For the length of time that that surcharge has been charged?
Thank you. And one other question. When was the last time the city audited this contract and its payments?
Thank you very much. Are there any other questions for these witnesses? (No further questions at this time.)
Is Commissioner 76 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 DiBerardinis here and Mr. Grillone? (DiBerardinis and Grillone come forward.)
I appreciate your waiting. I wanted to give Ogden the opportunity to come up and rebut some of those allegations. I do want to welcome you and ask you to identify yourself for the record. COMMISSIONER DIBARARDINIS: My name is Mike DiBerardinis, I'm the Recreation Commissioner.
My name is Greg Grillone. I'm the Stadium Director. COMMISSIONER DIBARARDINIS: Councilman, I'm just going to outline our responsibilities at the stadium, and then Greg can do a little more detail on the contracts.
The committee should know that you guys are here because you are the contractee. COMMISSIONER DIBARARDINIS: Right.
Also let the record be clear that when this contract was first written, you weren't around, I wasn't around. So 77 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 what you're able to comment on, we would appreciate. COMMISSIONER DIBERARDINIS: Good. Well, just as a short background, as everyone knows, Veterans Stadium, is municipally-owned and sits under the operational jurisdiction of the Department of Recreation. We have 30 full-time staff at the stadium that are responsible for the general maintenance of the building. We have an administrative staff that oversees the operations of the facility as well as administers all of the contracts, which include our capital projects funded annually by the administration of the City Council. We're also the access liaison between both professional sports teams -- the Eagles and the Phillies -- between them and the City of Philadelphia. And that outlines our role. And Greg will give his formal testimony and go into a little more detail about the current vending contract which was instituted in November of 1985 and runs through 2,000, the year 2000. 78 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349
Thank you very much. Please identify yourself and proceed.
My name is Greg Grillone, I'm the Stadium Director for the City of Philadelphia and the Department of Recreation. Good afternoon, Councilman Kenney and members of committee. As I said my name is agreeing dill grill the Stadium Director for the City of Philadelphia and I'm responsible for the management and the operation of the City activities at Veterans Stadium. I'm here today to speak to you about the food and beverage contract at Veterans Stadium. It is a contract that was entered into by the City of Philadelphia and Veterans Stadium Associates back in November of 1985 and run from 1986 through the year 2000. Veterans Stadium Associates is a partnership comprised of the Ogden Services Corporation and (unintelligible). The contract grants to the partnership an exclusive license, subject to certain special exceptions, to operate and manage the concessions and other food service 79 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 operations at Veterans Stadium. By way of summary, sometime in early 1985, a working committee formed to prepare specifications for food and beverage operations at the stadium. The concessionaire at the time (unintelligible), had the existing contract which started with the opening of the stadium and ran through 1985. With the anticipation of the expiration of the existing contract at the time, the Committee's mission, as I said before, was to prepare new bid specifications. The committee was quite comprehensive. It was comprised of representatives from Finance, Procurement, the Law Department, the Minority Business Enterprise Council, representatives from the two teams, the Recreation Department, and stadium management, and, lastly, a consultant. The consultant hired (unintelligible) a recognized expert in the stadium food and beverage business, whose advice and knowledge were significant in the formulation of the various provisions of the specifications. The committee worked for several months on the preparation of 80 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 the document. It was a comprehensive and thorough process. It was one in which there was pre-qualification fees where prospective bidders were required to submit financial information by the City. The work of the committee culminated in Bid No. C-101-86, which was entitled "Specifications for the Operation and Management of Concessions and Other Food Services at Veterans Stadium" and it was dated June 28, 1985. Among other things, there were several areas of concern in which City opened hoped to make improvements over what the existing situation had been in the stadium. Some of those general areas were: Better variety and quality; A significant capital investment to operate the facility; Minority and women participation in both equity and the operation of stands; Better financial and accounting controls; And lastly, to maximize revenues to the City with reasonable pricing and comparison to 81 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 other stadiums and other facilities in the business. As I mentioned to you before, this process culminated in the aforementioned contract dated November 18, 1985. I might add that there was competition on the bid. Several major companies in the industry submitted bids, all in excess of 50 percent commission rate to the City. And these were major companies. These were not, you know, Johnny-Come-Lately's in the industry. From my perspective, it was a fair and open process. I've been at Veterans Stadium through the life of this contract, at first as Assistant Stadium Manager, and now as Stadium Director. And it would be my observation and opinion that the partnership has by and large complied with their obligations set forth in the contract. That doesn't mean that they're perfect. It is a dynamic situation wherein there's a continuing dialogue among the City, the partnership, and the tenants.
They realize the importance of customer satisfaction in their business and continue to strive towards providing 82 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 high-quality products and service. Moreover, as it was mentioned before, Ogden is an international company, with a highly visible reputation to protect. I believe that the operation has significantly improved over what the stadium situation was prior to 1986. As far as comparison to other stadiums and arenas in the area, I believe we compare favorably. I base that on various sources of data in the industry; one which is the Fan Pricing Index alluded to before, as well as surveys. As I said before, the contract will expire at the end of the year 2000, or roughly two and a half years from now. I believe it is the City's intent to review all of the possible alternatives available to us and decide upon the appropriate course of action at that time. I believe it is the City's intention to begin that process in the near future. And as a matter of information, there have been some informal discussions to that among several City agencies already. I hope this gives you some context and background, and I'd be happy to try and answer any 83 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 questions you may have.
