BOOMING SALES : Fireworks Firm’s Domination of Lucrative Culver City Market Could End if Election Shifts Council Majority
Dressed for the occasion in his overseas cap with all the medals on it, Harold Sikoff reached into a small cardboard box Wednesday and pulled out a pink card to start the lottery for the right to sell fireworks in Culver City.
The half-dozen onlookers at City Hall laughed when Sikoff, commander of the L. Bushnell Post 123 of the Disabled American Veterans, chose his own ladies’ auxiliary as the first winner among 14 applicants.
His own group was chosen next, and soon all 10 winners were determined, among them eight veterans groups, Troop No. 113 of the Boy Scouts of America and the Culver Palms Y’s Men’s Club.
The ritual is part of a yearly routine leading up to seven frantic days of fireworks sales before the Fourth of July.
But 1986 may be the last year of fireworks sales in Culver City, the only source of so-called “safe and sane” fireworks in the Westside.
Although a 3-2 majority of the City Council favors the sales, next Tuesday’s election could tip the balance the other way, depriving the fireworks empire once controlled by convicted political corruption figure W. Patrick Moriarty of one its most lucrative outlets.
Moriarty, who is scheduled to go to jail for mail fraud April 21, still owns stock in Pyrotronics Corp., the Anaheim-based firm that markets Chinese- made Red Devil fireworks, according to his lawyer, Jan Lawrence Handzlik. Although no longer chairman of the firm, he has stayed on as a consultant.
Tapping a market that stretches from the beach communities to central Los Angeles, agents of Bishop Fireworks Co., Pyrotronics’ local subsidiary, sell more fireworks in Culver City than anybody sells anywhere in the state, industry sources said.
Unlike other cities, however, where regulations require that the sponsoring organizations do a large part of the work, Pyrotronics, through its subsidiary, dominates the fireworks trade in Culver City from top to bottom.
Its employees fill out the paper work, pay the fees, supply the fireworks, set up the stands, do all the selling and bookkeeping and report the results to city officials without any outside monitoring.
Revenues on the yearly sales at busy intersections as far west as Lincoln Boulevard, as far east as Fairfax Avenue and as far south as the Fox Hills Mall are estimated at more than $500,000, with all but about $100,000 going to expenses.
The Bishop company splits the remaining $100,000 profit with the 10 sponsoring groups, which means that the veterans and other nonprofit organizations are left with about $50,000--or 10% of the gross revenue--to divide among themselves, according to Fred Brookins, Culver City coordinator for the supplier. By contrast, in nearby cities where service groups are required to staff the stands themselves, they generally keep 40% of the gross.
Local officials said they see nothing wrong with the system, which is permitted under the Culver City Municipal Code.
“The city doesn’t dictate who the nonprofit corporations purchase fireworks from. We have no participation in that decision at all,” said Councilman Paul A. Jacobs, who opposes the sale of fireworks in Culver City because of fire hazards.
“Whoever they hire to guard and work the stands, it’s their business,” said Councilman Richard Brundo. “It’s not our affair. We allow the sale of ‘safe and sane’ fireworks. How they go about it is their business.”
Officers of the city’s veterans groups said they, too, are content with the system. One exception is Sikoff, who pulled his group out of a citywide veterans’ council in 1984 complain ing, of being short-changed in fireworks sales. He said his group received $1,800 last year from the gross sales of $36,000 at the Disabled American Veterans stand.
“We’re getting shafted, in plain words,” he said.
Still, he sees no alternative to the existing system since Brookins saves each sponsoring organizations a considerable financial burden by advancing the $2,600 required in permit fees, Sikoff said.
“There’s no other way to get fireworks,” he said. “We don’t have that kind of money.”
With the average age of World War II veterans reaching 65, most groups would rather leave the operation of the fireworks stands to Red Devil’s professionals, said Nate Whitman of Cpl. David Allen Post 667 of the Jewish War Veterans.
“We just found that it was easier to do it this way,” he said.
“You can see that we are not disturbed by the way the percentage is distributed. Without fireworks, we wouldn’t exist.”
However, Don Coleman, treasurer of Boy Scout Troop 113, said his group might be able to earn more money on its own.
