The Business of Being Santa

♪ look good from my head to my toe ♪ ♪ that's how it is ♪ Reporter: Ah, mr. Big. ♪ Big♪ Reporter: St. Nick, father christmas, whatever the name. Chanted or... See More

♪ look good from my head to my toe ♪ ♪ that's how it is ♪ Reporter: Ah, mr. Big. ♪ Big♪ Reporter: St. Nick, father christmas, whatever the name. Chanted or whispered -- a pony. A pony. Reporter: The name santa conjures some mighty magic and a bag full of questions. I want to ask him how he makes his reindeer fly. How does he prepare billions and billions of gifts? Reporter: How in the world does santa claus get to all of the houses in one night? That's the same questions I've been wondering for my whole entire life. Reporter: In search of answers, "20/20's" crack investigative unit took to the rode and found klums to almost all of them near a snow covered stretch of farmland in midland, michigan. This is the oldest santa claus training academy in the world. Founded 75 years ago by a former macy's santa named charles howard. The three-day school has ov over,000 garover 3,000 graduates. I tried for five years to get into this school. This is my fourth visit to the school. And my life changed after that. Instead of playing santa claus, I wanted to become santa claus. I'm here, according to my wife, because I'm having a mid life crisis. Reporter: This harvard of santas costs 400 bucks for three days of instruction and fine tuning. They'll ask you, how many elves do you have? 886. Reporter: Tom and his wife holly have been running this place. Give them is suspendered to hold the pants up. Reporter: For the past 25 years. You need to have great personal hygiene. Reporter: Everything. Everything. Dry cleaning, showers, your breath, your hands need to be clean. Reporter: And carefully placed. You have to watch the way you handle the children. If you are going to set them on your knee, koob keep your hands exposed to people can see them. Reporter: Sadly, these days, even santas need liability insurance. Across the u.S. This holiday, some 70,000 santas will don the suit, if not the soul, of santa, at malls, stores and parties. A few will rein in up to $80,000. An authentic outfit will cost $2,000. The classic ad campaign for coca-cola turned santa's image from a gaunt hobo into a hearty w ho ho ho. Which is where sue myers comes in. This is where the magic begins. Reporter: For 15 years, sue has been bleaching the beards of some of the finest santas in the land. What's the key to a great beard? It needs to be a very soft white. If you have dark hairs in there, it looks dry. Reporter: Doesn't look like santa. No. No. Reporter: I need to pree lighten first. Reporter: Today, sue's clients are fritz and ray, two alums of the santa school who have come in for their annual extreme makeover. It's changing, my friend. Reporter: As her business card suggests, sue has secrets only santa's hairdresser would for instance. What's this? Reporter: Peppermint oil. Smells like christmas. Just a touch. Makes sense. Smell like a candy cane for the kids. Reporter: For santa's beard. Returning to sue's a few hours later, ray and fritz were well on their way to channeling old kriss kringle. You look like a million bucks! Santa. Now you're santa! Of course, just looking the part won't get you past an audition with the kids. What makes a good santa? You have to have a good heart, a good smile. And you have to -- you have to believe yourself. Because the kids can see through it. Reporter: You bet they can. Are those santas that you see in the shopping malls, is that the real santa? Then who are they? People dressing up like santa. Reporter: Children have bravely withstood the assault of fakery and doubt for centuries. Would you please tell her you're not really santa claus? Reporter: Keeping the miracle alive, not just on 34th street, but every street, gets harder every year. With dream-crushing reporters. Not coming down the chimney, not bringing you anything. There's no santa. Reporter: Some teachers telling students there's no santa. That's horrible. Reporter: And santa burglars caught on tape. Santa! Reporter: Then, there are all those other bad santas. I'm on my lunch break, okay? Reporter: So many seen on youtube, brings discredit to the red, white and black. Still, the 5 to 10-year-olds we gathered at new york city's ps-9. Merry christmas! Reporter: Seem very much like children everywhere. Smarter than we imagine, more innocent than we know. I think he has helpers. Many, many helpers that help him get to every house. I think he can duplicate Or, he can have some type of magic that could make it a longer night, but no one notices. Reporter: He might have something there. When we visited the santa house back in michigan, we made an appointment with the most famous graduate of the santa school. Who sounds a lot like someone else we know. The dean of the santa school. Just a coincidence, I guess. Anyway, what about that age-old question? How do you get to all those places in one night? This is old santa's magic watch. Reporter: Oh. If I get behind, I just stop it like that, see, it stops. I catch up and I get it going again. Reporter: Oh, so, that's how it's done. What about the notorious chimney issue? I don't have a chimney. So, he doesn't know where to come in the house. My alarm would sound. He might shut it off. He doesn't know the code. But maybe he can turn invisible or float over it. It has a motion sensor. Reporter: Fascinating. Santa? You know what this is? This is a chimney expander, right there. And this one is a key to the front door, in case you don't have a chimney. Reporter: That night, as we prepare to leave michigan -- i can't believe it's snowing. Beautiful time of year. Reporter: Did you have anything to do with that, tom? Tom reminded us that listening to the little ones is santa's greatest gift. And the children? Maybe they're the ones who bring the magic. You're right. They're the ones. They're the ones. And it can happen any time a child climbs onto that big lap, with questions, even hard ones, like, can you bring my father home? He said, that santa had told him that, well, I can't promise that, but I'll pray for you. So, he come back the next year,