All councilmembers except Juan Vargas attended, including Valerie Stallings, who had reaped thousands of dollars by selling stock obtained in an offering by Neon Systems, a Texas company controlled by Moores.
On Tuesday, June 29, 1999, the San Diego City Council went into secret session to consider a series of financial concessions demanded by San Diego Padres owner John Moores. Although the closed-door meeting had been billed on public notices as a discussion about "real property interests in the East Village area of downtown San Diego," the real topic was the granting to Moores of almost $5 million worth of "modifications" to the Padres lease at Qualcomm Stadium in Mission Valley.
"For so long as the Padres use and occupy Qualcomm Stadium," says the January 3, 2000, agreement, "advertising will be permitted on the back of Tri-Visions at Qualcomm Stadium."
Confidential minutes of the meeting show that all councilmembers except Juan Vargas attended, including Valerie Stallings, who, later disclosures would reveal, had just 90 days earlier, on March 31, reaped thousands of dollars by selling stock obtained in a lucrative initial offering by Neon Systems, a Texas company controlled by Moores. Later, in November 1999, four days before the council again secretly considered granting the Moores concessions, Stallings again purchased stock in Neon.
Girard claimed that the city's negotiators had reached "a middle ground" in their dealings with Moores.
Attached to the minutes of that June meeting was a simple one-page matrix, never made public, that laid out for the council the estimated $4.68 million "cumulative impact" -- the cost to taxpayers -- of what Moores was asking for. "Ticket Revenue Cap at $25.5 million," was the first point. The "Annual City Impact" of the cap was given as "-$250,000." Point two was "Parking Increase over $6," and the "impact" was said to be "-$175,000." In all, the secret list contained 11 points, including "10 percent of Skybox Licensing Revenue," impact: "-$468,350"; "Plaza Food Court Improvement Revenues, impact: "-$120,000"; and "Revenue from 3500 Parking Spaces at Qualcomm Stadium when new Ballpark Opens (for five years)," impact: "-$262,000."
Unlike the old days, former city manager McGrory is on the Padres' side of the table now.
Another list provided to the council was titled "Additional Issues Not Accepted by the City." Item seven on the "not accepted" list was "Padres permitted to sell advertising on back of Tri-Visions at Qualcomm." The "Tri-Visions," two huge video displays, had been installed at the stadium by Moores under an earlier agreement, which allowed him to pull them out whenever his team vacated Qualcomm. Their backsides face the busy freeway interchange of I-15 and I-8, offering the Padres magnate a lucrative advertising venue if only Moores could convince the city to allow him to sell the space. At stake was possibly millions of dollars. So far, the city had denied him the opportunity.
Moores. More than six months after the city council authorized many of the Qualcomm concessions to Moores - was the public given a hint of what was going on.
Yet another list attached to the secret minutes of the June 1999 meeting was titled "Other terms being studied by city council." These included "Padres permitted to play additional games outside continental U.S."; "Padres permitted to sell naming rights for all or part of new ballpark district and license 'ballpark district' concept"; "Padres permitted to sell naming rights for all or part of new ballpark district public parking facilities"; and "Padres get additional 30 dates at new ballpark."
A fourth list was headed "Terms Padres wish city to reconsider." It consisted of a series of questions, including "Will City allow Padres to use City box at Qualcomm for party and promotional purposes?" and "Will City give Padres 371/2 percent of advertising revenue at Qualcomm (Chargers will get 371/2 percent)?"
The confidential minutes of the June 29 meeting show that Assistant City Attorney Les Girard, not the city manager, briefed the council on the proposed concessions. Then, after a discussion not recorded in the minutes, Councilwoman Judy McCarty made a motion, seconded by Councilman Byron Wear, to "approve numbers 1-11 on the [first] list, to give the negotiating team something to work with in regard to the Padres. Remove the word guarantee from the list." Like the rest of what happened in the closed session, the motion, which passed unanimously with Vargas absent, was not revealed to the public.
Five months later, on November 30, 1999, Assistant City Attorney Girard dispatched a memo, titled "Extension of Padres' Use and Occupancy of Qualcomm Stadium," to the city council. The document, which laid out the financial concessions the city was about to provide to Moores, was labled "Attorney to Client Corresponce -- For Confidential Use Only." Four days before the date of the Girard memo, on November 26, according to her later disclosure, Councilwoman Valerie Stallings purchased between $10,001 and $100,000 of stock in Neon Systems, the company controlled by Moores.
