Operator of Sports Arena Intends to Give Up Lease, Seek Local Replacement

The San Diego Sports Arena could soon have a new, local operator, a spokesman for the Canadian firm that has held the lease for 17 years said Monday.

Dean Cardno, controller for Vancouver-based Graymont Ltd., which took control of the arena in 1971, said the company has notified the city of San Diego of its intention to relinquish the lease and find a local operator.

Cardno explained that Graymont does not own the building itself--that belongs to the city--but rather holds the lease, which doesn’t expire for another 27 years. He said the city also owns the land in Loma Portal, west of the junction of Interstates 8 and 5.

‘Just Isn’t Our Game’

“We’ve informed the city of San Diego, and your City Council as well, of our intention to sell our share--78%, I think it is--in San Diego Entertainment Inc., which holds the lease to the building,” Cardno said. “Why? We’d like to deploy our assets elsewhere. Most of our interests are in oil and gas, mineral extractions, that sort of thing. Entertainment and sports just isn’t our game.”

Cardno declined to name prospective buyers, but did say: “We think it best--we think it wisest--for San Diego Entertainment Inc. to obtain local ownership.”

Graymont’s primary investors are brothers Phillip and Peter Graham, both of whom live in Vancouver. The Grahams’ control of the arena, which was built in 1965 and opened a year later, has been characterized by upheaval and controversy.

During Graymont’s 17 years of operating the arena, which seats slightly more than 13,000, the facility has lost as tenants two professional basketball teams, one defecting to Houston, the other to Los Angeles: the current Rockets and Clippers of the National Basketball Assn. Owners of each team cited the arena and then-arena President Peter Graham as reasons for leaving. The arena’s tenants now include the San Diego Sockers, a professional indoor soccer team, and the men’s basketball team from San Diego State University.

Despite the controversy, City Manager John Lockwood said that, “for two to three years,” Graymont has been “a most responsible operator, the kind we’d like to keep, the kind we hate to lose.” He cited in particular arena President Vin Ciruzzi, whose record, in Lockwood’s words, has been “nothing short of outstanding.” Lockwood said the same could not be said for Ciruzzi’s predecessor, Peter Graham.

Ciruzzi was unavailable for comment Monday.

Arena Renovations

Under Ciruzzi, the arena has been renovated, with much of the expense going toward roof repair (to correct a persistent leak), repainting and installation of new seats, as well as a new, multimillion-dollar acoustic system aimed at enhancing the structure’s primary use these days: rock concerts.

Bruce Blakley is a partner in the accounting firm of Coopers & Lybrand. His firm has been appointed to determine the worth of the lease and to interview prospective buyers.

“What’s for sale, exactly, is the stock of a corporation that has as its principal asset this long-term lease on a big arena,” Blakley said. “The Graham family has reached a point where it’s interested in fields quite unrelated to entertainment. They would much rather concentrate on those endeavors.”

The Sports Arena was built with an issue of low-interest construction bonds. It opened Nov. 17, 1966, with a Western Hockey League match between the San Diego Gulls and the Seattle Totems.

Bob Breitbard was the man who put together the group that financed and built the arena. He owned the Gulls and later the NBA Rockets. Breitbard sold the NBA team to a group from Houston, citing at the time the taxes imposed on the franchise by Peter Graham.

“The city interviewed Graham and gave him the rights to the lease in 1971,” Breitbard said. “The Rockets left in ’72. The arena was not built with city funds, didn’t cost the city a penny, strictly a private operation. And, you know, you can’t put a value on that land today.

‘It Was a Wasteland’

“You should have seen it when I took over. It was wasteland, old Navy housing. Nothing was built around there. The city used the monies from the arena’s being built to help pay for San Diego (Jack Murphy) Stadium.”

Breitbard said he hadn’t heard any names in connection with running the arena, but said a few had surfaced in regard to a pro basketball or hockey team coming here. He declined to divulge those names.

City Manager Lockwood said the entity most people seem interested in is a professional basketball team. He said the city had discovered that the NBA, which recently expanded, was more interested in cities with splashy new arenas than with cities that constitute major markets.

“Take Charlotte, N.C.,” Lockwood said. “They have a team now mainly because they have a new arena with 20,000 seats. It’s not a question of market, it’s a question of facility. If we had a larger, new arena, would we get a team? I can’t answer that question because I don’t know the answer. Can you attract an NBA team with the arena we have? You’d have to ask the NBA. That’s one question the city manager can’t answer.”

Many of the cities upon which the NBA has recently bestowed franchises have built new arenas downtown. Lockwood conceded that a downtown arena is an intriguing possibility.

“Downtown San Diego has undergone an obvious rebirth the last few years,” Lockwood said. “Any wholesome activity that attracts large numbers of people downtown has to help, has to be looked at. As to where a sports arena should be located, I’d have to see harder numbers to make a more educated comment, but yes, generally, the more activity downtown, the better off we are. If it takes a sports arena to do that, well, we’ll just have to wait and see.”