San Diego County Grand Jury • 2017-2018

San Diego Continues to Lose Money on Stadium Management

Published: January 12, 2017 14 pages
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Note: Missing finding numbers detected: F7

Findings 11 findings

F01
The Chargers’ departure gave the City an opportunity to recoup revenue on Stadium advertising and suite sales. Fact: In May 2017, READ began a sole-source negotiation with Fox Sports for the sale of Stadium advertising. Fact: In May 2017, READ began a sole-source negotiation with the Bowl Association to sell the Stadium suites for future events. Fact: Stadium staff is knowledgeable about the Stadium advertising opportunities and their costs. Fact: Stadium staff is knowledgeable about the Stadium suites and their costs. Fact: Stadium staff is well versed in national standards of stadium management.
F02
Stadium staff could have sold the Stadium advertising.
F03
Stadium staff could have sold the suites.
F04
The City gave away revenue it could have retained. Fact: The City’s contract with Fox Sports to issue an RFP for the Stadium naming rights was effective September 15, 2017. Fact: Fox Sports issued an RFP for the Stadium naming rights on August 1, 2017. Fact: The RFP responses were due to Fox Sports on September 1, 2017.
F05
The City allowed work on the contract before its effective date. Fact: The City’s contract with the Bowl Association to sell the Stadium suites was effective on September 14, 2017. Fact: The Bowl Association began selling Stadium suites in July 2017.
F06
The City allowed Stadium suites to be sold before it authorized the sales. Fact: Qualcomm Inc. bought the Stadium naming rights in 1997. Fact: Qualcomm Inc.’s naming rights expired in May 2017. Fact: Qualcomm Inc. did not wish to extend its naming-rights contract. Fact: The City contracted with Fox Sports for Fox to issue an RFP for the Stadium naming rights. Fact: The City Procurement Manual specifies RFPs are prepared collaboratively by the client department, the Purchasing & Contracting Department, and the city attorney Fact: Neither City contracting policies nor the Municipal Code discuss contracts to issue RFPs.
F08
The City needs rules on contracts that allow private parties to issue RFPs on the City’s behalf. Fact: The City’s benchmark for issuing RFPs is 60 to 100 days. Fact: Stadium Staff is familiar with the RFP process through the contracts for parking and concessions.
F09
The City had the time and expertise to issue its own renaming RFP in time for the Stadium events of September 2017. Fact: The City’s contract with Fox Sports provided that Fox would issue an RFP for the Stadium naming rights. Fact: A Fox Sports representative was on the panel that reviewed the RFP responses and selected the winner. Fact: The City’s contract with Fox Sports gave Fox 25% of the naming-rights revenue. Fact: The City does not have policies and procedures governing the judging of RFPs by third- parties who have a financial stake in the outcome.
F10
The City needs rules on third parties judging responses to RFPs. Fact: The contracts with Fox Sports and the Bowl Association are “contracts for services” under MC §22.3003 that require a competitive solicitation under MC §22.3206. Fact: MC §22.3208 defines a “sole source” contract as one that is not required to be competitively awarded. Fact: MC §22.3016(a) justifies a sole-source contract when “…strict compliance with a competitive process would be unavailing or would not produce an advantage, and…soliciting bids or proposals would therefore be undesirable, impractical, or impossible.” Fact: The sole-source certifications for the Fox Sports and Bowl Association contracts are based on the short period of time available to issue RFPs and the prior relationships with Fox Sports and the Bowl Association. Fact: The City had the opportunity to issue an RFP for advertising and suite sales as early as February 2017. Fact: The City Procurement Manual provides the official statements of what circumstances justify and what circumstances do not justify sole source contracts.
F11
The Fox Sports and Bowl Association contracts did not conform to the requirements for sole source status. Fact: The Fox Sports and Bowl Association contracts are revenue-generating. Fact: The City has no rules on valuing revenue-generating contracts for the purposes of determining the appropriate solicitation process.
F12
The City needs rules on valuing revenue-generating contracts.

Recommendations 4

No Responses Found 1

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