Surfside Race Place was underperforming with revenue and attendance.

Plans for a new 1,900-capacity venue at the Del Mar Fairgrounds have unraveled due to spiraling construction costs and questions about whether the fair should be in the concert promoting business in the first place.

Proposed music venue. Belly Up's Chris Goldsmith: “Running a successful music venue is difficult."

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At its May 22 meeting, the nine-member board that controls the fairgrounds (the 22nd District Agricultural Association) voted to not accept an approved $18-million loan and that would have started construction on the music venue that had a projected opening early next year.

The music venue plans started to sour at the fair board’s April meeting when board member David Watson pointed out that costs for build-out had already exceeded the $18-million budget, and that the board was proceeding without specific plans as to what kind of music venue this would be. Belly Up co-owner Steve Goldberg echoed Watson’s concerns with a speech before the board at that meeting.

At the May 22, meeting the other eight members agreed with Watson and sent the question of what to do with the Surfside Race Place back to a committee to come up with new plans. The board does not meet again until August 14.

Three years ago, the Del Mar Fairgrounds acknowledged that its 100,000 square-foot wagering facility called the Surfside Race Place was underperforming with revenue and attendance and that it should be repurposed. Ideas included a bowling alley, craft beer center, or a movie theater, but fair management settled on a music venue.

The fairgrounds reached out to the Belly Up to book the venue, but that plan was scuttled in January when Kaaboo threatened to sue the fairground if it proceeded to give the Belly Up the booking duties. The fair board decided in March that the task to book the 80 hoped-for concerts per year would be taken “in-house,” and handled by its own talent buying staff.

The fair has already paid $1.2 million to Bastien & Associates of Tustin on architectural plans that envisioned a two-story music venue in the Race Place building with polished cement floors, multiple bars, food service bays, and a new LED light system.

Should the fairgrounds ultimately decide that the Surfside Race Place building be used primarily as a music venue, it is unclear if either the Belly Up or Kaaboo or other entities would get involved in programming.

Board member Pierre Sleiman said the costs of the new venture would yield a “small margin” of profitability, and added, “I would be in favor of a serious overhaul” of the plans.

If the Del Mar Fairgrounds eventually does settle on using the Race Place building as a concert venue, it would be a rare example of a public entity operating a business as if it was a private enterprise, according to music industry insiders contacted for this story.

“I’m glad to see the fair board pause and consider everything before moving forward on anything to do with renovation,” says Belly Up talent buyer Chris Goldsmith. “Running a successful music venue is difficult and requires attention and experience.”

Had the Fairgrounds decided to accept the loan and go forward with the plans, it would have had to select from only two contractors. Initially eight contractors showed interest, but only two turned in proposals to take on the project.

The recent Supreme Court ruling on sports betting led some board members to suggest that it may boost interest at the fairground’s sports book operations. Plans were to include satellite wagering in the Race Place building, but in a scaled down section.

Board president Steven Shewmaker stated that it might not be until 2022 until expanded sports betting would come to California.