After months of anticipation, the U.S. Department of the Interior on Thursday chose a company that specializes in operating sports stadiums and racetracks to operate the hotels and other tourist services at Yosemite National Park.
The selection of Buffalo-based Delaware North Cos. Inc., which has no experience in national parks and in the 1970s was linked to organized crime, appeared to stun some environmental groups and prompted some members of Congress to pledge a thorough review.
"We're scared," said Dean Malley, longtime environmental activist and member of a Yosemite watchdog group. "This came kind of out of the blue. What do these guys know about offering quality service in a special location for middle-class Americans?"
The selection of a new concessionaire for Yosemite has been viewed as a test case of the government's resolve to squeeze more money and services from private firms that usually have reaped hefty profits from national parks and paid little in return.
Park officials estimated that the new concession will generate about $10 million more a year to Yosemite than has been paid by the current contractor, the Yosemite Park & Curry Co., an MCA Inc. subsidiary.
The $1.2-billion privately owned Delaware North Cos. owns the Boston Garden arena, 11 racetracks and concession contracts at two other racetracks, six major league baseball parks, 40 airports, the Miami Zoo, the Old Moscow Circus in Russia, and hotel and catering operations in Australia. Delaware Chairman Jeremy Jacobs also owns the Boston Bruins hockey team.
In Southern California, Delaware runs the food concessions at Hollywood Park and Los Alamitos racetracks and at Long Beach, Burbank and Orange County airports.
Park officials say Delaware offered the best of six bids to run the famed Ahwahnee Hotel and other Yosemite lodgings, stores and restaurants. Yosemite Supt. Michael Finley said Delaware was the only company to meet all Park Service requirements.
Delaware will pay the park 20.2% of its annual gross receipts, park officials said, generating more than $100 million over its 15-year contract. The money will be used to finance removal of some buildings from scenic Yosemite Valley and the replacement of what Finley called "ugly" tourist cabins with lodgings "that really match Yosemite's majesty."
But the long-awaited announcement of the new concessionaire was marred by questions about the company's past.
A predecessor of Delaware North, Emprise Corp., was convicted in Los Angeles federal court in 1972 of conspiracy to conceal an investment in the Las Vegas Frontier casino-hotel. According to the conviction, Emprise made fictitious loans to three reputed Mafia figures in an attempt to launder organized crime money through the hotel. The company paid a $10,000 fine.
In testimony before a House of Representatives committee that year, Arizona investigative reporter Don Bolles, who later was mysteriously murdered, said Emprise had a "continual association with organized crime figures over a 35-year period."
Emprise Corp, founded by the Jacobs family of Buffalo, N.Y., changed its name to Sportsystems Inc. in 1978 and later to Delaware North. The company's major subsidiary is Sportservice Inc. Jeremy Jacobs, Delaware North's current chairman, is the son of the late Louis Jacobs, who presided over Emprise.
A spokesman for the company said Thursday that the company welcomes scrutiny by Congress and environmental groups.
"We are not denying that a blemish is on the company's record in the past," said spokesman Maury Healy. "But no one working in the company today had anything to do with that."
He said Delaware has catered the last three presidential inaugural balls in Washington and the National Football League's Super Bowl. "It's just a tremendously wide-ranging company."
Park officials brushed aside questions about the firm's controversial past and said they have no second thoughts about their decision.
"We did some checks," Finley said. "They are a very reputable company. People give them high marks for professionalism."
Park Service Director James Ridenour said Delaware's lack of experience in national parks was not a problem. "Their broad range of experience includes operations that reflect virtually every facet of the planned operation within Yosemite."
Other park officials said the service had little choice but to select Delaware because its bid was the strongest.
"You can't turn your back on a bidder for something that happened 20 years ago," said park spokesman George Berklacy. "They could have come right back and sued us."
An internal Park Service memorandum obtained by The Times reveals that the service had various problems with the other bidders.
Several companies placed limits on what they would spend to clean up leaking underground storage tanks in Yosemite, a legacy of Curry Co. gas stations, and one bidder refused to accept any liability for the contamination.
Delaware accepted responsibility and put no cap on what it will spend to clean up the pollution.
TW Recreational Service Inc., considered by many to be the front-runner, offered the Park Service the most money but also put a limit on what it would pay to clean up the leaking tanks, according to the memo. TW runs several other national park concessions.
Other bidders, the memo said, did not appear financially capable of taking over the concession.
A bid by YRT Services Corp., founded in part by environmentalists, "did not present required evidence of an ability to fulfill the stated financial requirements," the memo said.
The Wilderness Society, which helped launch YRT, complained that the selection process had been rushed and should have been postponed until President-elect Bill Clinton and his appointees could review the bids.
"How can the public have any confidence that the best bidder was picked?" asked George T. Frampton Jr., president of the Wilderness Society. "The Park Service received 50,000 pages worth of bids and spent just two weeks evaluating them before reaching a decision."
Park officials say Congress cannot reject the agreement without passing a new law, but Wilderness Society officials predicted that Congress may intervene.
"This deals with the largest contract the Park Service lets, the premier national park, a 15-year contract and people expect it to set a precedent for how the Park Service operates," said Wilderness Society spokesman Ben Beach.
Rep. George Miller (D-Martinez), chairman of the House Interior Committee, has pledged to hold hearings on the contract next year and Rep. Bruce Vento (D-Minnesota) is also expected to take a close look at the selection.
Delaware North was selected by a team of park officials and approved by Interior Secretary Manuel Lujan Jr. on Thursday. The company will take over next October and operate as Yosemite Park Services Inc.
The sale of the Curry Co.'s assets in the park, for $61.5 million, including interest, was arranged by the Interior Department after Curry's parent company was purchased by a Japanese firm. Lujan said at the time that he wanted to keep the Yosemite operation in American hands.