The Chargers may abandon Qualcomm Stadium but the city’s prepared to let a food and beverage company sink $6 million into building upgrades – and taxpayers could be on the hook to pay that company back if the team leaves.

A divided City Council subcommittee voted on Wednesday to push forward a contract with food and beverage provider Delaware North that calls for the company to upgrade kitchen and food sales areas, and for the city to pay that money back if the Chargers move to Los Angeles.

City staff says that regardless of whether the team leaves, it needs to keep the stadium operational and hosting events for at least a few more years.

Councilman Todd Gloria, who voted no along with Councilman David Alvarez, ripped what he dubbed a rushed proposal.

“Unless we want to talk out of both sides of our mouths, we know that there’s a strong desire to replace (Qualcomm Stadium) and one of the main barriers to replacing that facility is that we don’t have enough money to do it. So why on earth would we try and put another $6 million in debt on the taxpayer when we’re having a hard enough time funding a new facility?” Gloria said.

The budget committee voted 3-2 to send the contract to City Council, with Council members Myrtle Cole, Mark Kersey and Scott Sherman supporting it.


We Stand Up for You. Will You Stand Up for Us?

On top of bolstering an endangered facility, the proposal’s timing is bad for another reason: Effective Wednesday, Qualcomm Stadium’s longtime food and beverage contractor, a company called Centerplate, walked away from the stadium, leaving the city to grapple with how to cater June events and serve food and drinks at the One Direction concert in July. It has yet to formally approve the new contract.

“We had discussions with Centerplate. We requested them to stay and they declined,” Deputy Chief Operations Officer Ron Villa told the budget committee. “They adamantly declined. We are now in a situation where we have major events coming forth that we need to be prepared for, for our residents and visitors, and that’s why we are here today.”

The city’s contract with Centerplate expired Feb. 15, five days before the Chargers went public with plans to team with the Oakland Raiders on a Carson stadium.

Real estate assets director Cybele Thompson said waiting to see how those plans played out wasn’t an option. The city needed a food and beverage contract to host events inside the stadium. (Most of the events it’s got coming up are in the venue’s parking lot.)

And it wants to get the best bang for its buck on Qualcomm Stadium.

“If stadium is in decline and we’re not going to do anything to maintain it, we’re not going to be able to get any outside events or catered events or concerts,” Thompson said.

Basically, Thompson said, the city’s convinced Qualcomm Stadium won’t be razed anytime soon.

“We can’t wait five years until a new stadium is built to put a new concession agreement in place,” Thompson said.

The city will receive a lump sum from the Chargers if the team leaves, it could end up throwing millions more at a stadium that virtually everyone agrees isn’t worth renovating.

And if the Chargers leave, the city will get more than a punch in the gut. It’ll owe more on a crumbling facility it’s still paying off.

Then there’s the fact that Delaware North will get the first shot at a food and beverage contract if there is a new stadium, potentially complicating discussions about using those revenues to help finance a stadium.

But in the weeks since the Carson announcement and the current contract ended, a city-assembled team heard proposals from a handful of food and beverage vendors, including Centerplate and Delaware North.

It ultimately chose Delaware North – and Centerplate, unsurprisingly, wasn’t pleased.

After Centerplate’s former CEO was captured on video kicking and choking a dog last fall, Mayor Kevin Faulconer said the city would review its contract with the company.

But when Faulconer appointed a task force to explore stadium options, the Chargers’ stadium point man, Mark Fabiani, blasted the mayor for allowing his longtime consultant Jason Roe, who’s a registered lobbyist for Delaware North, to attend task force meetings.

Things have gotten uglier since.

Centerplate sent Faulconer and other city officials a letter on April 6 raising questions about the selection process.

The Connecticut-based company mentioned Faulconer’s connection to Roe and city officials’ apparent failure to ask questions about financial proposals Centerplate made during its contract meeting.

Centerplate chief legal officer Keith B. W. King, who sent the letter, said the city hasn’t responded to the letter.

“I personally reached out to city Chief Operating Officer Scott Chadwick with an offer to stay through the end of the year in order to ensure a smooth and seamless transition given the timing of the award and all of the logistics involved,” King wrote in a statement. “To date, we have not received a response from the city to our letter dated April 6, nor a formal response to my verbal offer to Mr. Chadwick.”

Thompson, the city’s real estate assets director, couched the situation differently.

“Centerplate’s response was we’re either leaving on April 15 or we want to stay another season, effectively another year,” she said.

Whatever the circumstances, the company left the stadium for good on Wednesday, the same day city officials presented the new contract to the Council subcommittee.

Thompson told VOSD that the city wouldn’t necessarily owe Delaware North $6 million if things go south (or north, rather, to L.A.). The repayment amount drops 20 percent per year and the city will get to sign off on any renovations the company makes at the stadium, she said.

Bottom line, Thompson said, “the longer the Chargers stay here, the less we would be repaying.”