Thank you very much for your testimony. The City portion of the gross revenues, 58.21 or 68.21 of the alcohol, does that go directly to the maintenance, improvement, and upkeep of the stadium?
No. Actually, Councilman, it goes right to the General Fund of the City of Philadelphia. So not only does it fund activities of the Recreation Department, it also funds other City activities.
Do you know how much that number was last year that was turned over to the City General Fund?
Don't hold me exactly to this, but it's somewhere in the vicinity of about $8 million.
And the $8 million is our total contribution that we made to the General Fund, somewhere in that area. And it wouldn't be just solely from concessions.
Do you have a 84 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 general idea of what --
General idea of concessions, it's probably 55 percent of that.
Part of it is made up by the rent by the tenants and other fees that they pay -- utility reimbursements, rents from other people that might license the building. They pay a fee, if you will, on cable TV revenues, they pay a fee on super box rentals. There are various categories.
So between 3 or and $4 million are sole concession issues.
And that's not including what's charged for either super boxes -- is it sky boxes for the Eagles, super boxes for the Phillies?
Sky boxes are Eagles super boxes are Phillies. It's a different arrangement relative to the City's share in those two entities, as you may probably know, by various 85 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 leases or events.
Despite the fact that as a member of the organization, as a super box tenant, a private organization -- I mean, the pricing -- I didn't really want to get into that today, but I think the pricing there, I think it's 40-some dollars for a case of Coors Light, which seems to a little bit out of whack. But at this point, I'm not as concerned consumer issues facing corporate America in its desire to have entertainment available. Our issue is concerning what the average family that walks through the turnstile is paying. Why -- and if you could speculate. Should it be that this contract should be designed to be going to the highest bidder? I mean, what is our mission? Is our mission to be a revenue generator only? Or is it, as I believe it should be, an experience that people have of either living here, visiting here from the region or coming in from the outside, is it simply just an opportunity for the City to make money? Or shouldn't there be some higher, more important issue? 86 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349
Let me just speak a little bit to -- in the future, I believe that the City, as I mentioned in my testimony, I think we're going to look at all the possible alternatives out there. There's been a lot mentioned relative to the airplane model. The airport model may or may not work for us. The airport's open 365 days a year, has a lot more opportunities to obviously advertise their costs and whatnot. We're only open 100 days a year at best. So that may or may not work. I think the important thing is to remember that back in 1984 or 1985, a determination was made by the powers that be -- the Law Department, the Procurement Commissioner, and the people that actually interpret the City Charter. And they determined that this should go out on a bidding basis. But that was 10 years ago. Things may have changed, there are different interpretations, the world is different now.
And I also understood -- and fairly -- that the length of the 87 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 contract was an issue relative to some capital improvements that the company was willing to make at the time it was sorely needed for the facility, and having an extended-term contract makes fair sense, I think, in regards to those issues. And, is there anything you'd like to add to that?.
Yes. I was specifically involved at the time because I was concerned about the length of the contract. And, again, we kept going back to the consultant and financial people who had to run pro formas on the numbers. And if you were going to make a prospective bidder put $6.5 million into a facility, there was no way to make it a ten-year or a twelve-year contract. I raised that issue myself, and I'm not a finance expert. I just -- you know, being in Philadelphia, I saw how the whole dynamics of the sports industry changed from 1971 to 1984 so my gut feeling was that there would be similar dynamics in the industry and that things would change a lot. But, again, the consultants and the 88 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 financial people said that that was the only way you could get good competition on it. Secondly, this wasn't something that the City would have preferred to do, but with the financial situation at the time, they didn't have the financial wherewithal to make that capital investment. Again, that's a different situation, as I understand, that happened at the airport. The airport and the City made a significant capital investment. COMMISSIONER DIBERARDINIS: Councilman, I think, to focus on a point that Greg made, we have already been in, like he said, inform discussions -- but discussions nonetheless -- trying to look out beyond two and a half years, that we can, within the confines of the charter -- again, I'm not an attorney, but to the extent that we could work with the charter to expand our possibilities and to create a request for proposals to potential vendors that would bring us up to the cutting edge and to the new innovations that some of the ballparks around the country have shown to be very popular. 89 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 So although we don't have any specific proposals or ideas, I think it's fair to say that there's an interest in moving us forward along those lines.
Are you aware -- is either gentleman aware of any fees paid for by outside, either by Ogden, or outside vendors that are required or suggested as a result of promotional fees or advertising required to be taken either by the Phillies or by the Eagles? We've heard stories on some of the vendors that really didn't want to expose themselves for fear of retribution, that requirements to buy certain signage, certain advertising opportunities were made clear to them that it would be appropriate for them to buy certain advertising opportunities at the stadium, that the money went directly to the teams as opposed to the City or to even Ogden. Are you aware of anything like that?
