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IALEI-IAAPA Merger Proposal Provoked Fervent Debate Among Association Leaders

Posted On: 8/1/2009

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International Association of Amusement Parks, IAAPA, Attractions, International Association for the Leisure and Entertainment Industry, IALE, amusements industry, family entertainment centers, arcade industry, amusement attractions, amusement business, away-from-home entertainment

HUMMELSTOWN, PA -- The approval of an association merger a month ago by the boards of the International Association of Amusement Parks and Attractions and the International Association for the Leisure and Entertainment Industry, based here, followed a vigorous public debate over the merger proposal. According to reliable sources, as the membership's chance to vote on the merger question approaches, the debate is continuing behind the scenes among IALEI officers, staff and board members in even more heated terms.

IALEI leaders, past-presidents (and/or past-chairmen; the title has evolved over the years) and critics have made passionate arguments for and against the merger. They have traded charges of improper conduct. In some cases, they have openly blasted each other's motives and honesty in highly personal terms.

By VENDING TIMES' count, these parties exchanged a furious round of public emails, announcements, and press releases totaling more than 15,000 words between May 25 and June 25.

Among the most prominent volleys: 10 IALEI past-presidents launched a 2,100-word broadside on June 15. Signatories to the past-presidents' letter were Joey Herd, Phil DeAngelo, Ken Vondriska, George McAuliffe , George Smith, Larry Davis, Ed Pearson, Gene Hinkle, Harold Skripsky and Jack Cohen.

The 10 past-presidents responded to charges leveled publicly by past-president Frank Seninsky and former board member Bud Umbach. Both men have asserted for many weeks that IALEI's executive committee violated the association's bylaws in order to ram through a merger that -- according to these two critics -- is not in members' best interest and does not represent the will of the majority.

Without citing Seninsky and Umbach by name, the 10 past-presidents said these attacks are "inappropriate" and "by our reading, rife with inaccuracies and unsubstantiated opinion."

The past-presidents also admitted they are "not all of one mind concerning the merits of this potential merger," but they defended the current board and leadership as acting in good faith to achieve what the latter believed is genuinely in the best interests of IALEI.

The past-presidents insisted that "the process [of deciding for or against a merger] needs to be fair and balanced, not a public lynching of the rule of the many by the wishes of the few."

Separately, past-president George Smith on June 5 said he was "appalled" that Seninsky and Umbach had allegedly breached their confidentiality agreements as IALEI leaders by going public with criticisms of the merger and, in Seninsky's case, leaking minutes of certain board meetings that were deemed confidential. (It should be noted that some of the meetings themselves had been conducted in public.)

Earlier, on May 27, past-chairman Richard Sanfilippo, who heads the IALEI Transition Committee that is working to effect the merger, charged Seninsky with "an elaborate rouse [sic]", meaning ruse or deception. According to the past-chairman, Seninsky's "ruse" was designed to give IAAPA the impression that IALEI had legal problems that could be serious enough to make IALEI an undesirable merger partner.

The background on this latter charge is complex. For several years, past-chairman Seninsky has been accused by some IALEI leaders of various conflicts of interest in regard to his duties as an officer of IALEI. For example, several IALEI leaders over the years have made it clear they believe Seninsky's Foundations Education University seminar program competes with IALEI's Fun Expo seminars (and with an ill-starred attempt to launch an regional IALEI seminar program).

Other accusations suggest Seninsky improperly promoted his own financial interests when dealing with various companies, such as the Sterling & Sterling insurance firm, on IALEI's behalf.

No formal charges have ever been filed, and it is VT's understanding that all informal charges were recently dropped.

Seninsky has long maintained that IALEI lacks a clear policy defining a conflict of interest; that IALEI also lacks a clearly defined mechanism for dealing with such questions; that IALEI has failed to formally charge him and failed to give him a suitable venue to confront his accusers and clear his name; that many other IALEI board members have engaged in comparable outside competitive activities without being rebuked for it; that Sterling & Sterling and others have emphatically denied any improper conduct on Seninsky's part ... and have produced documentation to support those denials; among other charges.

Earlier this year, frustrated by lack of resolution on these issues and convinced that certain IALEI leaders had launched a "whisper campaign" against him that was costing him business, Seninsky's attorney notified IALEI's Executive Committee that it should withdraw its accusations, publicly apologize, and reimburse Seninsky for legal expenses incurred in connection with defending his reputation. Otherwise, the attorney stated, IALEI risked a lawsuit against itself and individual members of the committee for defamation of character and undue economic harm.

It is this threatened lawsuit to which Sanfilippo referred in his May 27 statement. Sanfilippo implied that the possibility of such a legal liability could be seen as "poison pill" by IAAPA leaders -- i.e., a reason to vote against merging with IALEI.

