ECM Special Report
By Miriam Raftery
Sept. 4, 2011 (Rancho San Diego) – After four and a half years of organizing numerous major community events as well as programs to benefits its 143 members, the Rancho San Diego-Jamul Chamber has closed its doors. The closure reflects today’s tough economic times—but also raises questions over why the America’s Finest Beer Festival, a three-day event at Qualcomm Stadium sponsored by the RSDJ Chamber, was cancelled.
An ECM investigation reveals that questionable actions by management of Qualcomm Stadium, owned by the City of San Diego, left organizers as well as vendors on the line for hefty expenses. While questions have been raised over the Chamber pulling the plug on the event, the City’s actions appear to have left the Chamber with no viable option except cancellation. Yet ironically, experts predicted that both the City and the Chamber would have generated significant profits had the event been allowed to go forward.
Now in an exclusive interview with East County Magazine, Chamber insiders and others reveal the untold story—and share documents that raise serious questions about the actions of Qualcomm’s management. In fact, the Chamber pre-sold about 2,500 to 3,000 tickets and was banking on at-the-door sales to boost revenues and provide a donation to the USO. Had the three-day beer bash been allowed to be held, the City of San Diego also stood to make a healthy profit off parking fees sales tax revenues from beer, T-shirts, and other items sold.
Why, then, did the city demand up-front payments not spelled out in the contract and engage in other questionable actions that left Chamber leaders with no choice but to cancel the event?
“Had the festival had the opportunity to move forward, the event would have been a huge success for the city, the vendors, the USO and the Chamber of Commerce,” said Chamber president Valerie Harrison, who founded the Chamber three years ago to serve under-represented businesses in her community. She expressed disappointed that her Chamber’s 143 members will no longer have a Chamber devoted to the Rancho San Diego and Jamul region, adding that the RSDJ Chamber was “known for excellence in promoting our members businesses.”
Through its three and a half years, the RSDJ provided educational programs, networking and marketing opportunities dedicated to helping businesses grow.
The Chamber organized an impressive number of previous events for a small organization, such as last year’s Summer Music and Culture Festival at Cuyamaca College's Water C Conservation Garden, the annual Olde Time Christmas Village celebration, monthly breakfasts, a golf tournament that benefitted wounded veterans, networking luncheons, awards presentations, and a year-long Women’s Higher Education & Entrepreneural Leadership program. The Chamber even brought the Carson & Barnes Circus to town.
East County Magazine has examined dozens of documents and found that Qualcomm management misled Chamber leaders on ticket sales information, made a last-minute demand for $8,900 to cover security costs that an e-mail months earlier implied could be paid after the event, contradicted itself in various email statements, and jacked up parking costs.
Yet ironically, by forcing cancellation of the event, the City actually lost thousands of dollars in revenues from parking fees and sales tax.
On March 23, in an email to Jeff Harrison, Chamber president Valerie Harrison’s husband, Qualcomm representative Michele Kelley stated that “once event is over, they [Ticketmaster] send the promoter a check, minus any amounts we may hold for expenses (if designated as such in the permit, such as pass thru cost, w[h]ere we get billed directly by other city agencies ie PD, Fire and Medical for your event and those fees are passed on to the promoter.”
Yet in mid-July, Kelley began demanding in e-mails that the Chamber pay for those costs [“Police Dept personnel and EMTs”] in full no later than the Thursday before their July 22-24 event.
Chamber leaders attempted to scrape together the $8,900 but in the end, did not. Other vendors suddenly presented demands for full payment up front to deliver equipment and more—bills that the Chamber could not pay, Harrison said. The small Chamber had already worked minor miracles raising funds to pre-pay bands a total of $25,000 (money that the bands have thus far refused to pay back, even in part.) Then a backer who had pledged to help cover unexpected last minute expenses fell through. There was simply no way for the Chamber to foot the bill for tens of thousands in pre-event expenses now being demanded, Harrison said.
The Chamber isn’t the only organization to received unexpected pre-event payment demands. ECM held an event on city property last year. ECM’s planning committee was advised that there would be a security guard cost and that if ticket sales exceeded a specified amount, ECM would need to provide a shuttle driver for off-site parking. ECM arranged for the guard and driver. But on the morning of the event, the City made a last-minute demand for ECM to hire four parking lot attendants at hefty rates, or the event would be cancelled. ECM hired private attendants, but the cost significantly cut into profits. With earlier notice of the requirement, volunteers could likely have been secured.
