As horse racing revenue declines and fair attendance levels off, the search begins for new ways to make money
Agriculture and horses, once the economic backbone of San Diego County, still dominate activities at the 340-acre Del Mar Fairgrounds, but the question is, “How much longer?”
Time and tastes change. Attendance at the San Diego County Fair is leveling off. Mounting horse deaths have soured the appetite for thoroughbred racing. The long-popular gun shows will be barred from the fairgrounds after this year. And after five successful years, the crowd-pleasing KAABOO musical festival has departed for a downtown venue.
Sensing the headwinds, the state-appointed board that governs the property has launched a long-range strategic planning initiative to review what works, what doesn’t and what might.
“We hope to adapt to changing times, protect (the fairgrounds) and grow it from where we are today,” said Director Pierre Sleiman, chairman of the strategic planning committee for the 22nd District Agricultural Association.
All events at the fairgrounds are overseen by the 22nd DAA, often called the “fair board,” which has nine directors appointed to four-year terms by the governor. The district and the county share the same boundaries.
The fair board wants to broaden the appeal of the fairgrounds. Located at the mouth of the San Dieguito River, between Interstate 5 and the Pacific Ocean, on the border of Del Mar and Solana Beach, the sprawling property attracts visitors from throughout Southern California.
But the venue’s two primary money makers are lagging.
Attendance at the fair is down from its peak of more than 1.6 million visitors in 2016. Race track revenue has declined sharply, from $11.8 million in 2015 to $7.8 million in 2019.
“I am concerned,” said fairgrounds CEO and General Manager Tim Fennell. “There are so many different forms of gaming now.”
On-line wagering, tribal casinos, and the public’s increased awareness of horse-racing injuries and animal welfare have taken a toll on attendance at the Del Mar meets. The district needs ways to replace the declining racetrack revenue.
“We have to make money,” Fennell said.
Payroll is a big part of the district’s budget. The fairgrounds had the equivalent of 161 full-time employees in 2019, up from 151 employees in 2012. Also, in late June at the peak of the Del Mar Fair, the district has more than 2,000 temporary employees.
San Diego held its first county fair with all volunteers in 1880 at what is now Kimball Park in National City. The first fair’s mission was to showcase locally grown produce, livestock and crafts such as leather work and quilt making, much as it does today. The legendary lawman Wyatt Earp reportedly judged the fair’s horse races in 1889 and 1890.
Various locations hosted the fair in the early years, including Oceanside and Escondido, until the state bought the old Del Mar Golf Course to be the exhibition’s permanent home in 1936.
Since then, fairgrounds activities have ballooned to more than 300 events every year, everything from cat and bridal shows to college fairs and tattoo festivals.
The district’s 2020 budget for the fairgrounds projects $87 million in revenue this year, up from the $81.2 million projected for 2019 and the actual $79.2 million for 2018.
Food and beverage sales are the biggest source of income at the fairgrounds and account for almost $24 million of the district’s revenue expected in 2020. The total is expected to be down by about $110,000 from 2019 after the loss of KAABOO.
Fairgrounds officials hope to boost food and beverage sales with new offerings such as craft beers, fancy drinks and gourmet meals to help make up for the drop at the track.
Still, horse racing remains the district’s second-largest source of revenue after the fair. The races are run by the Del Mar Thoroughbred Club, which essentially rents the track, the grandstand buildings and other facilities from the district for its meets.
“As is the case with many gaming, entertainment and hospitality entities, Del Mar Thoroughbred Club has focused on diversifying our revenue sources over the last several years while continuing to provide a premier racing experience to our local fans and from visitors from around the country,” said Thoroughbred Club President Josh Rubinstein.
The track club has included post-race musical concerts since the mid-1990s, which help to increase attendance and boost sales of drinks and snacks.
“Similar to successful Las Vegas hotels and casinos, horse racing at Del Mar now generates the majority of its revenues through non-wagering segments such as food & beverage sales,” Rubinstein said. “Since 2015, horse racing at Del Mar has generated over $52 million” for the fairgrounds.
One way the county fair has increased attendance in the past has been by extending its run.
In 1956, the fair was 10 days long and attracted 250,000 people. By 1990, the annual event was twice as long, 20 days, and set a new attendance record of 1,083,572.
Fair attendance hit its all-time high of 1,609,481 guests over a 27-day run in 2016. Since then, it has declined slightly each year to 1,531,199 for the 27 days from early June through July Fourth in 2019.
Even little things such as the theme, which changes every year, can make a difference in fair attendance, Fennell said.
This year, the theme is “Heroes Unite!” to focus on the county’s high achievers. Last year, it was “Oz-some” in honor of the much-loved book and movie, “The Wonderful Wizard of Oz.” Previously, there was a Beatles year called “The Fab Fair,” and a “Seussentennial Celebration” in honor of the late famed children’s author and La Jolla resident Theodore Geissel. also known as Dr. Seuss.
“A good theme can draw 10 percent to 20 percent more people,” Fennell said.
Another way to get more people through the gates would be to build new facilities, he said. The idea has been proposed before, but construction money is hard to find.
“We have old, out-dated exhibit halls that need to be replaced,” he said. “It would be great to get more facilities and host new events, maybe ice hockey ... volleyball. Pick a sport.”
A hotel and a convention center also have been suggested for the fairgrounds. The strategic plan will address those possibilities and more.
Despite any concerns, Del Mar’s fair has the largest attendance of any fair in California. It is one of the five largest fairs in the United States.
Horse racing season starts after the fair ends in July. The Del Mar track opened in 1937, and got a big boost from the popularity of founder Bing Crosby and the attendance of movie stars and entertainers such as Bette Davis, Jimmy Durante and others.