Are you aware of anything dealing with pretzel vending, for 90 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 example, where promotional or advertising fees are paid by the current vendor of the pretzels there directly to the Phillies organization?
I believe that Super Pretzel is one of the current advertisers at the stadium, and that a display rights advertising agreement was again a publicly-bid document. And the Phillies bid on that document and have the rights for the advertising in the stadium. And I believe J&J Pretzels was one of the advertisers.
Do the Phillies or the Eagles have any opportunity to veto or to suggest any type of vendor of any type of food product? Do they any rights whatsoever?
They have no rights to veto. They have the opportunity to suggest, perhaps, suppliers or vendors or whatever, but there's a very specific list of criteria listed in the contract, and all the prospective vendors or suppliers, you know, have to meet that criteria. 91 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 And that's the basis upon which the decision is made.
You know, I'm not a marketing person or an advertising person, but I wonder why you'd advertise in a venue you that you have a total monopoly on the product.
Why would you advertise at a venue your product that is a monopoly to be sold in that particular venue? It's not as if you're competing with two or three different pretzel companies. Again, this might be speculation, and I don't expect you to know the answer.
No, you know, I have a business background, I have an MBA. And they sell more than just the products that are sold at Veterans Stadium or CoreState Center. So anytime you've got an advertising opportunity where there's three million-plus people in a facility, that's an exposure. It's a business decision.
Do you have any specific recommendations for the upcoming contract? Is there anything down there that 92 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 you've seen there during the course of your experience there that you would like to see improved? I need you just to comment again if you'd like. Do you think we've put our best foot forward when it comes to what we provide in the way of choice and price for the average Philadelphia family? I assume you're -- I know Mike is a family man with kids. I don't know whether, Greg, you have children or not. But I mean, just as lifelong Philadelphians, do you feel proud or comfortable with what it is we do there? And considering our wealth of epicurean delights in the City, are we putting our best foot forward? COMMISSIONER DIBARARDINIS: I think I'd like to talk about that in the future. But I think I'd like to address that question by saying that I believe that when we structure the next bid, I will -- if it is a bid that's, again, within the confines of the regulations in the charter that we must work under, how ever we put this together and how ever it appears, how ever the request for proposal appears, I think it is 93 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 the interest of the Department's -- I can speak for it -- and I think it's in the interest of the other city agencies we're working with, that we would like to see innovative -- to inspire innovative, creative, entrepreneurs and businesses and find ways to encourage and support local businesses to participate within that contract, how ever it's structured. So I think within that vein, I think that that's really what our goal is. And I would support that and encourage our department and our Administration to move in that direction.
Thank you. In reference to the atmosphere at Veterans Stadium today, when a person has a complaint about the vendor, Ogden, and they don't know how to complain and they meet and they finally get through and call the director of the stadium's office, could you describe how often you get complaints, what you do with the complaints, do you have a process where you communicate the complaints to the vendor? Exactly could you just describe the 94 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 present atmosphere when it comes to the complaints that you get or the compliments that you get about the food?
Councilman, by and large, we get really relatively few complaints relative to the food. Let me just say that, okay? The complaints can come to us through a variety of sources. They can come directly from the fan, as you say. It can come through the Phillies's organization; they've got a fan accommodations unit which is really there to address problems, issues, concerns, whether it's lost kids, whether it's tickets that they don't like, or whether it's a complaint about food or parking or whatever. They kind of get stuck, if you will, with being the conduit of lots of the complaints, so the complaints will come through the Phillies' organization. Or, if you've noticed throughout building, just about on every sign, there is a sign that's been posted by Ogden, which basically says, you know, We care about you, we're concerned about consumer satisfaction, here's a 1-800 number to call us and let us know if you have a 95 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 complaint. That's how the complaints could theoretically come in. Once the complaints come in, if it comes into my office, I route it right down to Brian or Bruce. I typically will have a discussion with them about it, and they typically will take appropriate action. Lots of times it's even to contact the person themselves or the fan themselves and then try to rectify the situation. As I've been quoted saying before in some articles, I mean, when you serve hundreds of thousands of people, there's going to be some horror stories out there, that not everybody's got good day every day, and there's going to be some problems from time to time. But I truly believe in my heart that they'll do everything to make the situation right, if they're, you know, made aware of it.
Again, not to beat this to death, but people -- I hear a lot of people talk about this. They talk about the fact that it's expensive -- forget what the charts say 'cause they don't go to all these other stadiums; they go to the Vet. 96 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 They have complaints about the price and the quality. And I've had people say to me, I don't mind paying 2.75 for a hot dog if it's good and it's presented well. So I do have a couple questions, and I only ask a follow-up on that. I'll waive my turn for that.
I just want to explore one area of the surcharge, what your knowledge of the surcharge is. Where does it go? And Ogden, I think, was very forthright in their testimony, but also confusing in that sometimes it's paid to the City, sometimes it's paid to the police, sometimes to L&I. Who pays for it, who accounts for it, and how do we know where it goes, and why doesn't it go to just one placed and get disbursed from there? COMMISSIONER DIBARARDINIS: I'll let Greg answer that.
