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His worst nightmare.

As August in Arkansas Haunts Him, Festival Promoter Mark Abernathy Is Burdened by Debts and Lawsuits

A TOUCH OF IRONY TO Mark Abernathy's current struggles is the August in Arkansas poster on the wall behind his office desk at Juanita's Mexican Cafe & Bar in downtown Little Rock.

Does he really want to have a constant reminder of the financially disastrous event?

"Sometimes I do," he says, still proud six months later of August in Arkansas' artistic success.

But the mounting financial problems cause Abernathy to say wearily, "Sometimes I don't."

Abernathy has established himself in central Arkansas as a man who knows restaurants, knows good music and knows how to make a buck.

Last August, Abernathy parlayed that proven track record of success into the launching of the high-profile August in Arkansas with more than $300,000 in corporate sponsorships, hundreds of volunteers and plenty of community goodwill.

It was a recipe for disaster.

In just four days, Abernathy's $1.9 million dream became his worst nightmare. The festival lost $800,000 and left bad blood, lawsuits and potential bankruptcies in its wake.

Six months later, Abernathy's public reputation has taken a beating. The normally garrulous entrepreneur had become tight-lipped and distant when questioned about the festival.

But last week Abernathy changed his stance and talked openly with several reporters.

"I'm not trying to run and hide from anything," Abernathy says. "I'm here."

For Abernathy, the tale of August in Arkansas is the all-too-human tragedy of a man who reached too far, dreamed too big and may have lost everything in the process--his reputation, his savings and possibly his core businesses.

What is certain is that August in Arkansas is no more, Abernathy's fate is perilous and hundreds of thousands of dollars in time and money from corporate sponsors, vendors and volunteers swirled down the drain of miscalculation in just 96 hours last August.

Before the event began Aug. 13, Abernathy didn't mind being known as Mr. August in Arkansas.

Since then, Abernathy has sidestepped reporters' questions.

He's even been quoted saying, "It's not my festival."

Tell that to Buddy Sellers.

Sellers is an electrician who is owed $18,000 by the festival and is suing Abernathy personally for $200,000 in damages.

Sellers, among others, wants to know why he was not told the full extent of August in Arkansas' losses until recently.

It wasn't reported until mid-February that the festival lost more than $800,000, up from the "in excess of $250,000" Abernathy had disclosed previously.

Abernathy maintains that for various reasons, he could not or would not disclose more detailed information.

Just how much does the festival owe?

Abernathy says total vendor, service and entertainment debts equal $645,843. Money is also owed to the cities of Little Rock and North Little Rock and to Abernathy and others who personally loaned money to the festival.

August in Arkansas' original budget, according to Abernathy, was $1.6 million. Due to increases in insurance, security and site development, Abernathy says the budget jumped to almost $1.9 million.

The number of attendees required for the festival to break even was in constant flux before the event.

What was the break-even point?

To cover expenses the festival needed about 105,000 people to attend, assuming they each would spend $15, including the price of admission.

"Given the incredible lineup of talent, you would think that would be easily achievable," Abernathy says.

Instead, under 70,000 people came, with less than 50,000 of those paying.

Free admission problems started with allowing hundreds of volunteers to enter for free. There also was a problem monitoring park entrances.

Ticket taking was so lax, there still isn't an accurate count as to how many people walked in without tickets.

There was also a cash-flow problem just four weeks before the event.

With low advance ticket sales and deposits needed for entertainment, Abernathy and the other principal organizers had to quit work to raise almost $150,000.

Stephens Inc. came to the rescue with $80,000.

But as debts continued to climb, valuable organizational time was lost.

When it became evident the 150,000-200,000 people Abernathy was expecting weren't coming, Abernathy began asking friends to loan him money at a 5 percent interest rate to cover costs during the festival.

Much of the more than $100,000 Abernathy personally lost on August in Arkansas is money he still owes friends.

The Profit Question

While Abernathy promoted the festival as good for Little Rock and central Arkansas, how much was he hoping to make on the event?

The answer to that lies in the structure of the event.