(If other organizations have received unexpected/uncontracted pre-event payment demands from the City, please contact email@example.com with details or post in the comments section below.)
Qualcomm’s actions also cost the Chamber ticket sales over many weeks. Ticket sales were ultimately set up through TicketWeb, not TicketMaster. But Kelley provided a false reply to the Chamber when asked whether the Chamber could boost ticket sales by also selling tickets at outside venues such as restaurants, bars, or Chamber meetings, responding simply “no.”
However, TicketWeb’s contract with the Chamber says otherwise. The contract allows outside sales off-line, provided TicketMaster is paid 20 cents ticket – and Chamber leaders are upset that the city’s inaccurate information cost them numerous opportunities to boost ticket sales. Their contention is further supported by TicketWeb’s own website, which clearly states: “We can print tickets for you to sell at your venue, at a local record store, etc. We charge $.20 per ticket plus shipping.”
TicketWeb didn’t put a banner up to promote the event until much later than promised, Harrison said. Once Chamber leaders learned they could sell tickets themselves and began doing so, sales picked up.
The Chamber leader noted that Qualcomm’s management accessed her account with TicketWeb and informed Centerplate that ticket sales were lagging; as a result Centerplate raised its bid from around $1,500 to $10,000, she said. “Those are business secrets. What right do they have share that? They took away my ability to negotiate a fair price,” Harrison objected.
Chamber leaders also claim that they were initially promised free parking for their event. E-mails document that Qualcomm later informed them parking would be $10 per vehicle, then raised it to $15, over written protests from the Chamber leaders on May 23.
Kelley declined to comment, instead referring ECM’s inquiry to the Mayor’s office. Rachel Laing, deputy press secretary for Mayor Jerry Sanders office, spoke briefly with ECM. “The city never pulled the plug on the event,” she stated, adding that some vendors were not paid.
It’s true that the City was not the party to cancel the event. However it sent the Chamber a 72-hour demand for payment and threatened to cancel the event if not paid in full. Its actions left Chamber leaders with no viable alternative. Asked about the e-mails that provided conflicting and inaccurate information, Liang said she would need to look at them before commenting.
ECM faxed the most aggregious e-mail examples to Liang more than a week ago. Detailed questions were emailed approximately two weeks ago. The City failed to answer pointed questions about its actions.
Last night, after a final call prior to deadline, we received an e-mail from Liang which stated: “Unfortunately, the Qualcomm Stadium manager, Mike McSweeney, was unable to respond one-by-one to each of your questions by your deadline.” She sent ECM a statement made by McSweeney to another media outlet, which had never published it.
“The organizers of the America’s Finest Beer festival agreed to the standard rent and expense agreement we give every event operator at the stadium. We worked with them on ways to lower costs and were as accommodating as possible,” that statement read in part. The statement claimed the Chamber didn’t pay other up-front expenses to vendors. Chamber leaders have said that’s because of the City’s request for $8,900 up front, which could only have come from money set back for other vendors. So they cancelled the event two days prior to its start.
Harrson sent the following response when shown the City's remarks: "Initial reports made to the media were based on emotional events of the day of cancellation. Once the team had ample time to bring the committee leaders together to conduct a comprehensive business debrief the result findings was that the common denominator that caused the domino effect in the end was the $8944 believed to be an illegal tactic to cancel the festival," she charged." Otherwise without that threat negotiations with service providers were being worked out successfully by the team leaders. The stadium would not back-off the demand." By refusing to back down and forcing cancellation of the event, Harrision added, "Unfortunately at minimum the stadium lost somewhere in the neighborhood of approx. $15,000 (1,000 cars parking 2,000 cars) $30,000 X 3 days, for parking what a loss. Sales tax excluded."
There were other hassles. A date originally booked by the Chamber had to be changed after Qualcomm informed them that a regular customer wanted the stadium on that date for a jazz festival, according to the Harrisons. Available dates were limited and the best remaining option conflicted with Comic-Con. So the Chamber hired a promoter to pass out flyers at trolley lines servicing Comic-Con, offering discounts to Comic-Con attendees to come to the beer festival.
The event had presold around 2,500 to 3,000 tickets, including some VIP tickets. About 4,500 more ticket sales were needed to break even, according to Jeff Harrison.
Dan Kniffin is a local business manager with experience running a bar. More importantly, he also has run a company that managed bands professionally. “I came in to help with the bands and breweries,” he told ECM.
Asked how likely he thought it was that the event would have made a profit if allowed to go forward, he replied, “I think it’s automatic, based on the headliners we had.” Kniffin volunteered his efforts to help with the event, though Chamber leaders have indicated the board planned to consider a small stipend in appreciation if the event had been profitable.
With 122 breweries and 21 bands, the event was billed as the largest craft beer festival ever.
The popular band Pinback was slated to perform Saturday night. “Every place they’ve been has sold out,” said Harrison. The Chamber had also brought in a seasoned Los-Angeles based consultant; the latter was to be paid a percentage of profits only if the event was successful. A local public relations professional was also part of the organizing team.
San Diego event-goers are notorious for waiting until the last minute to buy tickets. Citing one example, Harrison notes, “XFest had 14,000 people. They sold 9,000 tickets in the last day or so and at the door.”
The Chamber invested heavily in publicity the week of the event, including a color spread in the Reader. But some of the biggest publicity wasn’t slated until after the event was cancelled. Two radio stations, Rock 105 and 91x, were slated to broadcast live from the event Friday and Saturday, moves that organizers believe would have generated significant sales at the gate.
Valerie Harrison says organizers were “very cautious” in incurring up-front expenditures, primarily for the bands. “We bought a printer and printed flyers ourselves because it would only cost us five cents apiece. We went everywhere – we were at the OB Fest, Pride, handing out flyers.”
When the last-minute demands for up-front payments came in, the Chamber made every effort to come up with the funds—even offering to give up all profits if the Reader or 91X would be willing to cover the up-front costs. “Up until one hour before we were forced to cancel due to the deadline, we said `We don’t want any money, if they would just pay the vendors up front and let the event go on,” Harrison told East County Magazine. “But there was just no time left to get corporate office approval due to time differences on the East Coast.”
Ironically, even if ticket sales had ultimately lagged behind the Chamber’s targeted goals, the City stood to generate substantial revenues had the event gone forward. At $15 per vehicle for parking, even a paltry 1,000 vehicles a day would have generated $45,000 over the three-day event. A sell-out could have produced revenues of several times that amount.
The City had already committed to have parking attendants with or without the beer festival, since another event was scheduled for inside the stadium (the beer festival was to be held on a practice field), plus Comic-Con parking was also being provided at the stadium lot. In addition, the City stood to gain from sales tax revenues for beer sales beyond tastes included in the ticket price, as well as sales tax on food, T-shirts and so forth. “We were expecting $70,000 in beer sales,” Harrison said.
She questions the intentions of Qualcomm management. “Was their intention all along not to work with us?” she asks, adding that a Metropolitan Transit spokesman told her MTD was never notified by Qualcomm about the beer festival--a notification that is required for all major events at the stadium.
Cancellation of the event left the Chamber stuck with bills in the tens of thousands of dollars—and no way to easily recoup such losses. While many (though not all) ticket holders have been issued refunds through Pay-Pal, some vendors such as advertising outlets and booth rental sponsors may not be able to get their money.
That’s a painful fact for the Harrisons to confront. “Jeff broke down and cried,” Valerie Harrison disclosed. “I’m supposed to be helping businesses, and now we’re losing money. The community wanted this festival. They rallied around us…How do we repay these people?”
The Chamber was a nonprofit corporation and thus its officers have no legal obligation to cover debts of the dissolved group, founders said. Despite that, Harrison said she would welcome an opportunity to host a fundraiser to at least partially pay back those owed money. Since the Chamber has officially dissolved, she hopes to find a donated venue and local bands willing to help. “We would need a neutral third party to collect proceeds and use the funds to pay those owed,” she said.
She feels stung by criticism in some media outlets and on comment boards, where some posters have suggested wrongdoing. “Were we naïve? Yes,” she admits, “but all the experts told us you will sell out Saturday. We could’ve ended up selling 15,000 tickets for the three days.” The Harrisons deny any illegal or unethical actions and ECM’s investigation has found no indication of any illegalities or intentional wrongdoing.
If there were mistakes in judgment made, those decisions were not made solely by the Harrisons, who thus far have borne the brunt of criticisms. The Chamber board approved the beer festival and many of its members were actively involved in the planning details.
Participation in the festival was approved by the Chamber board, which had eight members (in addition to the Harrisons) who attended meetings and participated in planning the beer festival. A board roster has been provided in confidence to ECM for verification, though Harrison asked that it not be published to protect her board members from any adverse publicity. The list includes prominent business leaders and a public official. (Two board members resigned after cancellation of the beer festival and a third quit a few weeks before due to health issues.) Harrison also provided, in confidence, a complete roster with names of 143 businesses, nonprofits and public officials with active chamber membership at the time of the demise.
The Chamber president also provided documents to East County Magazine showing that County grant funds appear to have been appropriately expended on the activities for which they were designated, including a Women’s Higher Education, Entrepreneurship and Leadership program that produced graduates who favorably rated the program, as well as some operating expenses. Final paperwork was submitted August 11, albeit a few days after the required deadline.
Supervisor Dianne Jacob, who has previously been honored by the Chamber, was asked in a Union-Tribune article about grant expenditures. Jacob indicated she halted disbursement of an additional $3,000, however the Harrisons say they had never accepted the money and hadn’t filed the paperwork necessary to receive the final grant once it became apparent that the Chamber would be folding. They have since filed paperwork with a final accounting of the funds.
If the festival had gone forward, would the Chamber have been able to remain open?
“Absolutely the Chamber would still be in business,” Valerie Harrison says, adding that she’s hurt by negative media coverage and comments posted on some blogs. “Instead, I lost everything. I lost our nonprofit Chamber of Commerce. I lost everything I invested. I cannot recoup four years of salary that was owed me. I was also owed medical and retirement.”
Harrison’s contract authorized a $54,000 a year salary for the full-time position, but she was paid only about $5,900 in 2010 and even less in 2011, she said. The rest she declined to accept, leaving the funds to help the Chamber meet other expenses.
It’s a well-known fact that Harrison worked tirelessly to help small businesses, often putting in far more than a 40-hour work week, answer emails into the wee hours of the morning. Prior to the beer festival, the Chamber had about $17,000 in debt, mostly for rent—expenses it intended to fully pay with proceeds from the festival. The Harrisons also ran up personal debts to cover some expenses, such as a $500 cell phone bill that included calls for the Chamber festival.
The stadium coordinator cost us $200,000 minimum in profits that we anticipated. We would have made almost a quarter million dollars. We could have ended up selling 15,000 tickets,” Valerie Harrison noted. “If we were allowed to have our event, vendors would have been paid, vendors would have made a profit, and the USO would have received a beneficiary check of at least $10,000.”
“This was a unique event. No one has ever done a three-day beer festival here. We even licensed our name,” she said, adding that the event should have generated funds through T-shirt and other merchandise sales.
Harrison has talked with leaders of other local Chambers, specifically the La Mesa Chamber and the San Diego East County Chamber, to ask that Rancho San Diego-Jamul Chamber members be accommodated.
“She has reached out to me, absolutely,” said Mary England, president of the La Mesa Chamber of Commerce. England said members of the closed RSDJ Chamber. “If any member from her area calls me, I would reach out to make the landing as soft as possible.”
England praised Valerie Harrison as a “tireless worker” and indicated that lining up 122 breweries was an impressive accomplishment. She called cancellation of the event “unfortunate” and noted that “sponsors are the key to any event,” suggesting that for any major event, garnering up-front funding is key.
The RSDJ Chamber did, in fact, have an array of major sponsors listed on its flyer, such as 91X, the Reader, EDCO, and others. However many were trade-out sponsors.
Biggest impact of the failed beer festival will fall on members left with no Chamber, as well as on food vendors with perishable products, England noted. “I think this will be a tremendous windfall for the East County Chamber,” she said, noting that most of Rancho San Diego and Jamul would fall not within La Mesa, but the unincorporated areas covered by the San Diego East County Chamber.
The Chamber has received e-mails from members expressing disappointment at the closure. “I am so sad to see the Chamber go,” one member wrote to Valerie Harrison, “but want to thank you for all of your efforts. It was amazing to see what could be done with a Chamber with all of your great efforts. I hope that we continue to see your smiling face around Rancho at local events and such.”
Despite the weak economy, RSDJ Chamber leaders had every intent of continuing to provide “exceptional service of representing our members and business communities” if not for the failed beer festival, the RSDJ president concluded. “It was amazing to see how much was accomplished with so little,” concluded Harrison, who took nearly a 90 percent cut in her own pay in order to fund Chamber activities. She praised the “tremendous effort of the boards of directors over the years” adding that not being able to continue is “heart breaking.”
Disclosure: ECM has maintained membership in several local Chambers of Commerce, including the Rancho San Diego-Jamul Chamber, which was beneficial in assisting ECM since the start of our nonprofit media outlet three years ago. Editor Miriam Raftery was an active Chamber participant in the past, helping to organize an educational event on media issues. However neither Raftery nor ECM had any role in planning the beer festival event.