Just what are San Diego taxpayers paying the San Diego International Sports Council to do? And just how much will it ultimately cost? Those closely guarded secrets loom large asthe Sports Council, a group of well-heeled and well-connected local business honchos, launches an expensive effort this week to sell Chargers tickets on behalf of City Hall.
Stadium concession area. The contract is careful not to mention specifically what the Sports Council will be doing.
Under the City’s controversial deal with the Chargers, city taxpayers must guarantee that the team sell 60,000 general admission seats for each ganie. If the seats don’t sell, the city must pay the Chargers the difference. One widely reported estimate by the San Diego County Taxpayers Association pegged the possible taxpayer liability for the unsold seats at $1 million a year.
Officials from City Manager Jack McGrory on down have argued that the seats would practically sell themselves, and if they didn’t, the Sports Council had agreed to lend its good offices to sell them. It was generally assumed that the Sports Council would make its services available for free, but a contract signed two weeks ago between the City and the council is casting serious doubt on that assumption.
The vaguely worded contract, dated May 21, calls for the city to pay the sports association $15,000 for just five weeks of service, ending later this month. According to terms of the deal, the Sports Council has embarked on something called the “Business Development Program,” which the document describes as “development of a marketing plan” and “implementation of activities to involve local business, media, military, and civic groups, and foundations to ensure the success of sports in San Diego.”
The contract is careful not to mention specifically what the Sports Council will be doing, and city officials, as well as those from the sports association, failed to return repeated phone calls seeking clarification of the deal. But a close examination of the fine print in the document and conversations with those who have been approached by the Sports Council suggests the objective is to unload packages of Chargers season tickets on local buyers.
A one-page attachment to the contract lists a series of “goals” for the program, including creation of a “database of prospective targets for sales presentation,” conducting “40 sales presentations,” coordination of a “media campaign to generate awareness of sales opportunities,” and securing “commitments.” Another attachment, labeled “Director of Business Development Budget,” calls for a monthly salary of $7500, plus a “bonus” of $2500. Other expenses include installation and use of a new phone for $860, a computer system for about $3700, and monthly entertainment, involving “lunches w/prospective clients” at $313.
Although the City and the sports association aren’t talking, those who have been contacted by the association say that the Chargers’ ticket sales campaign is set to be unveiled to business insiders this week. “The Sports Council is developing this plan to go out and sell these tickets, and it includes packets of 20 season tickets for a certain amount of money, or a hundred season tickets for another amount,” says Sal Giametta of the San Diego Convention and Visitors Bureau. “We as an organization will probably buy one of those, and we use that to take clients, meeting planners, and members of site selection committees that we’re trying to woo to town, to a game or two.”
Giametta adds that the convention bureau is not picking up any of the tab for the ticket sales effort. “Beyond whatever package we would buy for our organization that we would use to take clients to the games and so on, there would be no other hard dollars coming from the bureau in any way for this.”
Back in February, as the debate raged over whether voters should be given a say in whether the City should have entered into the Chargers’ contract with its controversial ticket guarantee, the Union-Tribune, a big backer of the deal, reported that “business leaders are trying to take heat off the City” by “coordinating efforts to generate enough season ticket sales from the business community to make the City guarantee moot.”
There was no mention of requiring local taxpayers to subsidize the sales efforts. That same month, City Manager Jack McGrory told a reporter that he trusted the Chargers to sell all the tickets for every game. “We feel confident in terms of the quality of that organization. The ticket guarantee is not going to be a significant risk to the city of San Diego.”
At the time there was talk of a plan by local business leaders to embark on a ticket marketing plan, but the idea of billing taxpayers for it was never mentioned. Sports Council executive director Ky Snyder told the Daily Transcript that “the plan could materialize in the next few weeks, although there are a few components that have to be finalized.” But nothing ever emerged. (Neither McGrory, his assistant Bruce Herring, nor Snyder returned repeated phone calls seeking comment for this story.)
The unclear wording of the City’s $15,000 contract with the sports association, along with word that the city-sponsored sales ticket efforts are just now gearing up, concerns Bruce Henderson, one of the chief critics of the Chargers’ deal with the City, who warned early on that the ticket guarantee meant trouble. “It clearly demonstrates that the City, as one would expect, doesn’t know what it’s doing. There’s no marketing program there, there isn’t a program of any sort outlined in the agreement, there isn’t even a requirement that they come back with a full-scale program to sell the full 60,000 tickets.
“There’s no indication that there is any performance schedule. Every ticket that doesn’t sell costs the City money, so they want to have a sellout. What they should be trying to do is sell out the stadium, sell out their 60,000 seats at least a month in advance.”
Henderson also questions the secrecy of the Sports Council contract and the way it was handed out without explicit city council approval. “From a certain perspective I don’t care whether their public relations plan is secret or public. There isn’t any reason to keep it secret. They should be quite open about it because that encourages people to get involved, but I’m not so much concerned about them being secretive about it as the fact that there’s an indication from this agreement that they don’t have a plan at all.”
He also notes that the contract is “sole source,” meaning that the City has awarded it without bid or even advertisement.
The document says sole sourcing is justified because the Sports Council can provide “unique services.” Says Henderson, “The real problem with the sole-source aspect here is that there is no backup information that suggests the Sports Council has the expertise to market 60,000 Chargers tickets over a ten-game schedule. There is nothing particularly wrong when you’re asking for professional services to pick the best person, but if you don’t have any basis on which you make that decision that they are the best, then sole sourcing is the equivalent of cronyism.” Henderson says he fears that the cost to taxpayers of marketing the tickets may end up being much bigger than the $15,000 included in the five-week Sports Council contract. “Whoever is going to sell those Chargers tickets has to expend anywhere from $1 to $2 a ticket to sell them. That’s a guess, but that’s got to be in the ballpark. Promotional expenses have to be in that range for tickets at that price, and it may even be higher than that because we don’t know that the tickets are set at a price that the public is going to find acceptable. If you set it too high, selling them becomes a very difficult problem and requires substantial expenditure of money.”
One indication of the selling job that awaits the City is initial response to an offer by the city-affiliated credit union to give special one-year loans at 10.9 percent limited exclusively to credit union members to finance the purchase of Chargers season tickets. A spokeswoman for the San Diego Metropolitan Credit Union, which has widely distributed full-color brochures promoting the loans, says that early response has been slow. “People are saying it’s too early to decide to buy season tickets.
I imagine they might be making up their minds in August.” Henderson speculates that the city council knows how tough it’s going to be to sell tickets and therefore is keeping the seat marketing deal off its public agenda, instead allowing City Manager Jack McGrory to issue the contract quietly and take any subsequent heat. “It’s not come to the city council because the council wants to be absolutely certain that they can avoid accountability. That would be the motive for the secrecy. Then, if the tickets don’t sell, the council can say, well, they didn’t bring a plan to us, it’s the manager’s fault. They have deniabil-ity. And, of course, that’s exactly what happened with the San Marcos trash plant, where we taxpayers in the region lost $125 million and no one, not one single person, was ever held accountable.”