Yeah. I mean, I'll try. It's not an easy -- first of all, there's a recognition, right or wrong, that there may be problems related to the consumption of alcohol. And with that as a backdrop, it became 97 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 apparent that these problems kind of burdened the resources available, okay, and that the resources were just not there. I mean, L&I, the police, the Port-A-Johns, the signage, whatever you want to talk about. So it was decided collectively that we will put a surcharge on the alcohol, on the beer and that we would use that pot of money to pay for some of these services that are indigenous, you know, to alcohol and alcohol consumption. It's been a dynamic process. Ogden, unfortunately, is in the unenviable situation where they're kind of the custodian of the funds right now. I certainly don't have the staff to do it, I don't have the means to be able to cut checks, to deal with vendors directly 'cause, as you know, the City's situation is purely a bid situation. So if it's for ordering Port-A-Johns and they're dealing with, you know, an outside private vendor, they'll cut a check for the vendor. If it's L&I or the police, they'll get the invoices, and the checks will be remitted to those agencies. If it's more signs that's needed 98 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 relative to beer permits or to beer policy, again, if it's a private vendor who's supplying those signs. That's why it's not as quick and easy as you would hope it would be.
Thank you, Mr. Chairman. Does Ogden have any involvement at all or receive any revenue for parking at the Veterans Stadium.
This is maybe a little off track, but Councilman Kenney brought it up. The Phillies, the Eagles receive police protection services from L&I, they also receive services that the City believes is the responsibility, like the traffic police. The Eagles, the Phillies get no bill for the traffic coverage at the Vet; is that right?
To my knowledge, that's right. 99 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349
My question is: When they need above and beyond, and you listed during budget very carefully the neighborhood control, the extra coverage that comes in, what do we do to assure that if the Police Department is providing officers to conduct a very specific 8 activity, that the Eagles organization and the 9 Phillies organization is compensating back to the 10 General Fund the appropriate dollars? 11 How does that work where the taxpayers 12 are getting reimbursed for the coverage that the 13 City provides -- L&I, fire rescue, I know it 14 provides a fire rescue unit, they're free of 15 charge during games, and we don't get compensated 16 during that. 17 How do we keep track of the monies that 18 these teams owe us for services? 19
I'll try to explain as 20 best I can from my understanding and from my, you know, tenure there. There's kind of a base level of service, if you will, that's kind of provided to a stadium event or Spectrum or CoreStates event, you know, traffic, L&I, there is a fire rescue unit 100 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 that's been there ever since I've been there and it's been provided as the base service to this activity since it's -- I assume it's a high- profile, high-visibility situation when there are events at the sports complex in general. Anything that's beyond that, that's been my experience that the teams deal directly with the police or with L&I. And if they want some extra details, they pay for that stuff directly. For example, during Eagles games, they typically augment their peer security company with the presence of uniformed police officers. They pay for that. They get bills for that and pay for some of that directly themselves. There's a portion of that, in the interest of full disclosure, that surcharge money pays for, again, because it's related in some way to crowd control, which may, you know, you can make the argument that it's related to the sale of alcohol. So they do pay, you know, for the services that are kind of beyond this base level of service. 101 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349
So if there's a request for extra protection, let's say, during the problem times with the 700-level activities, fights, etc., and they needed an extra two dozen police officers in their maintaining control, in your opinion, would that be normal doing business, or do you think that the Eagles should have reimbursed the City for those extra undercover 10 officers? 11
I mean, I think it's a 12 dynamic situation that created it, you know, that 13 no one could predict. I mean it's almost like 14 they're, you know, providing law and order to a 15 situation that had broke out. I mean, if it's 16 something that they can predict. 17 For example, I mean, when the Mets 18 crowds come in for Phillies games, I know, you 19 know, the Phillies people that run their 20 organization, they talk about, you know, having extra police detailed there because of the profile and the interaction between the fans; it's a rivalry with people from New York who don't like us, don't like our pretzels.
I agree. 102 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349
You know, they pay for that extra, but if something breaks out, it's kind of spontaneous and it couldn't be foreseen and there's a need to bring more police out, it's kind of, you know, different that if --
Thank you very much. There's no other questions. Thank you very much for your testimony. COMMISSIONER DIBARARDINIS: Thank you.
Thank you for being here. Mr. Termini? Is Mr. Connelly here? Would you gentlemen come up. What I'd like to do is to get some idea from some of our more high- profile Philadelphia merchants, what some of their experience has been in attempting to get into the Vets Stadium, and what some of their concerns might be as a result of the current circumstances surrounding this contract. (Michael Connelly and Vince Termini come forward.) 103 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349
My name is Michael Connelly. I am the President of Federal Pretzel Baking Company.
