City Council Vote Pulls Air Show Out of Its Debt-Plagued Nose Dive

The 1990 Air/Space America show at Brown Field, left for dead less than three months ago atop a heap of bad debt, was resurrected Tuesday by a San Diego City Council now satisfied that its organizers can manage the mammoth event and pay off most of their creditors.

With its 8-1 vote, the council handed rights to the show to a reorganized version of the group that produced the popular but debt-ridden 1988 extravaganza, which caused about $100,000 in damage to the city-owned airstrip where it was staged.

Citing debts and a lack of confidence in Air/Space America organizers, the council voted Feb. 7 to cancel the 1990 show. But the vote Tuesday gave Air/Space America a permit for a May, 1990, show and $300,000 in city funds to use as seed money.

Lengthy List of Conditions

In return, the show’s organizers agreed to a lengthy list of city-imposed conditions designed to prevent a repeat of last year’s financial and management problems.

“This show will mean more to San Diego over the years than anything that has happened in San Diego,” said former Congressman Bob Wilson, a founder of the air show. “We’re not here to make a profit. We’re here to do a job for the community.”

The council vote ended an eleventh-hour competition for rights to the multimillion-dollar show. The clash began last month when a rival group of aerial showmen offered to replace Air/Space America and stage the event themselves. Dubbed the U. S. Air Show, the group was composed primarily of aviation buffs who helped put on the 1988 Air/Space America extravaganza but broke away from the organization because of their dissatisfaction with its management.

Although Air/Space America agreed to make its “best efforts” to incorporate the rival group, U. S. Air Show principals predicted that they will not be taken back.

The council approval came despite strong objections from Councilman Bob Filner, whose district includes Brown Field. Filner repeatedly pointed out that the new agreement with Air/Space America gives the city no leverage over the organization if it fails to meet its responsibilities.

“What happens if the plans, the promises, the estimates, the expectations in your quarterly reports don’t hold up?” Filner asked Air/Space America’s acting chief executive officer, Dick Shigley. “What happens if you don’t meet your requirements?”

Sought Written Guarantee

Filner sought to impose a scheduled list of requirements on Air/Space America’s organizers and extract a written guarantee that the city would not be liable for any debts incurred by the next show, reasoning that the requirements would give the council measurable standards if it wanted to revoke the newly authorized permit. Last year, when the show incurred $4.2 million in debt, some of its creditors attempted to recoup their losses from the city.

Nonetheless, other council members refused to support Filner’s suggestions.

“We’re providing risk capital. We want to let these people alone to the extent possible so they can go out and make this show happen,” Councilman Bruce Henderson said. He warned against the “red tape of government bureaucracy that will guarantee failure, strangle them.”

Deputy City Manager Coleman Conrad’s recommendation to reschedule the show, and the council’s approval of it, stemmed largely from Air/Space America’s improved financial picture. With the addition of a prominent Cleveland-based marketing firm, the Lufkin Group, Air/Space America’s projected revenues have soared.

When the council canceled the show in February, auditors from the firm of Deloitte, Haskins & Sells were predicting that Air/Space America would lose $600,000 on the 1990 show, a sum that would be added to its existing $4.2-million debt.

Now Predicting a Profit

The same auditor is now predicting that the show will turn a sizable profit next year and that the group may not have to pay $1.5 million of its 1988 debt. Those factors will leave Air/Space America just $901,000 in debt after the next show, according to Deloitte, Haskins & Sells auditor Frank Panarisi.

Shigley, who predicted the show will draw 250,000 to 300,000 people, said Air/Space America will pay off its old debt and end the 1990 show at least $300,000 in the black.

About $1 million of the organization’s debt is owed to Evergreen Chemical Products, which last year installed a new drainage system at Brown Field in preparation for the past show. The firm’s president, Ron Reed, said Tuesday that he believes the city--not Air/Space America--should pay for the “improvements.”

As part of its reorganization, the group has also added executives and wrenched responsibility for finances away from retired Rear Adm. Bill Walsh, co-founder of the show. Some council members have called Walsh the source of last year’s financial and management problems.

In return, Air/Space America agreed to Conrad’s demands that it post construction bonds for all the work it will do at the airport, secure $25 million in public liability and property damage insurance, pay for repairs to Brown Field necessitated by damage at last year’s show, provide quarterly updates of its progress to the council and hire a new chief executive officer with the experience to run an event that now qualifies as the world’s third-largest air show.

Councilman Henderson offered to put more city revenue behind the show if a major aerospace firm lends Air/Space America a top executive on a full-time basis.

The group, which still owes the city $100,000 in rent from last year’s show, also agreed to pay $100,000 for the permit the council granted Tuesday.