Fair Board Ponders Switching Swap Meet Operators

Robert Teller invented the modern swap meet at the Orange County Fairgrounds in Costa Mesa, and for the second time since it opened in 1969, he’s in a knockabout fight to keep it.

Two companies are bidding for 10-year rights to run what is considered the Rolls-Royce of swap meets -- the Orange County Market Place, held 48 weekends a year at the fairgrounds. The outdoor mall pulled in about $13 million last year, of which $4.5 million went to the 32nd Agricultural District, which owns and operates the Orange County Fair.

The competing companies are Teller’s Tel Phil Enterprises of Newport Beach and American Park ‘N Swap, a subsidiary of concession giant Delaware North of Buffalo, N.Y., which also bid against Tel Phil in 1991.

It would be easy to characterize the showdown in epic terms. Teller’s home-grown company has 150 employees and relies on the Market Place for its income. Delaware North is a $1.6-billion international conglomerate with 30,000 employees and operations spanning the globe, from Boston’s FleetCenter to the Sydney Entertainment Centre to the Ahwahnee hotel at Yosemite National Park.

Both sides have hired pricey help: lobbyists Platinum Advisors, former Republican Assembly consultant Jeff Flint, and attorneys Manatt, Phelps & Phillips for American Park ‘N Swap; public relations consultants Waters & Faubel for Tel Phil. Whispers of impropriety emanate from both sides -- a 30-year-old racketeering conviction for Delaware North’s predecessor company; concerns that bid packages were skewed to favor Tel Phil’s entrenched tenure.

Judgment day is Thursday, when the nine-member fair board decides whether to consider both companies’ bids. Though the board initially rejected APS’ proposal for failing to include a required corporate document, a state hearing officer recommended waiving the oversight and scoring the bids. Another option is starting over with new bids.

Neither side admits to counting heads on the board. But there’s reportedly a three-way split: Three board members favor Tel Phil, three prefer APS and the rest haven’t said.

“If we lose on a level playing field, that’s fine with us,” Delaware North group president John Fernbach said last week. “We bring a wide variety of resources and capabilities that someone small and local can’t bring to it. We’re a quality operation. We want to tell that story.”

The way Bob Teller and son Jeff Teller see it, they’re fighting to keep not just any swap meet, but their swap meet.

“The bottom line is: We started from nothing in 1969 ... and built what it is now,” said Jeff Teller, who took over last year as company president, while his father remained chairman. “They can offer all the blue sky in the world. The question to ask is: Is it in the state’s best interest to disrupt a successful, 34-year institution?”

There’s no question the event is a money-maker. Tel Phil pays the fair board 35% of the gross, which was $4.5 million last year -- 26% of the fair board’s total revenue of about $17 million. Delaware North, in a bid package obtained by The Times, proposed increasing that to 50%, which it contended would mean an extra $12.4 million over five years.

But money is only part of the criteria upon which the bids are judged, fair general manager Becky Bailey-Findley said. While that accounts for about one-third of the scoring, other factors include the proposal for five years of operation, proof of financial stability and evidence of experience.

Tom Askew, president of the Orange County Market Place Merchants Assn., said he wasn’t impressed when he visited APS’ flea market in Phoenix, one of half a dozen the company operates around the country. He said he left Orange County with an open mind and came back with photos of garage-sale wares and missing restroom tiles. He distributed packets of his photos to each fair board member.

APS has operated the Phoenix market for 28 years and owns the land, he said, yet there was scant evidence that the event has been nurtured in the same way Orange County’s has.

“We don’t want the Market Place disturbed,” said Askew, who has sold car accessories there for 24 years. “The current operator has evolved to the standard it is. They’ve been a known entity for 34 years. If you turn it upside down, you could destroy it.”

Attorney Tim Paone, who works with Manatt, said there’s no reason for the “parade of horribles” envisioned by those who want Tel Phil to stay. The site in Phoenix always was intended to be a low-key flea market, not the kind of operation run in Orange County, he said.

There were similar fears 10 years ago when Delaware North won the contract to operate everything from hotels to concessions at Yosemite, plucking it from a long-term operator.

So far, the company has delivered on its promises, park officials said.

“They’ve done a lot of good partnerships with us to help do things like restoration and environmental projects,” said Yosemite spokeswoman and park ranger Deb Schweizer. “Overall, we’re pretty happy with them.”

The only sign for Orange County Market Place patrons that things may change is Tel Phil’s decision in May to stop offering packets with 10 admission tickets for $10, a savings over regular admission of $2 for adults (kids under 12 are free). Since May 1, the company has been on a month-to-month contract extension, and the Tellers worried they might not be around to honor the discounts.

Other than that, there’s been no outward difference for shoppers cruising the asphalt aisles, alert for deals on everything from Dickeys to doormats to mahogany dressers. Over the years, the event has grown from Teller’s Treasures and Trash to an extensive open-air mall, with 4 square miles of walking room for 1,200 vendors in 1,500 spaces.

Everything is top-shelf, Jeff Teller boasted, from the Hebrew National hot dogs and peanut frying oil at the West Side Grill to the 100% satisfaction guarantee and $1-million liability policy required of each vendor.

“This event was created and borne out of this company’s imagination and determination,” he said. “We’re always looking to see what we can improve. We make sure we give a good return for the fairgrounds and at the same time, not jeopardize the quality of the operation.”

Delaware North’s executives were as quick with praise about the Tellers’ operation. They said shoppers and vendors shouldn’t be worried if they are chosen to take over. They denied rumors they plan to raise the Market Place’s average $45-a-day rents.

“We haven’t bashed Tel Phil because what they do is good, but anything can be better with new eyes and more money,” Fernbach said. “Orange County is the five of five stars. We can enhance and improve, but in our mind, [the biggest benefit is] we can return more money to the fair board.”