Del Mar Fairgrounds goes back to the drawing board on micro-brewery project

By Joe Tash

Del Mar Fairgrounds directors rejected an in-house proposal to bring a micro-brewery to the under-used Surfside Race Place in partnership with beer giant MillerCoors, instead directing staff to gauge the interest of local brewing companies in such a project.

Some directors criticized the proposal, contending that staff and the fairgrounds’ food and beverage contractor, Premier Food Services, hadn’t done enough to solicit proposals. The plan put forward at the Tuesday, Feb. 11, board of directors meeting was “too cozy, too insider,” said director David Watson.

“The entire process has not been fair and has not been transparent,” said Watson.

Board member Stephen Shewmaker defended the proposal as making a “solid business case,” and that he didn’t consider Blue Moon Brewery, a MillerCoors subsidiary, as representing unfair competition to San Diego County beer makers.

“Chevy doesn’t ask Ford if they can put in a dealership,” Shewmaker said.

Fairgrounds general manager Tim Fennell said the plan was intended to produce new revenue for the district from its 90,000-square-foot satellite wagering center, which has seen its attendance dwindle since the 1990s from 2,900 visitors per day, to today’s counts of 300 to 350 per day.

The idea was for the 22nd District Agricultural Association, which runs the state-owned fairgrounds, to “take an existing facility and make it better. This is an expansion of what the fairgrounds already does,” Fennell said.

However, the board voted unanimously to reject all three proposals currently on the table and start over with the process of finding a micro-brewery partner. In August, along with the Premier proposal, the board received two other proposals for the satellite wagering center, one for a bowling and entertainment complex, and the other for a multiplex cinema.

“We erase the chalkboard and now we’re starting again,” said Watson.

“Let’s broaden our scope and see if any other microbreweries would be interested,” Fennell said.

Fairgrounds officials have questioned whether projects such as a movie theater or bowling alley would work logistically with major events such as the San Diego County Fair and the annual horse racing meets at the property. Also, Watson and others have suggested such projects would not comply with the fairgrounds’ permits with the California Coastal Commission and land-use regulations.

But a micro-brewery and restaurant might be more compatible, officials said.

The proposal outlined by Premier Foods vice president and general manager Mark Anderson called for a $4 million project that would have included craft beer brewery, an exhibit on the history of beer brewing in San Diego, a renovation of the satellite wagering facility’s existing restaurant, space for events, tasting areas and an outdoor beer garden.

Rather than contacting strictly local breweries, Anderson said, he worked with beer companies that have existing relationships with the fairgrounds, including Blue Moon/MillerCoors, Newcastle/Heineken, Green Flash and Ballast Point.

Anderson said an analysis of the proposal showed that by 2015, the proposed micro-brewery and renovation could boost annual food and beverage sales at the satellite betting center from the current $350,000 to $4.4 million, an increase of 1,000 percent.

Under Premier’s current contract with the 22nd DAA, the fairgrounds would get 87.5 percent of the net profits from the new venture, while Premier would get 12.5 percent, Anderson said.

Director Adam Day said he wasn’t convinced of the project’s financial viability by the PowerPoint presentation given by Anderson. He and Watson also said they didn’t recall directing staff to work only with Premier on a proposal. The request for potential projects issued by the district also wasn’t distributed widely enough within the business community, Day said.

Watson said he has heard the companies behind the two other proposals – for the bowling alley and movie complex – were unhappy with the process, which he said could expose the district to potential litigation.

After rejecting all the current proposals and terminating the bidding process, the board voted 6-1, with Day opposed, to direct staff to come up with another micro-brewery proposal after contacting local breweries. Shewmaker said the district should still consider an outside company if that offered the most lucrative proposal.

Watson, however, said the district has a legal mandate is to promote and encourage local businesses.

“We are a public agency with a public duty. It’s more than just money,” Watson said.