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Internal Debate Over IALEI-IAAPA Merger Erupts In Public

Posted On: 5/27/2009

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International Association for the Leisure and Entertainment Industry, IALEI, International Association of Amusement Parks and Attractions, IAAPA, trade association, amusement industry, arcade, coin-op, family entertainment

HERSHEY, PA -- A small but vocal minority consisting of various IALEI past-presidents and board members are questioning the desirability of the proposed merger between the International Association for the Leisure and Entertainment Industry and the International Association of Amusement Parks and Attractions. They are also doubtful about the validity of some procedures used by the IALEI board to move the merger process forward. The disagreement has been developing behind the scenes for months, but went public in recent weeks.

IALEI board member Bud Umbach of Recreation Solutions (Naples, FL), and former owner of Kokomos Family Fun Center (Saginaw, MI), has resigned in protest over the merger proposal and the way it was adopted. Umbach's decision to leave was in part due to his view that the vote for the merger was not legitimately approved by a majority of IALEI board members.

IALEI chair Dorothy Lewis of Fun Station Associates (Danbury, CT) has denied reports that the leadership registered a tie vote on the merger question, and it was broken by the vote of past-chairman Richard Sanfillippo of Sam's Fun City (Pensacola, FL). There appears to be no disagreement that such a procedure, had it been followed, would have been in violation of IALEI's bylaws.

The most vocal critic of the merger and its handling by the board has been IALEI past-president Frank Seninsky of Amusement Entertainment Management (E. Brunswick, NJ). Seninsky currently serves on IALEI's executive committee and board of directors, and chairs the bylaws committee.

For many months, Seninsky and the current leadership have been engaged in a bitter feud over numerous issues. In an email to IALEI's general membership, dated May 5, Seninsky charged:

"From the start so many IALEI bylaws and other state laws and procedures were violated, trashed and ignored (you choose the word); a witch hunt was instigated against me as a diversion; IALEI partners' rights via contracts were ignored and violated; IALEI members concerns were ignored; and all of this just to ensure the dissolution of IALEI and that you, the members, move over to IAAPA."

Seninsky has also questioned the propriety, motives and rationale for the board's original non-majority vote in favor of the merger.

The past-president labeled as a "false rumor" any claims that "IALEI was on the verge bankruptcy or in big financial trouble" that made a merger necessary for the survival of the association. "In fact, IALEI has something like 825 members and the IALEI insurance program just wrote 80 new contracts in the past three months," he said.

According to Seninsky: "I believe you will find out that the financial issue was a smokescreen ... and IALEI could easily have continued as a viable association for many more years." He added that IALEI's financial status might have become shakier in the past three months due to substantial legal and logistical expenses associated with the merger process.

In internal communications to the board and membership, some IALEI leaders have sought to portray Seninsky as an isolated critic with a personal axe to grind. However, the association also has been the target of private criticisms from other board members and past association leaders.

Documents obtained by VT indicate that in addition to Seninsky, some IALEI board members have complained of being left in the dark by the association's Transition Committee about the status of the proposed merger.

In late April, the IALEI board of directors asked all association members to approve an amendment to the association's bylaws that would give the board a proxy for the merger question. If approved by the membership, this change would enable the board to make the final decision on any merger on behalf of the rank and file, representing the members' wishes in absentia without requiring the physical assembly of a quorum.

IALEI members were asked to return their ballots, approving or disapproving the bylaw amendment that would permit a proxy vote on the IAAPA merger question, to the association's headquarters by June 1. In private, at least one more IALEI past-president -- not Seninsky -- has sharply questioned the propriety of this procedural maneuver.

Documents seen by VT indicate that this past-president, a former operator who played a role in the founding of IALEI, suggested that a neutral, third party should be retained to count ballots and certify results if the merger were to be decided by proxy vote. This suggestion appears to reflect a certain level of uncertainty within IALEI over the administration of the merger proposal.

According to Seninsky, that distrust is also widespread among IALEI's general membership. He sent out his own informal poll of IALEI's membership to gauge the membership's views on the proposed merger.

Based on scores of early returns, Seninsky said that when final results are tabulated, he expects them to show that a "huge majority" of the membership opposes merging IALEI with IAAPA.

As of May 22, some 55 members had responded to Seninsky's poll. He noted that not all respondents answered every question. The results so far:

-- 71% are not in favor of dissolving IALEI and becoming IAAPA members

-- 71% want IALEI to remain as is

-- 84% would support an association similar to IALEI

-- 58% are not members of IAAPA

-- 69% wanted more information on the merger

Seninsky reports that no IALEI board members responded to survey and only two past-presidents, not including him, responded. He added that a small number of supplier members responded, and that the questions asking for views about a similar IALEI association and more information on the merger received the highest responses.

Seninsky said more board members are planning to resign due to their discontent over the proposed merger and its handling.

To date, IALEI has issued no public statement on these matters. VT will report further details as they become available from IALEI and other sources.