In his memo, Girard cited the authority he claimed the council had given him at the June closed session. The matter had still never been taken up in a public meeting, and none of the terms arrived upon in the closed session had ever been disclosed to the public. "Enclosed as Attachment 1 is the closed session record from the meeting of June 29, 1999, at which authorization was given. The record shows a unanimous vote (with District 8 absent) to convey the Council's concurrence to 11 specific terms.
"Enclosed as attachment 2 is a list of those terms together with their economic impact. Certain other terms offered by the Padres were rejected. Enclosed as Attachment 3 is a list of those rejected terms. The Council agreed to further consider certain additional terms. Enclosed as Attachment 4 is a list of those terms.
"The [city's negotiating] Team met again with the Padres and conveyed the terms," the memo continued. "The Padres requested that the Council reconsider certain of the rejected terms. Enclosed as Attachment 5 is the list of terms the Padres wished the Council to reconsider. The Council, in August, authorized the Team to negotiate certain of those terms within limits. The handwritten notes in the margin of Attachment 5 indicate the Council's direction with regard to the terms to be negotiated. The team met again with the Padres and discussed those additional terms."
The list of concessions provided by Girard to the council in November had grown to 15 points, with a total estimated annual "impact" on the city's so-called "Stadium Fund" of $1.68 million. The cost of the so-called "Ballpark Signage District" was given as "unknown." "Some of the costs are direct negative impacts on the Stadium Fund," the memo said, "for example conveying to the Padres the City's 10 percent share of suite-license revenue, while others are merely foregone new revenue, such as any share of a future parking increase. Most of the terms will have ongoing cost impacts as long as the Padres occupy the Stadium, while some, like the food court expansion, will only be a one-time expense. Finally, the cost impact of some of the terms may vary, such as the suite-license revenue, depending on the success of the Chargers in licensing the suites in any given year, and some, like the estimated revenue for parking at Stadium once the ballpark is open, are difficult to estimate."
Girard claimed that the city's negotiators had reached "a middle ground" in their dealings with Moores. Among the concessions the city had made were "most significantly...negotiating for a special sign district around the [proposed downtown] ballpark that would allow the City and the Padres to implement certain advertising that will generate revenue for both the City and the Padres."
Cloaked in secrecy by Girard's claim of "attorney-client privilege," none of the specific terms of the concessions regarding the Padres' Qualcomm lease were made public by the council. And the concessions were never considered in public session. Instead, the council tacitly agreed that, for public purposes, the city manager and city attorney would be delegated with the task of reaching and signing an agreement with Moores.
A November 22 memo from the city's Redevelopment Agency regarding the sign-district proposal was leaked to the Union-Tribune, which reported it on December 10. "Under this proposal, the Padres would have the right to develop and own the rights to an official district name and logo," the paper quoted the memo as saying. It went on to quote Padres executive Jack McGrory, a former city manager, as saying that "district naming rights would apply to 60 blocks and would be a positive addition. This is not that different from what's being done in a lot of other areas of the city." There was no mention in the story of the Qualcomm concessions.
A day later, on December 11, some but not all of the details of the council's secret negotiations over the Qualcomm lease were leaked by someone to U-T columnist Diane Bell. "The S.D. City Council and the Padres have been secretly haggling over the Padres' continued use of Qualcomm Stadium until the new ballpark is built. The Padres know better than to ask for a ticket guarantee, but they are demanding concessions," Bell reported.
"Word has it," she continued, "they want the city's share (10 percent) of sky-box licensing revenue from the Chargers, a cap at $25.5 million on the city's 10 percent take of Padres' ticket revenue, use of the city's sky box for several games, and continued free rent in their office space near the stadium. They also want to collect fees (for 10 years) for 3500 parking spaces at Qualcomm for people who leave their cars there and take the trolley to the downtown ballpark.
"These requests and more are designed to offset the negative impact on the Padres of the Chargers' new stadium lease. Sitting in on these hush-hush discussions, as he has in times gone by, is Jack McGrory. But, unlike the old days, former city manager McGrory is on the Padres' side of the table now. The city isn't speaking publicly on the issue yet but will accept public comments at Tuesday's meeting before going into closed session to discuss it."
Thus -- more than six months after the city council, acting in secret session, actually authorized many of the Qualcomm concessions to Moores -- was the public given a hint of what was going on.
