San Diego Union-Tribune (Sunday)
DEL MAR FAIRGROUNDS CONSIDERS FUTURE AS REVENUE LOSSES GROW
Contracts canceled for 2021, horse park closes, fair unclear
The fiscal crisis at the Del Mar Fairgrounds continues to deepen.
In the last two weeks, fairgrounds officials canceled all entertainment contracts for 2021, including grandstand and midway shows for the annual San Diego County Fair, and all upcoming equestrian events at the 64-acre Del Mar Horsepark, two miles east of the fairgrounds. People who board their horses there have been told that they will have to find somewhere else to stable their animals after March 31.
The latest developments again call into question the immediate future of the fairgrounds and the long-term viability of horse racing, equestrian shows, and even the county fair at the stateowned property that has been operating on a barebones budget since the pandemic hit.
Unlike most other government agencies, the 22nd District Agricultural Association that runs the fairgrounds, also known as the
Del Mar fair board, is funded almost entirely by revenue from the events held there. When the COVID-19 pandemic forced the suspension of all mass gatherings this year, it also switched off about 90 percent of the annual revenue for the fairgrounds. One remaining source of revenue for the fairgrounds has been the horse park, which rents space to people who board their animals there and for equestrian events such as show jump
races held by the Del Mar Thoroughbred Club.
It’s more likely he’ll have to go elsewhere, which will be difficult. Most places large enough to hold equestrian events are already booked for 2021.
Horse park activities provide a steady income but not a big part of fairgrounds revenue, Del Mar officials said.
More significant to the horse park closure is a requirement by the San Diego Regional Water Quality Control Board that the fairgrounds curtail the groundwater pollution that results from boarding, training and showing horses there.
“Continuing with an equestrian presence at the horsepark property would require a significant and immediate investment of funds to address water quality requirements, which is simply not possible given the dire (effects) that the COVID-19 pandemic has had on the Fairgrounds’ revenues,” said 22nd DAA board President Richard Valdez in an email.
“We continue to look to the state to assist us with operational support,” Valdez said. “Once we stabilize, our board will continue with our strategic planning process, which will include a comprehensive assessment of all possibilities for our property, including equestrian usages for the Horsepark property.”
Water quality improvements recently completed in a two-year, $15 million project at the 340-acre fairgrounds include the construction of a treatment plant, a holding pond and wetlands restoration. Fairgrounds officials say that with the economic crisis they face, there’s simply no money to make those changes at the horse park.
The future of horse racing at Del Mar has been debated for decades. Animal rights advocates say the sport is cruel and should be stopped. But track enthusiasts said thoroughbred horses live to run, that they are well cared for, and that the industry provides many people with much-needed jobs.
Horse racing at Del Mar has declined in recent years as wagering, like so many other things, has moved online instead of in-person. This year’s Del Mar races were held with no spectators, which for the first time eliminated the profitable category of food and beverage sales.
Still, Del Mar Thoroughbred Club officials reported in December that wagering was up, more races were run and there were more horses in each race in this year’s five-week meet that ended Nov. 29.
Next November, for the first time since 2017, Del Mar will hold the prestigious Breeders’ Cup. Considered the world championship of horse racing, the Breeders’ Cup extends the season by two days and 14 races, bringing a big boost to overall wagering.
With the advent of COVID-19 vaccines, many people hope that activities at the fairgrounds might return to normal in 2021.
The Dec. 8 decision to cancel all fairgrounds entertainment contracts for 2021 also caught some fair enthusiasts by surprise.
Normally by this time of year, the fairgrounds has signed many of the contracts for entertainment at next summer’s monthlong county fair.
That includes a different headliner act nightly on the grandstand stage and other performers at various locations across the fairgrounds.
However, even with vaccines imminent, the pandemic outlook remains dire.
Cases of the virus are still increasing and public health restrictions have been extended, so any mass events at the fairgrounds appear unlikely for at least the first half of 2021.
“There is tremendous uncertainty as to what we will be facing,” said 22nd DAA Director Fred Schenk. “We do intend to have ... some kind of fair, but at this point we don’t know what it will look like.”
There are three different possible scenarios for the 2021 fair, said Fairgrounds Marketing Director Jennifer Hellman. One level would be to schedule only drive-in or drive-thru events such as the ones held this year. A second level would be limited-access events, the way grocery stores limit the number of patrons. The third option would be normal access as the fair has had in the past.
Plans for 2021 include a drive-thru “Jurassic Quest” event in January, where visitors who stay in their cars can see life-size animatronic dinosaurs walking through an exihibit of more than 40 creatures. Also this month, the fairgrounds leased space for two Christmas tree sales lots.
