San Diego It was early May, and San Diego City Manager Jack McGrory was worried. He and the city council had put city taxpayers on the hook for guaranteeing the sale of 60,000 seats for each Chargers game, and now he had to deliver. During the bitter fight over the Chargers contract with the City, McGrory had repeatedly reassured the public that taxpayers would never have to ante up to make good on the guarantee. The tickets, McGrory said, would practically sell themselves. And if they didn't, Chargers' owner Alex Spanos would see to it that they got sold.
But in May, McGrory knew he was in trouble. The general admission seats, which were the subject of the taxpayer guarantee, were not selling well at all, and the Chargers were spending their efforts marketing luxury suites and boxes not covered by the guarantee. A promised effort by the San Diego Chamber of Commerce to sell the seats had not materialized, and the San Diego International Sports Council, which had once promised to help sell the tickets, was now behind the scenes, demanding cash up front to get involved. McGrory was in a bind, and he knew it.
The solution? According to copies of electronic mail and other public records divulged by city hall last week under threat of legal action to enforce the state's public records disclosure act, McGrory hatched a secret plan: pay thousands of tax dollars to the Sports Council, even though the public had never been told of the costly scheme, and the city council had never approved it, at least not in open session.
Sources close to the situation claim the City violated the law by failing to properly screen the Sports Council's request for cash. Instead, McGrory aides slapped together an agreement outside legally required contracting procedures and then did their best to conceal their doings by failing to respond to subsequent questions about the deal.
The City could supply no written documentation for preparation of the contract, which contains only vague references to "marketing sports in San Diego," makes no specific reference to selling Chargers tickets, and sets forth no schedule of performance. In fact, most of the "documentation" of the agreement reluctantly turned over by the City consists of fragmentary e-mail messages between McGrory and his trusted aide Ernie Anderson.
Anderson denies that there was anything illegal about the contract, despite the meager paper trail furnished by the City. "It went through the city attorneys' office and all the appropriate steps," he maintains. "Generally you have departments that originate requests, but this was happening at the manager's level." Anderson also says that McGrory's action in personally ordering up the contract was not particularly unusual. "It depends. That could occur at any point in time, depending on the nature of the need. Jack will call and say get me a contract with this or that, that sort of thing. Financial Management is basically his staff arm, so occasionally we'll get direction to do reports, contracts, and that sort of stuff."
According to the records, during the early part of May, the pace was hectic and the direction was clear: get $15,000 to the Sports Council without delay and without notice to the public. There were no written proposals or consultations with others and no council hearings. Instead, McGrory first e-mailed Anderson on May 12, ordering him to come up with the funds.
The City now says that McGrory's brief message marked the beginning of what was to grow into a costly, sole-source, one-month contract with the Sports Council, never advertised for public bid. When first asked for documentation of the deal last month, Anderson even denied that the records below existed. On its face, the e-mail shows an all-powerful city manager, able to use the levers of the City's financial machinery to do his sole bidding, unchecked by legal niceties.
"How do we get the Sports Council an advance to start their marketing efforts asap?" McGrory wrote Anderson at 2:24 in the afternoon of Monday, May 12.
"Do you have a number in mind?" Anderson wrote back at 5:00 p.m. the same day, asking McGrory to tell him how much money to come up with.
"15,000," McGrory responded at 9:13 that evening.
"Who is doing the footwork for you on this?" Anderson wrote McGrory at 6:03 p.m. the next day, May 13. "We need to put together an agreement, and as soon as that happens we'll give them the dough.... If I'm doing the footwork, who is the contact with the Sports Council, and what do we expect them to do?"
McGrory didn't answer Anderson's question about what the Sports Council was expected to do for its money. Instead, at 6:30, he wrote back: "Can you do it and deal with Bruce and Ky?" The reference to "Bruce" apparently was to Bruce Herring, another trusted McGrory aide often given top-secret fundraising projects, such as patching the huge funding holes created by last year's Republican convention. Ky apparently was Ky Snyder, the Sports Council's executive director.
Two days later, Anderson wired McGrory back with news of how things were going.
"fyi, I spoke with Ky and advised him we are going to contract with him during FY97 in the amount of $15,000 for marketing the Stadium. This is within our administrative authority to do and will not require Council action. It is NOT an advance of FY98 funding. We will finalize the contract and give him the money early next week. He said he will ACCELERATE his plans to accommodate that time frame."
The references to FY97 and FY98 were to the City's fiscal years of 1997 and 1998. The fiscal year of 1997 ended on June 30, which meant that the Sports Council would be getting $15,000 for little more than one month's work. On June 17, according to a copy of a memo in the City's records, Sports Council executive Ky Snyder provided Bruce Herring with a mixed report on the Sports Council's progress in selling the tickets.
"As we discussed at our last meeting, I have attached a copy of commitments pending and refusals in our marketing efforts. The main resistance to date is that medium-sized companies are not prepared to invest in blocks. We are having success in the payroll deduction area and believe this will create the most benefit in the long term."
A list of companies that had been contacted and the number of tickets each had bought was censored by the office of City Attorney Casey Gwinn, which claimed that certain parts of the information were exempt from the state's public records act.
"The City believes the public interest in not disclosing those identities clearly outweighs the public interest in disclosure, because those persons or entities certainly did not anticipate that their identities would become publicly known (because they were dealing with a private entity, the Sports Council) and may not want the public to know that they are purchasing, thinking about purchasing, or have declined to purchase Charger season tickets," said a statement from Deputy City Attorney Leslie J. Girard.
As of today, the City has not revealed how much it will spend on the Sports Council or another marketing agent during fiscal year 1998, which began on the first of July. Sources say contracts will eventually be signed that may cost taxpayers as much as $250,000 a year over the next 30 years of the Chargers contract. The City's Anderson says that the council has so far approved $150,000 for this fiscal year, although he isn't sure of the details. That amount, of course, is much less than the millions of dollars taxpayers may be forced to come up with if the marketing efforts are unsuccessful and a significant percentage of the 60,000-seat attendance guaranteed by the City does not materialize. McGrory has left that worry to his successors. He quit shortly after the Sports Council deal was revealed here in June.