The struggling Orange County Marketplace swap meet, where hundreds of mom-and-pop vendors set up shop on the county fairgrounds on the weekends, wants an annual $600,000 from the Fair Board to cope with a longtime decline in business and attendance.
Supporters of the request say the money would be crucial to the promotion of a swap meet beset by publicity and financial problems over the last several years and full of vendors who depend on their shops as a source of income.
Critics of the potential deal, which uncertain Fair Board directors tabled at their June 27 meeting, say the fairgrounds should be cautious with what they see as a potential gift of state money.
The swap meet changed ownership in 2016 amid reports of declining revenue and business, though since then the financial losses have continued, according to fairgrounds staff.
Its new operator, Spectra — an entertainment company owned by the telecommunications giant Comcast Corp. — took over the Marketplace from Tel Phil Enterprises, which had operated the swap meet for over 40 years and at times maintained a tense relationship with the fairgrounds.
But despite Spectra’s efforts to revive business at the swap meet, fairgrounds staff say the company’s current business model is unsustainable.
Between 2017 and 2018, overall revenue declined by over 10 percent, with losses increasing by 322 percent, according to Spectra. Much of the losses are due to a decrease in paid attendance to the swap meet and a decrease in the number of vendors and their own profits.
And the number of vendors at the swap meet have decreased by 40 percent since Spectra took over the Marketplace, said Spectra representative Nick Nicora at the June 27 Fair Board meeting, though at the meeting he didn’t specify how many vendors there were then and now and he didn’t respond to Voice of OC inquiries after the meeting.
To recover, Spectra wants $600,000 taken out of the annual $2 million it pays to the fairgrounds in rent for the Marketplace property, and redirected toward a budget to promote the swap meet.
The Fair Board currently doesn’t have an agreement like the one Spectra is proposing in place with any other contractor, according to fairgrounds spokesperson Terry Moore.
Vice President of Business Development for the fairgrounds Michele Richards said “staff takes no position on” whether or not they consider the potential $600,000 deal a subsidy. But that’s what Board Director Ashleigh Aitken called the proposal in a July 5 phone interview.
“When it comes to a subsidy of that size, we can’t approve that without considering whether this is a program where we wanna commit those types of tax dollars,” said Aitken, whose father Wylie is the chairman of Voice of OC’s Board of Directors.
Nicora in a presentation to the Fair Board said Spectra under the deal would still be paying the $2 million, maintaining that the requested money would just be “put into a little budget.”
Nicora added that fairgrounds staff would still be able to control how that budgeted money was spent, as long as it was spent toward the Marketplace.
Spectra is also promising to pay 100 percent of all the net profits generated annually at the Marketplace back to the Fairgrounds until the $600,000 is repaid.
Some of the swap meet vendors showed up to the meeting to voice their approval of Spectra’s request.
“We have customers who come from all over southern California, and we even have one gentleman who comes from Visalia every other week, even though it’s a 400-mile trip,” said Jeanine Robbins, who, with her husband Mike, have been operating their Paradise Cigars shop at the swap meet since 1979.
“The one thing these customers have in common is that they’re all longtime customers,” she added. “What we are missing however, are the new customers, the people who are not even aware that the swap meet exists.”
But the proposal has its critics.
Some Board Directors, led by Aitken, voiced concerned with the fact that they only learned about Spectra’s request a week before the meeting.
“My first concern was that the appropriate process was not followed,” said Aitken in a phone interview. She added that a committee specifically created for the purpose of discussing proposals like these “did not have an opportunity to review this and look at other options.”
Nicora during the meeting said that Spectra’s internal conversations around the future of the Marketplace started around 2017, after a management change at the company.
“We’d been talking about our deficits for quite a while and were trying to come up with different solutions,” he said. “It became eminent that we needed to come up with a solution.”
Much of the pressure to change came from Spectra’s executives, according to Nicora, who described a company becoming more and more unsure of its investment in the Marketplace amid struggling business.
“Big corporations sometimes only care about the bottom line,” he said. “They don’t care about the vendors. They don’t even know the vendors out on the street. But we do. I do.”
He added despite the controversy between the Fair Board and Tel Phil, they “built a pretty significant enterprise at this facility, and it deserves to stick around. So, I’m fighting for it.”
“This Board is being asked to kick in $600,000 a year, for god knows how many years, to subsidize one of the world’s largest companies, Comcast,” said Reggie Mundekis, a local activist and frequent spending watchdog at Fair Board meetings, at the June 27 meeting.
She added after the meeting that if Spectra “is at a point where they need $600,000 a year from the Fair Board, then we should be looking at a new operator for the swap meet.”
Mike Robbins said he doesn’t see how either party in the proposed deal — Spectra and the fairgrounds — couldn’t benefit.
“The marketplace supported the fairgrounds almost literally for decades. The profitability of the fairgrounds is based on profit from the marketplace,” he said.
Mike Robbins also said the $600,000 requested by Spectra is minimal when compared to the profits seen at the fairgrounds annually.
Richards said in an email the fairgrounds saw a net profit of approximately $3.7 million in 2018.
Under the proposed deal, a majority of the requested money — $500,000 of it — would go toward producing events in the fairgrounds parking lot, which Spectra hopes will increase the amount of foot traffic to the swap meet at the same location. The rest of the requested money would go toward actual promotion of the swap meet itself.
“We don’t need a second events center in the parking lot,” Mundekis said, adding that an event of 15,000-25,000 people would “far outstrip” anything being done by vendors at the swap meet.
“Not every event is going to benefit 100 percent of the vendors,” Nicora said. “But potentially a majority of them are going to be affected by it. More people will know that we’re open.”
But Jeanine Robbins said the events will make attendees aware of the “hundreds of small businesses that are open each and every weekend and are struggling to survive.”
An example she gave over the phone was that on July 6, when sports channel ESPN filmed for a show on the fairgrounds, the swap meet was so crowded that “I didn’t hear any vendor complain about bad business that day.”
“People’s livelihoods depend on increasing our customer base at the swap meet,” she told the Fair Board during its meeting.
Mike and Jeanine Robbins say their shop currently accounts for 90 percent of their income, and that many other vendors at the swap meet rely heavily on their businesses.
“It takes a long time to build a business at the swap meet,” said Mike Robbins over the phone. He said he and Jeanine pay $130 a day for their shop’s space at the swap meet. “In 1979, it was $10 a day.”
Aitken wondered if possible alternatives to Spectra’s request could work, such as a co-op situation between tenants and vendors so they can manage and run their own events.
“Maybe there are alternate structures we can set up to ensure the vendors are thriving economically,” she said.
“Do governments give away subsidies? Oh all the time. But I’m not going to be involved in a public-private partnership that has not been studied and analyzed as to what the net benefits are to the fairgrounds.”
Brandon Pho is a Voice of OC intern. Contact him at bpho@voiceofoc.org or on Twitter @photherecord.