“But they have the equipment all set up because they do it every year,” he said. If an organization could be sure that it would be authorized to sell fireworks every year, it might be worthwhile to set up as an independent, he said.
According to Brookins, a former vice president of Pyrotronics and now its local coordinator, the Culver City stands gross about $525,000 in a typical year.
Of this, about $227,000 goes to pay for the fireworks, which Bishop buys from Pyrotronics, he said. Labor costs are about $75,000 and other expenses include about $35,000 in sales tax, $20,000 for the city’s July 4 fireworks show, $15,000 for rent, $14,000 for warehousing, $12,000 each for trucking and advertising, $9,500 for off-duty Culver City police to provide security and $5,000 for insurance, he said.
This leaves a profit of about $100,000, Brookins said.
“They’ve been doing it that way for more than 20 years,” Brookins said.
He said the charities could probably make more money if the operation were run the way it is in nearby cities.
In the South Bay community of Lomita, for example, seven charitable organizations brought in $150,000 in fireworks sales last year, realizing a net profit of $42,400, City Clerk Dawn Tomita said.
Municipalities generally require the nonprofit organizations to file reports every year on gross sales, net profits and how the fireworks revenue is spent, officials said.
In Downey, “it’s just mainly part of the ordinance that the council wanted to be sure that the funds are used for what they are purported to be used for, charitable purposes and so on,” said Bill Sumner, Downey fire marshal.
Citywide totals are available for public inspection in all three cities, their officials said. But Culver City officials said the reports of proceeds from fireworks sales, which the city has on file, could not be made public.
“It’s confidential information because it’s a business license and all that information is confidential, just like any other business,” said Dale Jones, the city’s chief administrative officer.
Harold Macbeth, chairman of the Culver City Veterans Coordinating Council, also declined to reveal sales figures, saying, “Our contractual information is between us and our agents.”
Macbeth, past commander of American Legion Post No. 46, said the fireworks sales help raise money for high school scholarships, Little League baseball and other causes.
The proceeds also pay for a Fourth of July fireworks show and help deter the sale of illegal fireworks, he said.
“The city of Culver City benefits a great deal from the sales tax, (from) people dealing with city merchants, (and) it brings people into the city,” Macbeth said. “It is a good municipal advertising situation.”
Macbeth, an accountant who volunteers his services on behalf of the American Legion, has been involved in Culver City fireworks sales for at least two decades.
For much of that time he has been the contact among the fireworks companies (principally Moriarty’s firm), the veterans’ groups and the city
Fireworks have been sold in Culver City since the 1950s and independent vendors once competed freely. By the mid-1960s, however, the Bishop Fireworks Co., founded by the late Kenneth Bishop, had begun to dominate the field and veterans’ groups entered into a partnership with the firm.
Bishop was later acquired by Pyrotronics, which has been the principal source of fireworks in Culver City for more than a decade. Another company, Freedom, supplies less than 5% of the total in Culver City.
Macbeth said Pyrotronics, the state’s largest fireworks company, has the best prices and that the veterans’ council has stayed with it even though other companies have approached the council with other offers.
An executive of a rival firm, who declined to be identified, said he would offer a better deal if given a chance to bid.
“They (Pyrotronics and Bishop) have an exclusive lock on the entire city,” the rival executive said.
Although private firms are banned from selling fireworks in Culver City, the law provides for permits to be paid and other steps taken “by or on behalf of” a nonprofit group.
“That’s the way the ordinance is written. It’s perfectly legal for anyone to run the stands,” Brookins said. “They can either do it themselves or give it to someone else. . . . That’s been perfectly legal for the last 20 years.”
Added Joseph W. Pannone, Culver City’s acting city attorney: “I don’t see anything in the code to limit the percentage of the split, whatever the net intake is.”
Although fireworks sales were long the exclusive province of veterans’ organizations, the City Council began allowing other nonprofit groups to apply for permits in 1983.
Each veterans’ organization routinely files separately in the name of its ladies’ auxiliary.
“It gives us pretty good odds, doesn’t it?” Macbeth said with a laugh.