Sure. My purpose in coming here today is to express Federal Pretzel's long-standing interest in supplying pretzels to Veterans Stadium and to relay some of the difficulties that we have come in contact with over the years. 104 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 By way of background, since its inception in the 1920s, Federal Pretzels has been a Philadelphia-based company. I am now part of the fourth generation to run or assist in running Federal Pretzels. I've only been active in the company for a short time. However, I've been advised that in the past, when contacts were made with the concessionaires at Veterans Stadium, that what we had been told and I think what other local pretzel vendors have been told was that the bid was on a frozen-pretzel basis. Philadelphia-style soft pretzel are not frozen pretzels. They are manufactured daily for consumption daily. Because of that, it literally precludes the fresh-baked pretzel from responding to that contract there. What I would envision is the creation of a micro bakery, akin to a micro brewery, in Veterans Stadium where pretzels could be manufactured, the visitors to the stadium could actually see the pretzels being made, and they could buy a traditional Philadelphia-style soft pretzel. I think that would add to the overall 105 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 entertainment package at the stadium.
Have you ever suggested this in the past or made inquiry to either Ogden or the City or anything regarding this particular provision?
I have not. As I said, I have only been active in the company for a short time. My understanding is that really the discussions have not gone very far and maybe it was just a lack from everybody's standpoint of some vision and some creativity because once it was said that there was frozen pretzels that were required, maybe it wasn't presented as, Well, this may be an option for you. I mean, this might be an alternative to that. So I'm not quite sure and I don't want to speculate to it because I didn't participate in it, but that's what I would envision from this point. Federal does supply pretzels now at the airport. There are a number of stands at the airport that are selling Philadelphia-style soft pretzels, and we are supplying a large quantity of those pretzels. 106 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 I travel a lot and I meet a lot of travelers throughout the country, and that is something that people constantly relate to me, that they really like that idea that when you're in the area, you can grab those Philadelphia-style soft pretzel.
I have quite a few people, you know, who have told me that their practice is, when they're getting on the business flight in the morning, they grab three soft pretzel for their flight out. Other people have told me that when they know they're going on a business trip out of town, they buy the pretzels at the airport to take with them. I think that there's a potential here to add to the experience of Veterans Stadium, and I think from Federal's standpoint, we would be very, very interested in pursuing that and being a part of it. The Philadelphia-style soft pretzel is not only unique to this country, but to the world. We have a reputation for that, and it 107 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 should be something that we could jointly promote and take advantage of.
Would your company, without being specific on what the costs would be, be willing to incur some of the capital costs in establishing a micro bakery?
Absolutely, absolutely. What any project like this would necessitate is capital investments. And, obviously, the details and the numbers would have to be dealt with, but that is something that we would absolutely entertain and absolutely something we would pursue.
Even only for -- one of the continual excuses I think we keep on getting from various sectors about what's going on there is that there's only a hundred days worth of events. Would that limit you at all as far as your desire to be there?
No, as far as the capital costs incurred in going into a facility that would only provide you a hundred days. 108 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349
Again, the devil's details, you'd have to take a look at the numbers, but certainly there is a potential there. And I think if you're, you know, providing a good pretzel and people have a little bit of an entertainment experience with it as well, it would become an attraction. If you go down to Camden Yards, you know, the barbecue places down there, the people are lined up. To me, it's something more than just getting a sandwich, and I think we can create something that's something more than just getting a pretzel. I think another important aspect of this is that Federal is somewhat financed by PIDC. We have a PIDC loan, we're a Philadelphia-based business. If we could create something like there, it would keep manufacturing jobs in Philadelphia. My estimation, based on the information that I've been able to get, just very quickly here, is I would envision that if we had this type of a setup at the stadium, we would need two to three full-time employees, and then we'd probably 109 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 need about seven or eight part-time employees just for the manufacturing aspect of it.
Let me ask you a question because we have representatives of labor, organized labor, who are working at the stadium today. And let me say for the record that I worked three -- there used to be two locals down there. One was Local 301 and the current one is Local 274, which, assuming Local 301 would have (unintelligible). I was a member of that union, I worked there in the Stadium Club for three years, worked my way through college. Would you be willing to take all of the employees down there -- again, it's the devil and the details financially-wise, but you would be open to --
So you would be open to training and bringing in the current employees of the stadium to work.
And, of course, I 110 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 want to ask you the obvious question. The 58.21 of your gross receipts is a problem, I would suspect, off the top.
It is a problem but there are ways to maybe address that problem. You know one of things that I see is, you know, the necessity for Ogden, quiet honestly, is they have to serve big pretzels because they have to be able to charge a certain amount in order for everybody to make some money out of it, you know. I think maybe there's some things we can do to put a little different twist on the Philadelphia pretzel to change that.
Pun intended. To maybe be able to market it a little bit differently than maybe find for the 35-cent vendor pretzel.
Thank you very much. Mr. Termini, could you please. . .
Yes. Let me give you some background first of all on our business. We're there 76 years. We started in Philadelphia -- my father started in 1921. I'm the second 111 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 generation. I have two sons in the business, which would be the third generation. My wife is involved in the business. It's a small family business. We won the Philadelphia Wharton School Award last year for a small family business out of 300 contestants and then we won the statewide in Pennsylvania for small family business last year.