The U-T's Bell failed to mention a number of other still-pending concessions, among them Moores's demand back in June of 1999 to place large billboards on the back of the two so-called "Tri-Vision" video screens flanking the stadium scoreboard. That proposal had been placed on the "Additional Issues Not Accepted by City" list adopted by the council in its secret June 29, 1999, meeting. The Tri-Visions were also missing from the list of 15 proposed concessions furnished to the council by Assistant City Attorney Les Girard in his secret November 30, 1999 memo. But the "Tri-Vision" proposal was far from dead. It would ultimately prove to be of major benefit to Bell's employer, the Union-Tribune.
On December 14, 1999, despite urgings from the San Diego Taxpayers Association and others to delay its vote, the city council voted to push ahead with bonds for the new downtown ballpark. There was no public discussion of the Qualcomm concessions and no further mention of them in the Union-Tribune. The newspaper did, however, use the occasion to editorialize in favor of the deal.
On January 28, 2000, the paper reported that, based on information contained in "more than 1000 pages of documents released this week by Mayor Susan Golding...the Padres would continue to collect 10 percent of the sky-box money the city gets from the Chargers, which Padres Executive Vice President Jack McGrory estimated at $400,000 a year."
(In fact, according to Assistant City Attorney Les Girard's secret memo to the city council dated June 30, 1999, McGrory's estimate of the sky-box revenue lost to the city under the deal was on the low side. In June 1999, Girard estimated it to be close to $470,000 a year, though in his November 1999 memo, he dropped the estimate to $400,000. None of those figures saw the light of day.)
The Union-Tribune story added that "the city would allow the Padres to use the city sky box for up to 40 games a year. And the Padres may raise parking fees above $6 and pocket the extra revenue. McGrory said the Padres get 37.5 percent of stadium-advertising revenue, but the Chargers currently have control over sales."
There was still no mention of billboards on the back of the "Tri-Visions." On Monday, January 31, 2000, the council finally voted in public to approve the lease, but in a way that shielded it from political fallout. No details about the negotiations were provided in the public documents, and the terms were reported only partially by the Union-Tribune, apparently based on briefings by Padres executive McGrory.
The actual specifics were contained in an obscure document, dated January 3, 2000, entitled "Memorandum of Agreement For the Extension of the Partial use and Occupancy Agreement for Qualcomm Stadium." The memorandum was signed by City Manager Michael T. Uberuaga and McGrory. Their signatures are dated February 7, 2000, a week after the council action.
The memorandum incorporated the costly 10 percent skybox-revenue clause and ceded the use of the city's skybox for 40 games, although it provided that the city council "shall receive 22 Plaza level tickets between 1st and 3rd bases for each game." The agreement was silent on the purpose of the tickets.
The deal also called for an improved food court, costing the city $360,000 in cash, plus an additional $120,000 rent credit from the city to the team. (Girard's June 1999 memo had estimated the total expense to be just $120,000.)
Per Girard's June 1999 memo, the Padres "shall retain 100 percent of the revenue for any increase in the parking charge" above $6. The team was also awarded as a "rent credit" the "upfront consideration paid by parking contractor in 1999 for the extension of the parking contract ($50,000)." (Girard's June 1999 memo to the council valued this at only $25,000.)
The issue of the advertising split between the city, the Padres, and the Chargers, according to the document, "shall be set forth in a separate agreement between those parties."
Also missing from the agreement were several items listed by Girard in June 1999, including "Rollback, Broadcast Connection Fees" ($25,000)"; "Reimburse Padres for Costs Related to Conversion between Baseball events ($25,000)"; and "Pay Rent December 31 vs. Bi-Annually ($32,500)."
Replacing those items, however, was perhaps the most lucrative concession that the city council could offer, one it had previously insisted it would not even consider: use of the back of the two giant "Tri-Vision" screens for billboard advertising. "For so long as the Padres use and occupy Qualcomm Stadium," says the January 3, 2000, agreement, "advertising will be permitted on the back of Tri-Visions at Qualcomm Stadium." In addition, the agreement said, "temporary advertising such as banners and signs facing towards the parking lot will also be permitted." All of the city's share of the money derived from the signs would go to the Padres. How much money the city gave up is not known, as no value was placed on the signage.
The next time the public was to become aware of the city council's secret Qualcomm concessions was in early spring, when 150-foot signs advertising the Union-Tribune and its Spanish-language insert, called "Enlace," sprung up overnight on the back of the "Tri-Visions." City officials insisted to irate neighbors and inquiring reporters that the signs did not violate the city's ban on billboards because the Union-Tribune is sold at the stadium and therefore falls under an exemption allowing signs at places of business.
Neither John Moores nor the the city has ever made public how much the U-T is paying for the advertising, and the newspaper itself has ever reported on the matter, nor on the history of the secret city council meetings that led up to the deal.