-based in nature.

D’Alessandro has quite a bit of work ahead during the next six months with regards to Zhonghong’s intentions – Whether that be a vast increase in Zhonghong ownership of SeaWorld, as the Chinese company recently did with its stake in luxury tour company Abercrombie and Kent, outright acquisition, or the complexities of negotiating for new animal parks overseas, such as he did with Dubai, Abu Dhabi, and Village Roadshow (and consider these all speculative reasons for him to stay on).

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Zimbabwe’s Minister of the Environment, Oppah Muchinguri, shares her support for Chimelong at its Qingyuan elephant holding facility, December 2015

To date, Zhonghong competitor Chimelong has been developing strong tourism partnerships tied in with animal acquisitions. Its Australian exhibit at Chimelong Safari Park endorses tourism to Australia’s Northern Territory. It’s acquisition of elephants, lions and other animals from National Parks in Zimbabwe for a new conservation-themed park in the mountains of Qingyuan was done in full cooperation with the African nation.  Final Days has learned that Zhonghong’s acquisition of Abercrombie and Kent included the purchase of four leading safari lodges in Botswana and expect that a Chinese park similar to Busch Gardens Tampa Bay may tie in with Abercrombie’s luxury African tour products.

Meanwhile in China, five major companies that have been investing heavily overseas are under investigation by the China’s banking regulators. Their holdings include either full or majority ownership of football team AC Milan, the AMC and Carmike theater chains in the United States, Club Med, Cirque du Soleil, and Hilton Hotels.

One of the companies, Dalian-Wanda Group has been building aquariums and dolphinariums throughout China, located within or adjacent to its mega-malls.

When news broke on June 22 of the investigation, stock value in Wanda’s only publicly traded stock, Wanda Film Group, which includes the company’s film studio and production group, US blockbuster film producer Legendary Entertainment, and the world’s largest collection of movie theater screens – in Australia, North America, China, and Europe – dropped by 10% by end of day. Wanda immediately responded by blaming the drop on lies spread on the internet.

This new scrutiny on uncontrolled debt in the purchase of overseas assets is part of a new initiative by the Chinese government to crack down on the practice.  As a result, the first quarter of this year saw an 80% drop in foreign acquisitions by Chinese companies.

At the same time, the Chinese government is becoming more welcoming to foreign investment, especially in the theme park sector. In eighteen free trade zones, seven of them newly designated in March, foreign developers will be able to build and operate theme parks for the first time without partnering with a local company. For example Shanghai Disney Resort is 57% owned by a Chinese consortium with close ties to the government. Under the new rules, Disney would be able to retain 100% ownership in the free trade zones of future parks and resorts. The new regulations are especially appealing to regional park chains such as Parques Reunidos, owner of Marineland Antibes and the Miami Seaquarium, who to date have had to partner with a Chinese company to enter the market.

Overall in China, there is a long standing joke about looking left (as in reforms), but turning right (as in staying with the party line). As Castor Pang, head of research at Core-Pacific Yamaichi HK, told Bloomberg:  “The most important factor of doing business in China is the company’s political stance. It is important for the company to ‘stand at the right side.’”

There’s a small company fully owned by Zhonghong that’s housed in the London offices of Abercrombie and Kent. It was through this company that Zhonghong purchased its majority stake in SeaWorld Entertainment. The little company is called Sun Wise. There’s a reason for that. Sun Wise in Mandarin is 向右转地, which also translates as “Turn Right.”

A Selection of Comments on the Proposed AWA Rule on Marine Mammals

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SeaWorld, presented by the company’s Chief Zoological Officer, Chris Dold:

SeaWorld APHIS Rule

Dolphin Research Center Vice President of Animal Care and Training, Linda Erb: 

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SeaWorld’s new partner, HSUS, presented by Senior Staff Veterinarian Barbara Kohn:

HSUS APHIS Rule

A joint letter representing Animal Welfare Institute (AWI), Animal Defenders International, Born Free Foundation, Born Free USA, Center for Whale Research, Cetacean Society International, In Defense of Animals, the International Marine Mammal Project, Kimmela Center for Animal Advocacy, Marine Connection, Orca Research Trust, People for the Ethical Treatment of Animals, Whale and Dolphin Conservation, and Zoocheck, presented by Naomi Rose, AWI Marine Mammal Scientist:

AWI APHIS Rule

Finally, and I find this most fascinating as it mentions the specific needs of medical enclosures, a letter from Traci Kendall, Director of Research Training at the University of California, Santa Cruz Long Marine Laboratory:

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Revised Coastal Commission Findings on Blue World Project

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The California Coastal Commission’s staff prepared a revised finding on SeaWorld’s application for Blue World Project, which was to be presented at the March 9 Commission meeting in Santa Monica. A finding is a public hearing and vote to approve findings for a previous Commission action. The only issue is whether the findings adequately support the previous Commission action. The hearing is not to reargue the merits of the prior action. Although the presentation of and confirmation of the revised findings was postponed and SeaWorld, by all accounts, has canceled the project, you can read the full document here.

 

The Russian Dolphinarium Part I – Wait 20 to 30 Years and You’ll Be Ready for an Orca

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For over thirty years, I thought one thing to be true: that it all started with Shamu.  To place it another way, the global dolphinarium industry spread so rapidly during the 70’s and 80’s because of the success of Shamu and Sea World’s killer whales, that because they saw the huge attendance and profit these animals could bring, every dolphinarium owner wanted to place one in their dolphin tank – often a tank far too small.

