Del Mar Fairgrounds deal: A look at the money

The Del Mar Fairgrounds
The Del Mar Fairgrounds

By Joe Tash

In coming weeks, decisions at the state and local level will likely determine the fate of a proposal by the city of Del Mar to buy the state-owned Del Mar fairgrounds for $120 million.

One key aspect of any fairgrounds deal is money — how much cash is generated by the 400-acre coastal property each year by its various activities, including the San Diego County Fair, annual horse-racing meet, satellite wagering on horse-racing and some 300 additional events, such as the popular Scream Zone at Halloween, the Christmas Holiday of Lights and the Del Mar National Horse Show.

The title of the property is held by the 22nd District Agricultural Association, a nonprofit state entity run by a nine-member board of directors appointed by the governor.

According to a financial statement provided by district officials, in 2009, the fairgrounds’ operating revenue totaled $62.7 million and operating expenses were just under $54 million. After costs such as debt service and depreciation were figured in, the fairgrounds’ bottom line was a surplus of about $4 million, which was reinvested into the property for maintenance and improvements, said Tim Fennell, fairgrounds CEO and general manager.

The figures include two related entities — the Race Track Leasing Commission, which contracts for an operator of the annual race meet, and the Race Track Authority, which was created to issue bonds to finance a new grandstand and related buildings.

Fairgrounds revenue comes from food and beverage sales, concessions and carnivals, admissions, facility rentals, satellite wagering, parking, sponsorships and other sources, while expenses include payroll, entertainment, maintenance, administration, depreciation and marketing.

The district — through the Race Track Authority — still owes $36.5 million on bonds sold to pay for the new grandstands. Annual debt service on the bonds is $4.8 million, said Fennell.

In an interview, Fennell said the district provides “a good, safe, quality venue at a reasonable price. We balance our budgets, we’re self-funded, we’ve put $191 million (since 1991) into capital improvements at zero taxpayer expense. If you can find another facility like that throughout the United States, let me know.”

Del Mar officials, though, insist that if the city were to buy the facility and help run it through a newly created board of directors, operations could be made more efficient and a larger operating surplus could be generated.

“It’s a very underperforming asset for the state and it’s understandable why (Gov.) Schwarzenegger looked at it as such and offered it for sale,” said Del Mar Councilman Mark Filanc.

Del Mar Councilman Carl Hilliard said city officials and bond counsel hired by the city have looked at the fairgrounds’ financial statements “upside down and inside out,” and he has concluded, “I know we can do a much better job.”

But Fennell, who along with members of the fairgrounds’ board of directors adamantly opposes the proposed sale of the property to

Del Mar, said the district’s operations provide opportunities for the public and generate enormous economic benefits for the region without any state money.

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