Fresno · Highlight · Sports

Fresno didn’t audit the Fresno Grizzlies last year. Why?

The new baseball season is here. The Fresno Grizzlies are off to a wonderful start – 6-4 in the Pacific Coast League as of today. The team’s excellence on the field is there for all to see.

How is the team doing financially? City Hall apparently figures that is of no concern to the taxpayers who continue to fund the bond debt on Chukchansi Park, the Grizzlies’ home.

I filed last month a state Public Records Act request, asking to review the Grizzlies’ audit for calendar year 2018. It was my understanding from past practices and the constant trumpeting of transparency by certain city politicians that such an audit arrives at City Hall by late March of each year. We’re talking about the post-Fresno Diamond Group era.

Turns out my understanding is wrong, at least with new team owners in town.

I got an email letter on April 9 from City Attorney Doug Sloan and Chief Assistant City Attorney Francine Kanne. It said in part: “After a diligent search and reasonable inquiry of the City’s records, the City did not locate any potentially responsive documents for this request. The City did not perform an audit pertaining to the Fresno Grizzlies’ for calendar year 2018.”

To be precise, I didn’t ask to review the city’s audit on the Grizzlies. Again, relying on my admittedly limited understanding of this issue, annual Grizzlies audits during the Chris Cummings/Fresno Baseball Club LLC era were performed by an outside firm at the team owners’ expense. As of early 2018, there’s a new era at the Grizzlies. The team is now owned by Fresno Sports and Events, an entity created by three Colorado-based businessmen.

I wanted to see the latest Grizzlies public audit, regardless of who prepared it. The message from Sloan/Kanne was unmistakable: City Hall doesn’t have one and doesn’t plan to get one.

Why?

It turns out City Hall and Fresno Sports and Events signed an amended stadium lease (provided to me by the City Attorney’s Office) last December.

The amended lease says in part: “City Manager may request an annual audit by Tenant for any or all years during the term, if in City Manager’s reasonable discretion an audit is advisable, for example, but not by way of limitation, if Tenant fails to pay Rent when due or fails to meet other obligations under this Agreement.”

Wilma Quan is the city manager. She was promoted to that job by Mayor Lee Brand, who made quite a name for himself during the Chris Cummings era (during most of which he was the City Council’s most powerful legislator) by insisting on transparency in the Grizzlies’ operations.

You see, City Hall and the Grizzlies are partners. That means the citizens of Fresno and the Grizzlies are partners. It’s been that way ever since the fall of 2000 when the City Council on a 5-2 vote decided to publicly fund the construction of what was originally Grizzlies Stadium and is now Chukchansi Park.

The 30-year bonds carry an annual debt service of more than $3 million. The original plan was for the Grizzlies (then owned by the Fresno Diamond Group) to pay annual rent of $1.5 million. The city’s general fund was to contribute about 25% of the annual debt service. That meant the Grizzlies’ financial health was of the utmost importance to the city. But back in 2000 only then-Council Members Chris Mathys and Ken Steitz and then-Mayor Jim Patterson wanted a full public airing of the Diamond Group’s finances. They were steamrolled into silence by a council super majority.

Well, the rest is history. No matter the size of the rent, Grizzlies owners don’t like it. The general fund has come to shoulder most of the bond debt’s burden. At one point not long ago, annual public audits of the Grizzlies’ operations were standard operating procedure. Thanks to Lee Brand, it was a serious step in restoring public faith in the City-Grizzlies operation.

The current stadium rent is $500,000 a year – still a hefty amount in the world of Minor League Baseball. The Grizzlies of yesteryear always lost money. Minor League baseball is a tough business. Fresno is a tough market.

UPDATE: Mayor Lee Brand issued a statement regarding the lack of an audit for 2018.

“The audit provision in the previous contract was put there because of the precarious financial position of the former ownership group and was made an option with this agreement because of the changes in the agreement itself and the stability of the new ownership group,” Brand said.

“The new owners purchased the franchise in cash and, in partnership with the city, have promised to allocate funds every year to a reserve fund, starting in 2020. All of our negotiations and dealings with the owners has been honest and positive and we are satisfied that the rent is being paid on time. There is nothing at this time that would necessitate an audit.”

George Hostetter
George Hostetter is The Sun’s Fresno Civic contributor – covering the City of Fresno, County of Fresno, and Fresno Council of Governments.

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