August in Arkansas was a nonprofit organization with an unpaid board of directors, but it hired the for-profit management company, Great Festivals Inc., to run the event.

Abernathy is president of Great Festivals Inc.

The company had a paid executive director, marketing director and support staff. Abernathy says they were significantly underpaid compared with industry standards.

Many are still owed money.

Abernathy never received any pay, but he would have received compensation if the festival had made money.

How much? Good question.

Abernathy denies Great Festivals Inc. was established to be the moneymaking end of the festival.

He says no one stood to profit substantially from the festival in its first year or in succeeding years.

"Nobody who put money into this looked at it as a moneymaking scheme," Abernathy says. "No one."

Yet if 200,000 people had attended, as Abernathy planned, and each spent $15, then sales would have equaled $3 million. Add the $300,000 in sponsorships, and the festival would have made almost $1.5 million off the $1.9 million budget.

Where was that money supposed to go?

There was no set way the money was going to be distributed, Abernathy says.

There were no investors in the festival, only sponsors and people who loaned it money. The ones who loaned money with 5 percent interest were Abernathy's friends.

Abernathy says that after management salaries were paid, the festival's board would have decided where profits went.

The board's president, Steve Giles, says, "We hadn't gotten that far."

Giles says he doesn't know what percentage of profit would have been put back into the festival or how much would have been paid to groups that volunteered and were supposed to make money on the event.

For example, The Arkansas Literacy Councils Inc. was designated to be the main charity to receive money and spent a number of hours working on the event, yet a set amount was never determined.

Abernathy says the purpose of Great Festivals Inc. was to create a pool of festival management that could develop and consult on other nonprofit festivals. The company had a one-year contract with August in Arkansas, and the failure of the festival meant the demise of the company.

August's Aftermath

At this point, there is no staff left to help Abernathy sort through the aftermath of August in Arkansas.

In the days following the event, Abernathy had friends come out to Riverfront Park to help clean up because there was only a skeleton, paid work crew.

Abernathy says he's taking full responsibility for the event, but there is some question as to how personally liable he'll be.

His name is not on any of the hot checks the festival wrote. Festival director Robyn Dickey signed them.

"I was not handling the day-to-day financial activities," Abernathy says. "That's not the way it was set up."

Abernathy did make personal guarantees, mainly to his friends, on loaned money. In some cases, he did so with a promissory note.

"Everyone is being very understanding," Abernathy says. "Guido is not going to bust in and break my arm."

But if Sellers wins his suit against Abernathy and gets the $200,000, it could bankrupt him.

It would probably follow that Abernathy's ownership in Juanita's and Blue Mesa would be affected. Regardless of the financial outcome, Abernathy's dream is dead.

This is new territory for Abernathy. He is not used to failure.

"Most everything I've done has worked," Abernathy says.

The Arkansas native had success with several San Antonio restaurants until he opened Abernathy's, a failed French restaurant.

He personally lost about $40,000 on the venture.

In 1976 he joined the Boy Scouts of America as a district executive director. The organization eventually brought him back to Little Rock, where he opened the successful Juanita's against the advice of virtually everyone.

Like Juanita's, August in Arkansas was a risk. This one did not pay off.

Until December, Abernathy worked at holding the festival again, in part to recoup his losses. Three of the four presenting sponsors, who each donated $40,000 to the original event, had agreed to help sponsor a 1993 festival.

But there is no way to hold another August in Arkansas without creditors from last year's event suing for the sponsorship money.

Despite the overwhelming odds, Abernathy is exploring alternatives to raise money. He's not yet saying what they are.

Meanwhile, Abernathy still is doing damage control.

Although he says he wants to get everything out in the open and get on with his life, he's been calling people connected with the festival to warn them about questions from the media.

He wants all the questions directed to him.

He wants to present the same story.

He even has headline suggestions for articles about August in Arkansas.

"'It Just Didn't Work,' or 'They Just Didn't Come'--either one," Abernathy says.
COPYRIGHT 1993 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:financial struggles of August in Arkansas founder Mark Abernathy
Author:Rengers, Carrie
Publication:Arkansas Business
Date:Feb 22, 1993
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