    This article relates to: Chargers Stadium, Government, Must Reads, Quest

    Written by Lisa Halverstadt

    Lisa writes about San Diego city and county governments. She welcomes story tips and questions. Contact her directly at lisa@vosd.org or 619.325.0528.

    14 comments
    Mike
    Mike subscriber

    Jason Roe needs to stop moonlighting ASAP and just focus on the mayor.  Or quit the mayor, then go do whatever private sector job he wants.  This current arrangement has lawsuit written all over it.

    Dean Plassaras
    Dean Plassaras

    I think it's a good bet that the owner has nowhere to go and that Carson is 1st class Mickey Mouse business.

    msginsd
    msginsd subscriber

    RFP losers frequently grouse, but it sure sounds like the fix was in for Delaware North.  When the city wants a particular vendor, it's very easy for them to work the RFP process to that goal.  I agree that no questions in 90 mins is unusual, but not entirely unheard of.  The nonsense about the food exhibits could just be sloppy work on the part of P&C, but I can see the mayor's business office being involved with that bit of misdirection.  As for somebody getting up in the middle of a presentation and leaving, again, it is not unheard of, but it is poor behavior on the RFP team and speaks to the organizational skills of the individual Procurement Specialist acting as Ringmaster.  Some are more strict than others when it comes to interruptions.


    To those people who believe that the city should outsource work, here's the rub:   The city cannot be trusted to properly select a vendor and manage the subsequent contract.  The city routinely ends up with less service, less quality, and higher costs, and that's after spending money and staff time to perform the RFP.  Not to say that every instance is bad, but there are far too many bad results compared to successful ones.


    The mayor stepping into fray trying to take advantage of the Centerplate CEO's dog abuse to get PR time? Silly.  Including Jason Roe in anything related to the stadium at a time when the concessions contract is up for bid? Ill-considered.  The questionable RFP process?  Typical.  

    Sam Ward
    Sam Ward subscribermember

    A bad deal, a dirty deal and a strong argument for getting the City of San Diego out of the business of running a stadium.

    Judith Swink
    Judith Swink subscriber

    Then there are questions about Delaware North itself. In 2005, the State awarded a contract to Delaware North to operate what had been a supremely profitable (to the State) Bazaar del Mundo, instead of Diane Powers. Revenue plummeted and DN withdrew in 2009.


    Even more troubling is the secretive action by Delaware North to obtain Trademark rights to the Awhanee Hotel, Curry Village, Wawona Hotel & even the name "Yosemite National Park". This is public property, not property owned by Delaware North or any private company. Their action wasn't disclosed until a news article last fall in a Bay area newspaper broke the story. http://www.nbcbayarea.com/news/local/Concessionaire-Files-Trademark-Claim-to-Popular-Spots-Ahwahnee-Hotel-Yosemite-National-Park-286774931.html  Delaware North is willing to sell these trademark rights to the National Park Service (to US) for $51 million!!  This is NOT a company that we need to be associated with for a publicly-owned property. The City Council must REJECT this proposed contract and not just because of the $6 million DN wants us to be on the hook to reimburse if the Chargers move from SD.

     Another story about this Trademark horror story:  http://www.trademarkologist.com/2015/01/yosemite-trademarks-owned-by-delaware-north/



    Matty Azure
    Matty Azure subscriber

    The article failed to mention the amount of kickback dollars that Faulconer will receive from Delaware North.

    Signed,

    There's a lot of heat in the kitchen

    Stanton
    Stanton subscriber

    This rush deal is clearly a mistake and likely a straight-on ripoff and sellout of the taxpayers. More transparency is desperately needed here.

    David Crossley
    David Crossley subscriber

    The concession "upgrades" might just be nothing but replacing current kitchen facilities.  It is my understanding that when Centerplate lost the contract, all the kitchen equipment in the stadium was owned by them, and they were taking it with them.

    Jeff Toister
    Jeff Toister subscriber

    @David Crossley That would add an interesting angle to the story. If true, it would mean an investment in kitchen facilities would be required to keep the stadium running. Do you know if that can be confirmed?

    Lisa Halverstadt
    Lisa Halverstadt authormember

    @Jeff Toister @David Crossley  Just got off the phone with Cybele Thompson, the city's real estate assets director. 


    Thompson says it's her understanding that Delaware North has negotiated with Centerplate to buy about $300,000 in necessary operating equipment. She estimated roughly $3 million total in upgrades - which includes that equipment - will ultimately be needed to continue serving food and drinks at the stadium. The big ticket items are related to the stadium's power supply and point of sale systems.

    Jeff Toister
    Jeff Toister subscriber

    @Lisa Halverstadt Thanks for this update, and thanks to @David Crossley for raising the issue. If I understand correctly, it sounds like the $6 million wasn't a luxury item but rather necessary costs for continued stadium operation.


    If so, it looks strikingly similar to our Convention Center. All the attention is put in raising money for expansion while necessary improvements and upkeep are largely ignored.