Orange County Fair officials say they aren’t yet ready to loan $5 million to the Del Mar Fairgrounds in San Diego County, citing ongoing questions about Del Mar’s finances and the neighbor fair’s ability to repay the loans while tied up in other debts.
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Both the Orange County and San Diego County fairs were canceled this year over social distancing and mass gathering restrictions in light of the novel coronavirus emergency. Del Mar’s $5 million loan request stems from their fair cancelation.
At last Thursday’s teleconferenced OC Fair Board meeting, directors voted unanimously to push a decision on the loan to next month, and in the meantime formed a committee that would look into the neighbor fair’s fiscal situation and assess any risks involved with the potential lender-lendee agreement.
OC Fair Board directors also grappled with their own future on Thursday, touching on issues like the uncertain fate of the fairgrounds swap meet, possibilities around a virtual fair, and the OC Fair’s own revenue shortfalls stemming from this year’s fair cancelation.
Local watchdogs criticized Del Mar’s loan request and the agency’s financial instability, questioning whether Del Mar’s troubles started with the ongoing novel Coronavirus pandemic — or if the pandemic merely “laid bare” a financial problem years in the making in San Diego.
Del Mar CEO Tim Fennell in a presentation to the OC Fair Board said most of his fair’s operating budget — 95% of it — is “predicated on mass gathering events.”
Among the things Del Mar’s invested in, he said, include new exhibit halls, “millions of dollars” in horse racing structures, converting a parking lot into a $5 million restoration project, and turning an outdated horse betting facility into a new concert, entertainment and e-sports center.
Del Mar officials have continued to lose money on their horse racing track from declining attendance and food and beverage revenues losses, as well as growing controversy over the sport, while burning through money to operate the venue and pay off the track’s bond debts.
The San Diego County Fair cancelation resulted in a $54 million revenue loss for Del Mar, Fennell said. Even with aggressive cost reduction strategies, Del Mar officials said they needed an extra $5 million to close a $20 million budget gap. So they turned to Orange County.
“I don’t understand how the fair with the sixth highest attendance in the nation is now financially insolvent” after canceling one fair, said Reggie Mundekis, who with her husband Vincent Pollmeier comprise one of the closest fair observer groups, known as Friends and Neighbors of the Orange County Fairgrounds.
“If changes happen, we need to let them happen and changes need to be made to both management and the way the fairgrounds are structured to make those fairgrounds solvent, rather than running around and looking for stop-gap funding,” she said.
Other watch dogs like Mike Robbins and his spouse, Jeanine, criticized the Fair Board for considering the loan request before considering requests for help by fairgrounds swap meet vendors such as themselves, who have been put out of business by the pandemic’s effects on public life.
The reopening of the Market Place has stalled as the company operating it, Spectra, seeks to renegotiate its contract with the fairgrounds.
“Please remember, you have an onsite partner who is asking for help,” Jeanine Robbins said during public comment. “The OC Market Place (swap meet) is asking for help to the tune of a lot of less than $5 million.”
Mike Robbins said the fair’s first obligation is to support the swap meet vendors “that have been there for decades.”
“Make sure the family’s okay, then maybe you help the neighbors too,” he said.
Pollmeier called Del Mar “a very troubled organization. A very troubled organization.”
“When you start looking at the financial numbers, they have been spending the money they make on new facilities, many of them for horse racing. They’ve gotten very low revenue,” he added.
Del Mar officials acknowledged OC Fair officials might need more time to think the request over.
“I know for all of us this ask we’re making of you to your board does not come without a tremendous amount of thought and consideration,” said Del Mar Board Director Pierre Sleiman during the meeting.
Under Del Mar’s proposed loan plan, initial repayments would be made as soon as July, 2021, and principal and interest repayments would be made through 2025.
“There’s no way anyone on this board, in good conscience, can vote on this today,” Pollmeier said.
Board directors agreed.
Board Director Ashleigh Aitken, whose father Wylie is a Voice of OC board chairman said that while “there may be a time where we may need assistance from the Del Mar fairgrounds,” she and other Fair Board members didn’t receive information like Del Mar’s Thursday presentation until Wednesday. “It’s not a criticism in any way, I’m just pointing out the time that we as a board had to digest the limited information we had before us.”
“I’m glad we don’t have to vote on this today,” said Board Director Barbara Bagneris. “I would not be in favor of doing this until or unless we look at how to take care of our own facilities and vendors asking for help right now.”
Board Director Doug LaBelle said “any time you enter a lender-loan relationship, there’s risk associated with it. We need to evaluate what those risks are and what the costs are to us.” He and newly-appointed Board Director Nicholas Kovacevich were appointed to the newly-formed committee purposed with looking deeper into the loan proposal.
Fair Board directors on Thursday also mulled over their own revenue losses and the online possibilities of a virtual fair.
In a budget forecast presentation by OC Fair CEO Michele Richards, two scenarios for the agency’s fiscal outlook this year were presented. The best case scenario was the fair looking at a $15 million shortfall with a full roster of concerts and other scheduled events for the Fall, public health guidelines permitting. The “worst case scenario” without that lineup, Richards said, was an $18 million shortfall.
At the same time, OC Fair officials are sitting on a sizable cash reserve of $54 million.
Plans are also underway to bring the fair into a virtual setting to maintain the fairgrounds’ presence without having a physical fair season.
The fair’s newly-appointed, chief business development officer, Joan Hamill, said a number of possibilities include online livestock judging competitions, re-broadcasts of past performances and tribute band concerts, and virtual tours of exhibits like the Heroes Hall veterans museum where Hamill said people can “actively engage with online lessons and veterans’ talks.”
Mundekis praised the ideas over the possibility of a virtual fair bringing in new, long-term markets: “For instance you could reach out to our military and service members overseas to give them an opportunity to participate in activities.”
Making some aspects of the fair accessible online to those who may not be able to attend in person, she said, “could become a regular part of the fair when we go back to an in-person fair.”
Brandon Pho is a Voice of OC staff writer and corps member with Report for America, a GroundTruth initiative. Contact him at [email protected] or on Twitter @photherecord.