Seninsky told VT that IALEI has not formally responded to his demand letter, but that the association's leadership did withdraw its informal accusation of conflict of interest.

He also said the association's conflict of interest policy has now been modified and that such conflicts are self-assessed or self-defined by officers and board members. Accordingly, officers and board members are expected to voluntarily recuse themselves from votes on issues where the condition may obtain. In Seninsky's judgment, this policy is hopelessly subjective and ineffectual.

The 10 IALEI past-presidents also addressed this issue in their June 15 letter. Educational programs, a key service provided by IALEI, require credible teachers and "To develop credibility even the appearance of conflict of interest had to be avoided," the 10 said. But they conceded it's difficult to avoid such conflicts in a volunteer-driven organization.

Commenting on Seninsky's threat of legal action, the 10 past-presidents said: "Imagine being a volunteer and being pilloried for making the best informed stand but sued by a loud, well-funded opponent who seeks to have his own way because the conflict of interest test may well indicate culpability."

The past-presidents' letter also appeared to target Seninsky and Umbach when it spoke of "the aspirations of the few to seek their will over the consideration of the many." In this, they echoed Sanfilippo's May 27 message, which included this statement: "Let's remember all of this side show is being created by one man hell bent on trying to prevent us from a professional evaluation of the IAAPA merger option."

Seninsky responded to the past-presidents' letter and other pronouncements from IALEI leaders in turn. He remarked that it seemed inconsistent to complain about a "public lynching" on one hand while -- at the same time -- publicly suggesting guilt without a proper hearing (i.e., the "culpability" remark).

In addition, Seninsky pointed out that his resort to possible legal action preceded the board vote for a merger with IAAPA. Accordingly, he said, it is misleading and inaccurate for IALEI leaders to attempt to link the two issues.

A final issue that appeared to weigh on the minds of both the 10 past-presidents and Sanfilippo is the choice of Seninsky and Umbach to go public with their criticisms and concerns. This is apparently related to complaints that IALEI's critics have violated their confidentiality agreements.

The past-presidents wrote that the debate and decision "should be completed within the membership body ... The [proper] forum for any [debate and decision] ... should be discussed by members within the available internal methods of deliberation."

In a similar vein, Sanfilippo stated in an email to IALEI's leadership that "It is premature to be having a public debate on an important subject like a merger without gathering and sharing the facts. This media circus is the result of one disenfranchised board member who has cost us all a lot of wasted time and creditably [sic]".

Such complaints are familiar fare for Seninsky, who has a 25-year history of rankling association leaders by taking his criticisms public. He is perhaps the industry member with the highest profile, since his columns appear in most of the industry's leading trading magazines (including VT). In addition, Seninsky recently launched a redemption-focued e-newsletter to a global readership. His personal email database is understood to include some 40,000 names.

All of this gives Seninsky a powerful megaphone, but to date he has been relatively restrained in its use. For example, he has not devoted a single column to the merger debate. And it was IALEI's past-presidents, not Seninsky, who went public with news of his possible lawsuit.

Seninsky said he had a simple reason for taking his criticisms public: "...there was very little debate [about the merger] at the board level as all debate was cut off using Robert's Rules as an excuse." He accused the IALEI Executive and Transition Committees of editing minutes of their meetings to delete embarrassing material or indications of failure to comply with bylaws. He also accused IALEI leaders of denying those minutes to association members who have the right to see them.

"All of the past-presidents who signed the letter are good people and have done a lot of good for IALEI," Seninsky said. "I do not believe that any of them would ever intentionally hurt this industry." But he also said many, perhaps all, of the 10 signatories of the June 15 letter were far out of the loop of the association's day-today business over the past few years.

For his part Umbach said the past-presidents were right to encourage debate on the merits of the merger and that his and Seninsky's criticisms -- however unbecoming to the dignity of the association -- were intended to just that. He also criticized current IALEI leadership for saying all members were encouraged to ask questions and to request information, then publicly criticizing him (Umbach) for doing just that.

The latest major public comment on the merger debate was a June 22 release from the IALEI leadership, asserting that a merger does not mean that IALEI would be "swallowed up" by the much-larger IAAPA. "The FEC community is currently the largest constituency within IAAPA," the release said. "Having the FEC community together in one association will provide a stronger voice for FECs."

The debate over the possible merger includes many additional complex issues. Among them: the fate of IALEI's staff and execution of certain contingency clauses in their employment contracts; the disposition of IALEI's contract with Sterling & Sterling; the intricacies of whether or not IALEI's bylaws and votes conform fully to Illinois state laws that regulate nonprofit organizations; the proper role of vendors and consultants within IALEI; and possible leadership roles for current IALEI executives within IAAPA if the merger occurs; among others.