Thoroughbred racing remained a huge attraction through the 1960s and ‘70s. But since the 1990s, attendance and wagering have been declining at Del Mar’s races, part of a national trend.
Negative publicity has taken a toll. Reports of drugged horses and animals killed in competition or training at tracks across the United States has brought widespread attention to animal welfare.
Problems at Santa Anita, the track near Pasadena, also have focused attention on Del Mar. Santa Anita had 37 horses die in races or training in 2018, and more than 50 each year in 2017 and 2016. Four horses have died there so far in the season that began in December.
Del Mar had a bad racing year in 2016, when 23 horses died. After that, the course overhauled its dirt track to make it safer, and there were only six deaths in 2017, three in 2018 and two racing deaths last fall.
Racing officials say Del Mar is now the safest track in the nation.
Del Mar’s regular 2019 racing season lasted 36 days from mid-July to Sept. 2. Since 2014, Del Mar has included a fall season with races three days a week for five weeks.
The track had one of its best recent years in 2017, when it hosted its first Breeders Cup, a fall event sometimes called the “World Series of horse racing.” Revenue that year totaled $11.4 million. The Breeders Cup returns in 2021, and track officials expect it to bring another boost in revenue.
A portion of the track’s racing revenue goes toward repaying the $80 million in bonds issued by the fairgrounds to rebuild the grandstands in the early 1990s.
Competition from tribal gaming and off-track betting also have hurt live action at race tracks across the United States.
Del Mar tried to fight back by building its own off-track complex, the Surfside Race Place, in the early 1990s with room for as many as 5,000 patrons a day. However, attendance there has been poor. The Kentucky Derby drew 2017’s largest crowd of 2,500.
Now Del Mar is counting on a major makeover of its Race Place building to bring new guests to the fairgrounds.
The $13 million renovation will add an 1,869-seat indoor concert and entertainment venue. The arena is expected to open next summer and host 45 shows this year, adding $2.5 million in revenue for the fairgrounds in 2020.
Esports, which are professional video game competitions, are another entertainment possibility in the new arena.
“I envision esports tournaments being held here on the grounds,” Fennell said. “It’s huge.”
One steady stream of income for the agricultural district in recent years has been the Horsepark Equestrian Facility. Purchased in 1994, the facility covers 65 acres about a mile east of the fairgrounds at the corner of El Camino Real and Via de la Valle.
The horse park has 400 permanent stalls for year-round boarding, and offers professional training for horses and riders from beginning to Olympian levels. It has two grass stadiums with seating for 1,320 spectators.
Also bringing year-round business is the fairgrounds’ golf center, which is between Jimmy Durante Boulevard and Interstate 5. It has a driving range, lessons, a pro shop and two 18-hole miniature golf courses.
A regular fairgrounds event in the fall is the Scream Zone, a month-long Halloween event with multiple attractions such as The House of Horror and The Haunted Hayride.
An annual drive-through holiday light show brought spectators to the fairgrounds from Thanksgiving to New Year’s Day for years. Admission was $15 per vehicle. The light show went dark after 2012 to make way for a track-widening project and never returned, edged out by the fall horse-racing meet and other activities.
One of the biggest recent splashes was the five-year run of the KAABOO music festival that ended in July.
The festival’s performers were among the biggest in the music business, including Bruno Mars, Tom Petty and Paul McCartney. Guests could treat themselves to gourmet meals, fancy mixed drinks and and spa services. The final sold-out, three-day weekend had an audience of 35,000 people daily.
Still, not everybody was happy with the big music festival. That’s another angle to be examined in the strategic plan.
Noise and traffic from events at the fairgrounds have long been issues in Del Mar and its neighboring city, Solana Beach. Residents generally say the neighs of horse and bleats of goats are okay, but not the late-night amplified sounds of rock and rap music.
The mayors of both cities praised the district’s planning effort at the board’s Jan. 14 meeting, but also raised some community concerns.
“We hope you keep your emphasis on agricultural events,” Del Mar Mayor Ellie Haviland told the board.
City officials also are concerned about traffic created by the fair, the horse races and large events like KAABOO. They would like to see a special events train platform built, so fairgrounds guests could ride the Coaster and get off at Del Mar instead of at the nearest stops now at Solana Beach or Old Town in San Diego.
Del Mar also has proposed that the fairgrounds build affordable housing, perhaps in an area now used to park recreational vehicles, to help the city meet its state housing mandates.
“We all know the state has a housing crisis,” Haviland said. “We are very interested in exploring a partnership in this area.”
Fairgrounds officials have not commented on the housing proposal, but said they welcome all ideas.
Solana Beach Mayor Jewel Edson asked the board to find ways to discourage fairgrounds visitors from parking in town.
For example, she said, the district could add more off-site parking areas with shuttle service to the fairgrounds, or work with North County Transit District to build the rail platform in in Del Mar.
Solana Beach City Manager Greg Wade suggested the fairgrounds join his city, Del Mar and Carlsbad in the newly created Clean Energy Alliance. Those cities formed a joint powers authority last year to bypass San Diego Gas & Electric Co. and purchase their own electricity with a greater reliance on renewable sources beginning in May 2021.
It’s important for the state-owned property to remain financially self-sufficient, said Assemblyman Todd Gloria, whose 78th District includes the fairgrounds.
“I’m glad that the 22nd DAA is finally embarking on refreshing its outdated strategic plan to reflect current realities,” Gloria said by email. “Now is the time for the fairgrounds to innovate and adjust, and I stand ready to assist them in any way to ensure this public asset remains a regional jewel.”
The new reality appears to be fewer guns, less racing, and more events like KAABOO.
— Phil Diehl is a reporter for The San Diego Union-Tribune