Thank you. We have a great opportunity in Philadelphia to have small businesses cooperate and work in Veterans Stadium. We have lots of Vet organizations and restaurants to go in there and start working. We have a background with this -- with the Reading Terminal Market. We're there for, I think, 12 years now. All the vendors get along fine, they have a mix of different items, and the tourists love it. We are currently in the Convention Center. Aramark has invited us in. We're there, I think, two years now, and we pay 30 percent off of our daily sales to Aramark. Aramark has 112 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 supplied all the equipment, we didn't have to put any outlay of money, and all we do is when we sell our products, at the end of the day, we give them a sheet of our sales, and they take 30 percent off, and we're very happy with that.
Yes, very much so. We're not involved in all the conventions, but when a big convention's going to be profitable for us, we're invited in. Also we have a few vendors from the Reading Terminal Market that are invited in, and we're all working there to together and there's a few of the others, and it works out wonderful. I can't see why it couldn't happen at the stadium.
Does the limited number of Vet days cause you any concern?
No. A hundred days would be perfect for us and (unintelligible). Yeah, a hundred days would be absolutely perfect. We're only ten minutes away.
You're only 30 seconds away from my house. 113 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 (Laughter.)
I'd like to point out another fact. A lot of customers into our store when night games come in and buy cannolis and are holding Pat's steaks or Gino's steaks in a bag, and all I hear is complaints about the food and the prices at the Vet, and so they're taking their own food in there. I know they're taking cannolis and Pat's and Gino's steaks 'cause I see the bags. And they complain to me that they refuse to buy the food there because it's so expensive and not worth the money.
I appreciate your taking the time to come in. Just so you know, we're going to be developing a report and a list of a group of suggestions to turn over the bill to the Administration as they move forward in this process. Your information could be very helpful in that process.
Thank you. 114 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 Is Mr. Jordan here? Mr. King? Mr. Jordan's not here? (Mr. Jordan is not present.) (Wayne King comes forward.)
Mr. King, I ask that you sit there. Is there a representative here from the Phillies? Just hold on one second. Please identify yourself for the record.
I can't help but be amazed about all the finger-pointing that's going around. If I had my way, I don't think it's Ogden's fault, I don't think it's the Phillies' fault, I think it's everybody's fault in this building who was elected. There's no way that anybody could tell me that the blame is split three ways.
I'm sorry. Could you please speak up so that the stenographer can here you. 115 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349
If you go to a game and they charge a child $4 for a water ice, there's no way you can explain to that same child why you don't have for him to get on a school bus. And if the City of Philadelphia could take 58.2 percent of that water ice, then you have to ask the people elected where the money's going, not the Phillies, not Ogden.
Understand, sir, and I think you may have heard this during the course of testimony, this contract is a 15-year contract with 13 years already run.
Okay, just so you understand that it's a long-term contract. And the reason that we're talking about it now is because it's coming to an. End and we want to really kind of go through it and rework what the mission of it is there, whether it's Ogden doing it again or someone else or a combination.
Okay. Well, the food really 116 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 is bad, and that is Ogden's fault. But the prices and where the money goes, then that's everybody's who's in this building's fault.
I'm sorry, could you identify yourself. What I'd like you to do is if you have some opening remarks for the record, you can give them. What I'd like you to do is talk about the experience at the airport, where we were, where we are today, and how we got there.
Good afternoon, Councilman Kenney. My name is Jim Tyrrell. I'm the Airport Property Manager of the Philadelphia International Airport. As you may know, the airport embarked on a new concession program. Where we were in the early seventies, the Division of Aviation negotiated a contract with Aramark (then ARA) for the provision of all of the food and beverage services and retail sales at the airport. It was a long-term contract that ended in 1994. The concession that ARA operated for 117 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 the years, from the early seventies to the early nineties, consisted of approximately 40 locations where they employed 167 employees in 1994. The gross sales of Aramark in 1994 was $18.8 million, of which they remitted approximately percent to the airport in the 8 amount of about $3.6 million. 9 The program that we will be 10 (unintelligible) the main portion of it consists 11 of approximately 116 locations and will employ 12 approximately 1,745 employees. The primary 13 difference is that we will no longer have a single 14 concessionaire; but instead, approximately 110 15 different individuals selling products at the 16 airport. 17 One of the -- in terms of revenue, we 18 expect the program, in its first full year of 19 operation, to generate approximately $82.6 million 20 in sales, of which 8.3 million, or approximately 10 percent, would be remitted to the airport in the form of concession revenue. The term of the contract is approximately 15 years, with the opportunity to buy out the developer at the end of 10 years. 118 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349
What was the purpose of the length of the contract? Were there large amounts of capital improvement required, capital investments?
The capital investment is primarily coming from the airport. The developer who manages the concessions program for us actually gets to deduct that service from his gross concession revenues. So, in essence, the airport has actually funded all the capital investment.
Could you explain -- were you around prior -- were you working for the airport prior to them embarking on this new effort?
