Consultants Win in Fights Over State Initiatives

The votes haven’t been counted yet, but some results already are clear: Many of the biggest winners in this election are political consultants, especially ones with a piece of California’s initiative business.

By the time receipts are totaled, more than $83.6 million will have been spent on the 15 propositions on Tuesday’s ballot.

It’s not a record. The fattest year remains 1988, when more than $100 million was spent. But by any measure, California’s fall ballot measures have proved to be golden for the business of initiative politics.

Says California Chamber of Commerce President Kirk West, who is overseeing campaigns to defeat seven initiatives he has dubbed the job killers: “We have an industry, the initiative industry.”

Chief among the big bucks initiatives is Proposition 211, the measure to expand lawsuits against publicly traded corporations over stock fraud. In this election, 211 is the mother lode for consultants, pollsters, public relations experts, opposition researchers, fund-raisers, lawyers and direct mail specialists.

Through mid-October, the campaign against Proposition 211 had raised $36 million. The campaign in favor of 211 had raised $9 million. By the time the vote is over, the campaigns’ combined price tag will exceed $45 million, making it the costliest initiative in this state’s history.

Most initiative campaigns are being run on far less--anywhere from a few hundred thousand dollars to a few million dollars.

“Obviously, consultants who want to get rich do better working for rich clients,” said political consultant Beth Capell, who is running the Yes-on-214 campaign, which deals with the health care industry, and who figures to gross $45,000. “I don’t have a rich client.”

No firm stands to profit more this year than Goddard/Claussen, First Tuesday, the company hired as the lead consultant in the campaign to defeat Proposition 211. Through mid-October, the campaign had paid Goddard/Claussen $24.2 million. But that’s not all the firm is doing this fall.

Run by Ben Goddard and Rick Claussen, the firm also was retained to wage the campaign to defeat Propositions 214 and 216, which would increase regulation of the health care industry. By mid-October, the campaigns against the measures had raised $7 million, with Goddard/Claussen getting payments of $4.6 million.

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Together, the payments amount to almost $29 million. Goddard/Claussen paid the bulk of that sum to subcontractors and others, chief among them television stations that air commercials.

Based on industry standards and interviews with other consultants, Goddard/Claussen probably will pull in between $3 million to $5 million for its work. Claussen downplayed the sum his firm will profit.

“I’m not going to go out and build myself a new high-rise. This is business as usual. We have a big staff, a big operation,” said Claussen, whose firm has offices in Malibu, suburban Sacramento and Washington.

For a consulting firm like Goddard/Claussen, the big money comes from producing and placing broadcast advertising.

A contract might call for the consultant to take a commission of 15% from the first $3 million or $5 million spent on advertising, and lesser percentages from advertising in excess of $5 million.

Additionally, the lead consulting firms receive a retainer, monthly fees and expenses.

Claussen says a single television spot is generally produced for $40,000 or $60,000. But the real cost is in the purchase of air time. Claussen estimates that the No-on-211 campaign will spend $25 million of its total $36-million budget on broadcast advertising, with three-fourths of that going to television.

In its campaign finance report covering just four months, the No-on-211 campaign reported paying a combined $4.6 million to the three network affiliates in Los Angeles alone.

Proposition 211 is part of a yearlong initiative war that included three anti-lawyer propositions on the March ballot, all of which failed.

Even so, the campaign for the three March measures cost $12 million, while the campaign against them cost almost $10 million, meaning that in the last year, the California litigation war has pumped $67 million into the business of initiative politics.

Led by the law firm of Milberg, Weiss and its partner, San Diego lawyer Bill Lerach, backers of Proposition 211 set the November campaign in motion by paying the signature gathering firm, Kimball Petition of Los Angeles, $1.04 million to circulate the petitions and place the measure on the ballot.

Once the measure made it onto the ballot, the big money flowed to the lead campaign consultant, a Los Angeles consulting firm run by Bill Carrick, whose firm also is managing President Clinton’s California campaign.

Campaign finance reports show that the committee supporting Proposition 211 and opposing one of the March measures paid Carrick’s firm $9 million. The firm, in turn, produced and placed television spots, taking its cut of as much as 15%. Carrick did not return calls.

Beyond the big money that goes for television advertising, some also goes to political entrepreneurs who have carved themselves sub-niches. Based on campaign finance reports, here’s how the No-on-211 campaign has spent at least some of its money through mid-October:

* Coalition building. The California firm of Stoorza, Ziegaus, Metzger & Hunt received $200,932. The company’s job was to line up a coalition of groups, celebrities and public officials to oppose Proposition 211.

* Door-to-door campaigning. The firm Voter Revolt received $205,000 to have its workers walk door to door in opposition to Proposition 211.

* Polling. The Holm Group received $325,500 and Charlton Research received $246,404. The San Francisco firms tested messages in focus groups and also did statewide public opinion surveys for the campaign.

* Public relations. Edelman Associates, one the nation’s largest public relations firms, was paid $257,022 to generate stories in newspapers and television, and serve as spokesman for the campaign.

* Opposition research. The Dolphin Group of Los Angeles received $15,000 to investigate lawyers and others backing Proposition 211. Dolphin also is running the campaign for Proposition 204, the water bond measure. In that $1-million campaign, Dolphin gets a monthly fee of $50,000, which it shares with subcontractors, plus a commission on advertising.

* Direct mail. The firm of Forde and Mollrich of Newport Beach has received $586,524 for mailers.

* Fund-raising. None of the above would have been possible without money. The main paid fund-raiser for the No-on-211 effort was the Anne Hyde Co. of Tarzana. Through mid-October, the campaign reported paying the firm $314,900.

Not all the money comes easily.

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“You know what? It’s combat pay,” Hyde said. “It’s a two-year cycle. I’m probably not going to make anything for another eight months. How many people want to raise money by phone? Politics and money don’t bring the best out in people.”

But, of course, the consultants will all be back.

“There might be one or two consultants spending the winter in Tahiti,” said Bill Zimmerman, who is running the campaign for Proposition 215, the measure to legalize marijuana for medicinal use. “But most are going to be working to get more initiatives on the ballot in 1998, just as soon as the results from 1996 are in.”