Still, without the regular fair, which had 1.5 million visitors in 2019, the 22nd DAA remains in fiscal turmoil.
Normally, the fair is the largest single event of the year, generating more than half of the district’s $87 million in annual revenue from tickets, parking fees, food and beverage sales, and more.
Total revenues from Jan. 1 through Aug. 31 this year were down 88 percent, according to the most recent data available. The district’s annual budget anticipated more than $74 million in revenue for the eight months, but it received only $8.7 million.
Compounding the financial difficulties is the lack of any significant reserve funds, along with more than $74 million in bond debt for capital projects such as the construction of the racing grandstands finished years ago and the renovation still under way of the off-track betting center, the Surfside Race Place, into a concert and entertainment venue.
Layoffs announced in June and effective in October left the fairgrounds with just 62 of the 158 full-time employees formerly employed there. Officials said 19 employees avoided the layoffs by retiring, and 15 others found other jobs with the state or in the private sector.
Among those who took retirement was longtime fairgrounds CEO and General Manager Tim Fennell. Six employees who were scheduled for layoffs were able to keep their jobs by moving to a lower position.
No additional layoffs are planned, Hellman said last week.
“Our reduced staff is really making efforts to be creative with our outdoor event space, and we’re still hopeful that the California Department of Food and Agriculture may utilize the significant remaining balance of the $43.3 million in general fund support allocated ... to keep California’s fairgrounds afloat,” Hellman said.
“Meanwhile, we’re continuing to look for incomegenerating opportunities, keep our expenses down and manage our cash flow while we work on plans and projects for 2021,” she said.
The 22nd DAA had received a total of $8,720,304 from the state through early November as reimbursement for payroll, leave liability payouts and unemployment insurance reimbursements connected to the pandemic-related layoffs, according to a report delivered to the board by fairgrounds interim Chief Executive Officer Carlene Moore.
The amount received was $12 million short of what the 22nd DAA had requested from the state through AB 75, the $40.3 million state budget allocation for district agricultural associations, Moore said.
“Monthly revenues are still short of ongoing operating expenses and payroll,” Moore said in her Nov. 3 report to the board. “However, personnel has been reduced to the bare minimum needed to maintain and secure the property from being a public nuisance, remain available to the community for emergency and natural disaster responses, and have a viable organization going forward.”
In April, the 22nd DAA sent a letter to Gov. Newsom asking for $20 million in “critical emergency funding ” to help cover the budget deficits. The governor’s response was to include the $40.3 million budget allocation to be shared by the more than 50 district agriculture associations in the state.
“Discussions are continuing as we evaluate the most effective ways to support the network of fairs,” said California Department of Food and Agriculture spokesman Steve Lyle.
Del Mar officials went to the Orange County Fair Board over the summer to request a $5 million loan, but Orange County is facing its own financial troubles and refused.
Fairgrounds officials across the state are hoping for help at the federal level.
Bay Area Congressman Jimmy Panetta introduced the Agricultural Fairs Rescue Act in June that, if approved, would provide up to $500 million in grant funding for agricultural fairs through state departments of agriculture to keep them functioning and preserve them for the future. The act, H.R. 7883, was referred to the House Committee on Agriculture, where it remains.
The 22nd DAA also sent a letter to Speaker of the House Nancy Pelosi and Minority Leader Kevin Mccarthy asking them to include agricultural fairs in any future COVID-19 relief packages.
Occasionally people suggest selling all or part of the Del Mar Fairgrounds, which covers about 340 acres of prime seaside real estate.
Gov. Arnold Schwarzenegger f loated the idea in 2009 of selling the fairgrounds along with other landmark state properties in an effort to raise as much as $1 billion to bolster the state budget. Local elected officials were appalled, and the fairgrounds remained intact.
Also, it’s possible that any proceeds the state might see from the sale of fairgrounds property would be used for purposes other than the operations of the 22nd DAA.
Adding to the fairgrounds’ security is its designation as the county’s emergency shelter. Several times in the past it’s been the refuge of choice for sheep, goats, horses and other livestock evacuated by their owners in the face of wildfires.
And while the future of the fairgrounds appears uncertain, the county fair is unlikely to disappear. California leads the entire United States in cash farm receipts, accounting for 13 percent of the nation’s total agricultural value.
Agriculture supports almost 17,000 jobs and contributes almost $3 billion annually to San Diego County’s economy, according to the Department of Agriculture, Weights and Measures.