He said the veterans’ experience gives them an expertise that benefits other organizations.
“Basically, because we have a position we have developed over the years, we know how it’s done. And it takes the load off of people who are not as schooled in it as we are.”
Although the veterans apparently decide among themselves which organization will occupy which site on private land, Chief Administrative Officer Dale Jones said city-owned sites are allocated on a first-to-apply basis.
Still, Sikoff said that the American Legion or its auxiliary invariably gets the best spot, which is on city-owned land at the Culver Center shopping center.
“We’ve had the same site (on Sepulveda Boulevard near Venice Boulevard) for the last two years and it’s not very good,” Sikoff said. He said the Disabled American Veterans would gladly pay the extra $1,000 fee required for the city-owned Culver Center location because it would triple or quadruple their take.
Macbeth said the American Legion deserves the prime location.
“It really doesn’t make any difference, because the money goes to the community anyhow,” he said. “It’s no secret that the American Legion is the spearhead. . . . People who put in the time and management and accounting . . . that organization will get more than the others.”
Although Macbeth would not say how much the veterans received from the fireworks sales, he said the veterans’ council provides more than $175,000 a year for the Legion’s baseball program and other causes.
“This represents much more than the amount of money received from the sale of fireworks,” he said.
Macbeth’s comments came in response to a statement by Councilman Jacobs that the fireworks business “is of no practical use to the community.” In a letter to Culver City residents March 18, Macbeth said that they would have to look elsewhere for funds to sponsor the annual fireworks show if the sales were ended.
The 10 stands are assessed $2,000 each for the show, which has been produced for years by the Pyrospectacular Co., another firm founded by Moriarty and sold in 1979. Moriarty, however, still owns stock in the firm, according to Natalie Piezina, secretary to Robert A. Souza, the president and majority stockholder. The $20,000 tab generally is paid in advance by Brookins.
Macbeth also said service groups that raise money through booths at the Fourth of July fireworks show would lose that source of revenue as well.
“Are the people of Culver City prepared to finance these activities either through additional taxes and or contributions that support our youth, senior citizens, the handicapped and our veterans?” he asked in his letter.
Jacobs, whose term on the five-member City Council extends for another two years, has also cited the objections of surrounding communities where fireworks are banned as a fire hazard.
The fate of fireworks sales depends on the outcome of the current race for two seats on the City Council. Two incumbents who are running for reelection have spoken in favor of fireworks sales.
According to campaign contribution statements, one of them, A. Ronald Perkins, accepted $350 in campaign contributions from Red Devil in 1982 and another $250 from Brookins, the Red Devil representative, last month. Another, Richard Alexander, received two $50 gift boxes of fireworks from veterans’ groups.
Both said the contributions did not affect their position on fireworks sales.
“I have supported fireworks sales in Culver City for at least 25 years,” Perkins said.
“My price is much higher than that,” Alexander joked. He said he found the gift boxes embarrassing and gave them to his children.
Three of the five challengers want fireworks sales banned. If at least one challenger is elected, the current 3-2 majority that favors fireworks sales could tip the other way.
Two incumbents who are not up for reelection received more money from Moriarty or his associates. Richard Brundo, who has two years left on his term, received $666 from Moriarty in 1980 and $250 from Bishop Fireworks in 1984. He also accepted three $50 boxes of fireworks from veterans’ groups.
He, too, said his support for fireworks antedated the contributions. “I’ve been in favor of fireworks for years.”
Councilman Paul A. Netzel, who favored fireworks sales until last year but now wants them banned, accepted a total of $600 in campaign contributions from Kenneth Bishop in 1980 and $250 more in 1984.
He said the contributions had no effect on his position, especially since he spoke out against the fireworks trade in a letter to veterans’ groups in 1985.
He said he changed his mind because of the danger of fire and injury even from the strictly limited varieties of fireworks allowed under so-called “safe and sane” regulations, which have been decried by many fire officials.
“Culver City has little tentacles extending out to these neighboring cities,” he said, referring to the city’s sprawling geography. “It seems to me to be a little inconsistent to be selling fireworks when these cities are in opposition, and when we have a mutual pact with these cities for fire equipment and other services.”