While studying the industry that operates in Russia and China, I came to a much different conclusion.  In the Communist East, it was not Shamu that led to the rise of the dolphinarium and the Russian orca market.  It was rather societal progress.  When a society reaches a certain level of sustainability in zoological exhibits or shows, it begins to look for the next big challenge – something bigger, something more exciting, something more exotic, something more profitable.  In the Communist East, there were no captive orcas on display prior to this Century*.

The modern Western dolphinarium can trace its roots back to 1938 (Marine Studios, later Marineland of Florida).  The Soviet Union would not have its first dolphinarium until 1975, when one opened in Batumi,  a Black Sea resort town in modern day Georgia.  23 years after the opening of Marine Studios, Wanda would become the first orca to be held alive in modern captivity – at Marineland of the Pacific.  She lasted two full days.   Three years later, it was Moby Doll.  The year after that, Namu, then Shamu.

Russia’s orca revolution began at the place in the photo above – at Utrish, also on the Black Sea.   In 2003, 28 years after the first Soviet dolphinarium, a female orca was captured and placed in a sea pen at the Ultrish Dolphinarium.  Here is the account of what transpired, from the official report of the Marine Mammal Council, dated December 9, 2003:

 LM Mukhametov, Ph.D. (IEE RAS, Utrish Dolphinarium) reported the circumstances of the capture and death of a killer whale in the Utrish Dolphinarium.

Attempts to capture orcas with seine nets were few, and most were unfortunate. Animals left over the top, or by diving under the lower net. This managed to happen even with calves.

Not even Rapporteur has placed a successful capture.  It is roughly 45-50 miles (his words “four o’clock fly”) from Avacha Bay. (In fact, according to our data, the capture was actually in the Bay of Sabotage, which is located about 15 kilometers from the entrance of Avacha Bay).  They encountered a group of 9 – 10 animals (which is a violation of the rules of capture, according to which based on the number of cetaceans, cast nets shall not exceed 5 layers). Most of them had gone over the upper part of the net, just jumping and floating. In the end, inside the net remained five animals.

Two swimmers were released from inside the net. One whale died because it did not see, did not even know that it was in the net, jerking was heard. Another orca was still captivated.

The age of the animals was determined by the ratio tables for ages and sizes of animals.

Unfortunately, I could not ask for some populations from composed tables (Pacific killer whales are much larger than the Atlantic, such as a newborn in the Atlantic has dimensions of 220-230 cm and 250-270 cm in the Pacific).

The dimensions of killer whale: 435 cm in length and weigh ~ 1100 kg. For several days, the orca was kept in a fenced off area in the Gulf of Kamchatka, but muddy water did not allow us to establish precisely whether or not feeding occurred. The fish was thrown into a pond, it was observed that the whale took it into its mouth. However, if it was ingested, it is unknown.  Therefore, the killer whale was transported to Utrish in a complete water bath. During transportation, it emitted so much feces that comrades thought it was a sign of a successful feeding.

There is something I do not understand here, to be frank. Bottlenose eat with difficulty, against the backdrop of the relevant drugs. I personally saw how powerful eaters belugas are. What I recounted to [Leo] Mukhametov, saying that there was a likelihood that the wild orca just threw the fish, and it is the very beginning of it there?

We used Antistress drugs: When asked, Rapporteur mentioned only one – relanium or Valium (another name). A blood test showed the presence of inflammation in the body.
The killer whale had died after 13 days.

The autopsy revealed a large number of worms. Also was found morbillivirus. The blame lay for the death of the animal on the morbillivirus, because it can cause the lung lesion that was detected. On the basis of what Rapporteur has repeatedly claimed, the entire population is infected, and is on the verge of epizootic diseases.

The findings of the scientific meeting:

Krokhin: let’s say thanks to Mukhametov that this moves forward Russian science, not only to catch up with the Americans. By the way, I’ve developed a patent for catching whales, let me in, and’s let’s go.

Goskomrybolovstvo: estimate of the number of killer whales in the Sea of Okhotsk – 2500.

K.b.n YD Starodubtsev (Moscow State University): think how many thousands of people will be brought joy by one single killer whale.

K. Alexander Zharikov (VNIRO): catching ten whales will not affect the population.

DSc, acad. AV Yablokov: a proposal to reduce the TAC include, development of methods of catching, feeding and content specifically for killer whales.

LM Mukhametov, Ph.D.: We should prohibit the fishing network, because it leads to an increased likelihood of mortality and loss of corpses, which are also valuable. By the way, the bodies are also a great value for science. Now they are exploring killer whale brains and viscera and blood sent for analysis to Novosibirsk.

He argues that the preservation of killer whales as a species is only possible in the aquarium, referring to his own experience reintroducing bottlenose dolphins in the Black Sea.

Prof. VA Zemsky previously concluded: Mukhametova congratulates this beginning, and offers to develop special techniques for catching whales.

A decade later, the killer whale capture industry in Russia would be well under way.  And Ultrish would be threatened by new players out of Moscow and the Ukraine moving in on its turf.  It would bring forth allegations in its attempt to survive of criminal activity by the newcomers, organized crime connections, and government corruption.

Next time: Ultrish, NEMO, White Whale, Moskvarium, TINRO Center, FEBRAS and the web connecting them all.

*Ocean Park in Hong Kong was a British Crown Colony at the time it held orcas