Could you explain what the experience was then, I guess, from your own personal opinion as to quality, price, selection, reputation, and what was the need to move into a different direction?
In the early eighties, in the mid-eighties, when I came to work for the 119 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 airport, it was typical for an airport venue to retain a single operator, a master concessionaire so to speak, who served kind a single product. It was a fairly generic offering. All of the stores basically looked alike, had the same employees, and had the same prices.
And what was the result of that as a reputation for an international airport?
The airport did not have a good reputation in the early 1980s. In fact, it was very bad.
And what is your opinion now as to the change that has occurred since the new contract?
My personal opinion is that Philadelphia International Airport will be one of the top three, if not the top airport in the country when the program (unintelligible) in terms of its offerings in attracting the public.
Are there still changes that are being made now as a result of what's going to be expanded, from what's going on now? 120 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349
It is. The Marketplace Development contract consisted of a couple of difference phases. Phase 1, in 1994, consisted of buy-out of the existing ARA contract which still had a few years. ARA hired, for the most part, local concessionaires to take over the operation of the existing concessions. The mainstay of the Marketplace Development concession program is in the B C connector mall, which will open tomorrow and have a grand opening next week. It's approximately 33 stores and about half of its total concessions at the airport. Phase 1 consisted of going in and developing all of the stores in the concourse. That's not yet completed, it's been a little slower than we anticipated. It's expected to be completed by the end of the year. But, like I said, the mainstay of the program will open tomorrow, with a grand opening next week.
And, again, you indicated that the percentage of gross revenues for this particular contract is 30 percent.
No. The way the 121 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 concession fee is calculated, it's two-tiered. It's based on the number of passengers that come into the airport. That's considered a minimal guarantee. What you do to get the bottom line is to take the gross concession revenue, you allow for the developer to deduct all its operating costs, which includes debt service, and you get to the bottom line. After the (unintelligible) is deducted, the remainder is split approximately 75/25 between the developer and the airport; the airport getting 75 percent of what's left over in profit-sharing range.
And that is -- the base number for that is based on the number of people that come through that facility?
That may be an interesting way to look at it from a sports complex (unintelligible), but it certainly is a different way of looking at something like this as opposed to a straight out number. Is there anything else that you would suggest from your experience? Granted, airports 122 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 and sports arenas are different things, but is there anything that you could suggest that we look at or make sure we avoid or try to incorporate as we move forward to try to, I guess, retool our mission at Vets Stadium?
One of the trends in the airport industry and the concessions industry is come up with a perception of value for your money. I mean, the premise of our development of this program was that if people think they're going to get good value for the cost, they're more likely to spend more money. What we included in our developer contract is a street pricing program, which doesn't necessarily mean you're going to get the lowest price in town. What it means is you're going to get a fair price. And how implement that is if we contract -- if Marketplace Development contracts with a concessionaire who operates another store in Philadelphia, the store at the airport has to sell that same product for the same price that it sells at it's off-airport location. A good example of that is we have 123 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 entered into an arrangement with (unintelligible) who operates at the Belleview. He also operates down at the airport. His prices are identical to what he sells on Broad Street. Now, they may not be the lowest prices in town, but it's comparable, it's the same. You could buy the same product at the airport that you can buy anywhere else in the City of Philadelphia.
I assume that also takes away the anger that develops when people who believe they are captive audiences waiting for flight or waiting to pick up someone sees the difference, a substantial difference in what he or she would be spending in an off-site location for the same product.
Okay. And then I assume that the rationale is that people then don't have that bad feeling. You know, they'll purchase at the airport as easily as they would purchase at the Belleview.
Again, the hope is that the traveling public will spend its free time at 124 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 the airport shopping for things it doesn't have time to do when at home.
All right, thank you. I appreciate your taking the time to come in.
And, again, I apologize for having to make you wait. Mr. Hyman? Is Mr. Hyman here? (Thurston Hyman comes forward.)
Good afternoon. I apologize for the delay and I appreciate your patience. Would you please identify yourself for the record.
For the record, my name is Thurston Hyman. I'm the Secretary-Treasurer of the Restaurant Employees Local 274.
