Bread from Circuses

Who does not feel nostalgic about the Big Top? Ernest Hemingway once wrote that the circus "is the only spectacle I know that gives the quality of a truly happy dream." Now, for $16.50, anybody can own a piece of that dream. The Ringling Bros.-Barnum & Bailey Circus is going public. An offering of 346,000 shares in "The Greatest Show on Earth" allows a circus lover or an investor to become part owner of such properties as a ten-year-old gorilla and a herd of elephants.

The ringmaster in this deal is Houston's ex-mayor, flamboyant Roy Hofheinz. He and a pair of friends founded a holding company that bought the circus from John Ringling North in 1967 --clinching the deal with a flourish of flackery on the floor of Rome's Colosseum. The price was $8,000,000, consisting of a $4,000,000 bank loan, another loan of $3,500,000 from Hofheinz to the holding company, and the sale of 720,000 shares at just over $1 each. Hofheinz picked up 324,000 shares for $338,000; the two friends, Irvin and Israel Feld, impresarios who for years have handled some of the Ringling Bros, bookings, put up $125,000 each for stock. As part of the deal, Hofheinz also holds warrants to buy 1,554,000 additional shares at $1.42 per share.

What all this amounts to, if the public buys Ringling Bros, stock at the $16.50 offered price, is a potential 1,500% profit on Hofheinz's cash outlay of $338,000, and a similarly impressive gain for the Feld brothers. Hofheinz's original shares would have a value in the over-the-counter market of nearly $5,400,000, and he could make another $23,400,000 on his warrants.

The circus lists assets of $9,300,000, and last year it earned $639,000, or 210 a share. The suggested market price of the new stock would thus place the issue at about 80-times earnings. The proceeds of the public offering will be used to pay off the bank loan and part of the original Hofheinz loan, which has an annual interest rate of 7%.

This year, the Ringling Bros. Circus is split into a "red" unit and a "blue" unit so that the two can visit more cities than ever before. Chances are that the happiest fellow under the big top will be Roy Hofheinz, who is Ringling Bros.' board chairman.

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