I want to thank you for allowing me to come down here today to speak on behalf of Local 274 and the over 500 members that we represent at Vets Stadium. To some, it may look like this hearing 125 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 is about hot dogs, pretzels, peanuts, and beer. I can assure you that Local 274 is not before this body to discuss beer. Local 274 has an issue that is a quality-of-life issue for our members. The issue of food products and food service operators is plainly out of our jurisdiction. We understand the concerns of City Council about the food service operators and the business that negotiates the contracts, but that's not our job, we don't do that. Our job is the business of helping protecting men and women working in the union positions at Veterans Stadium in the food and in the food and beverage industry throughout the City through education and by negotiating fair and solid contracts, we ensure they are treated with dignity and respect. Today, I come here for union business. I'll begin by asking the question you may answer later. The question is, How would you feel if you kept a commitment to the City for 20 years of your life by servicing guests at a City facility only to wake up one day and find out, through no fault of your own, the devastating economic crisis that 126 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 your lost job. This is what happened to a lot of our members in 1996 at the airport. We lost over a hundred members down there at the airport. Now, I'm not here to argue over what the airport (unintelligible) or whether the contracts down there are the way they should be. I'm simply here to tell you that we lost a hundred members, and over 90 percent of them were not hired by the people who came (unintelligible). There are still contract down there, there are still vendors down there, but the people who previously worked there are not there. ), Pete Bennett, along with many others who have given over years of 18 service to the City operating the Veterans 19 Stadium. Some have been there since the stadium 20 opened in 1971. Year in and year out, they return each season for all the events and they do their jobs. The operators may change, but the employees remain. They give enormously of themselves to provide service and stability for the fans and for 127 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 the City of Philadelphia, regardless of who (unintelligible) the operator. The members continue consistently to do a good job, and they're in a very unique situation. They have made lifetime commitment to this type of work. The reason why they accept these positions and working conditions of dealing with people and the crowds and the demanding schedules is because they love their jobs and because the union contracts make their seasonal employment profitable and tolerable. Many members supplement their incomes in other positions by getting work that's dispatched through the union hall. That's how they make their ends meet. Our members at the ballpark are skilled food and beverage workers. They know how to provide a service within their trades. They may be accused of serving beers in cups, but I want you know that they do what they're required and they are perfectly capable of serving chilled (unintelligible), including glasses. One of my members, Helen Markee, who's 128 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 here with me, has been at the ballpark for more than years. She's probably served more than a 4 half a million hot dogs. During the first three 5 years, they were boiled. Then later, they were 6 steamed. Now they're grilled. If the operator 7 wants the hot dog flambeed, Helen Markee will 8 flambe a hot dog. She does exactly what's 9 required of her with the tools that are provided, 10 in a professional manner, and professional service 11 is provided. 12 She's not alone. All the employees 13 down there know their jobs and they do their jobs. S.
15 presidents, rock stars, and All-Stars, and many 16 others, and they've done so professionally and 17 effectively. Because in their prospective fields, 18 they all are stars. 19 Whether or not Ogden deserves the food 20 service contract is not an issue for this organization to consider. That's an issue for City Council. We know that our members have earned and deserved a union contract down at Vets Stadium because they do their jobs and they do it well. 129 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 What happened to our people at the airport shouldn't happen to someone like Helen Markee. She has consistently demonstrated a commitment to the job and is able to do the job at the ballpark and service the fans and the citizens Philadelphia as well. In closing, in the interest of the men and women that I'm representing that are working at Veterans Stadium, their families, the fans, and the citizens of the City, as well as Philadelphia itself, it's with a sense of duty and fairness and honor that I, as the Secretary-Treasurer of Local 274 go on record seeking a guarantee of union protection for our members down there at Veterans Stadium. I'm also stating that anything less than a guaranteed contract down there is something that is unacceptable to Local 274. We've come here today simply to cry out for our members and put a human face on what's going on. We will fight vigorously to protect our members. We want to make sure the City has what it's looking for but we have members to protect and we simply wanted to make that point to City Council today. 130 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 Thanks for your time.
Thank you. I appreciate your coming in and being part of this record because, as a result of this hearing, as I had said earlier, there is going to be a report and a recommendation issued by the committee to the Administration about this whole issue. And I just want to tell you again, and I think you mentioned a woman's name by the name of Evelyn?
Evelyn Cook works in the super box level in the Stadium Club?
I bused her tables in 1976, '77, and '78. And I still seer her when I go down there now. And I tell that you because I want you to understand that my experience has been working 131 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 -- at the time it was Local 301. And I have a very deep and emotional tie to the people who work there, and that union is now 274 and that I can assure you, from this particular Councilperson's standpoint, that nothing will be recommended or voted on by me that would not include significant protection for the individuals who currently work there so that they may work there in the future. My experience with 274, I think recently, would indicate that I'm willing to fight with people like Ron Jaworski and others to make sure that the Holiday Inn, which is now union still as we speak. And, again, during that fight, a lot of people lost their jobs and didn't go back, even though the house maintained its union designation, and those people suffered as a result of that fight, which was ugly and long. But I can assure you that nothing that will be recommended by me or voted on by me would not include protection for people like Evelyn and others who were a major part of my life as I was going through school to get where I am today.
Well, Councilman, on behalf of the President of Local 274, Pat 132 COMMITTEE ON LICENSES AND INSPECTIONS - RES. 980349 (unintelligible) who couldn't be here, and the members that we have throughout the City, we just want to thank you for your consideration.
Is there anyone else to testify about this issue? (No response.)
I appreciate everybody's time and consideration and patience in dealing with the acoustics in the room. We'll be hopefully doing some type of report by the fall which will be circulated to all the people involved. And I thank you again for your testimony and your patience. (Adjourned at 3:16 p.m.) - - - 133 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday, June 3, 1998, were reported and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON LICENSES & INSPECTIONS BILL NO.'S 980242, 980314, 980343 RESOLUTION NO. 980349 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter