The company that stages the Los Angeles Marathon has been sold to a Chicago firm for more than $15 million in a deal that had city officials questioning Wednesday whether they should continue subsidizing the footrace with $370,000 in traffic control and policing each year.
William Burke and Marie Patrick, partners in Los Angeles Marathon Inc., sold their controlling interest to a subsidiary of Devine Racing in an agreement that leaves Burke and Patrick overseeing the marathon for five more years.
“We think the L.A. Marathon will be the cornerstone of our company,” said Chris Devine, chairman of Devine Racing. “It’s got a lot of growth potential, and we are going to infuse a lot of capital to help it expand.”
This year, the race drew 24,600 runners, but Devine sees the marathon growing to 40,000 to 45,000 participants, which would make it one of the largest in the country.
Devine said the merger involved paying Burke and Patrick about $10 million in cash, but sources said the pair also received stock in Devine Racing that brought the total value to more than $15 million. Burke will also sit on the Devine board of directors.
Burke, who remains president of Los Angeles Marathon Inc., declined to comment on the price but said he and Patrick earned it, having started the marathon 20 years ago against daunting odds.
“There were five different marathons before Marie and I came along, and everybody else went broke,” Burke said. “I took the risk. I put in 20 years, and I’ve earned mine.”
Others, including City Council President Alex Padilla and Councilman Jack Weiss, said Wednesday that they planned to review the deal and determine whether the marathon company, because it is now flush with cash, should continue to receive the subsidy.
The city contract with Burke requires his company to pay $130,000 annually for traffic control, street closures and extra policing for the race, which city officials have estimated actually cost $500,000.
“It deserves looking into,” Padilla said. “If we have been contributing to the success of the marathon financially or in kind, we have a vested interest in looking at this.”
It is unclear whether changes could be made under a deal Burke cut with the City Council that made the multimillion-dollar sale possible. Earlier this year, Burke sought and won council permission to allow the transfer of the marathon to a third party without the city’s being able to terminate or renegotiate the terms, as long as either Burke or Patrick remained in control for at least three years after the transfer.
Others questioned whether the politically influential Burke, who is married to Los Angeles County Supervisor Yvonne Brathwaite Burke, should be allowed to enrich himself with an event owned and sanctioned by the city and its taxpayers.
“The right to run the marathon is something of value, and the city should benefit,” said Jon Coupal, president of the Howard Jarvis Taxpayers Assn.
Devine Racing runs the Salt Lake City and Las Vegas marathons and the Chicago half-marathon. The firm formed a subsidiary, Devine Racing of Los Angeles, to buy out Burke and Patrick.
Burke issued a statement Wednesday to assure Los Angeles officials that he would remain in charge of staging the race, which will celebrate its 20th anniversary March 6.
“It [the merger] is going to turn L.A. into, if not the largest marathon, one of the largest and most respected in the country,” Burke said in an interview from Las Vegas.
He and Patrick operate the marathon under a contract with the city that extends through 2010.
Earlier this year, Burke settled a legal dispute with the city over the rights to the name “Los Angeles Marathon.” Under the deal, Burke and his firm will receive a license to use the name and logo on T-shirts and other products, as well as in television and radio.
In return, the firm will pay a royalty to the city, starting next year, equal to 7.5% of any gross income received above the $3.86 million in gross income expected in 2004.
Burke is likely to weather any review by City Hall. His political influence extends beyond his marriage.
His firm has given city officials $64,000 in political contributions in the last decade, and thousands more to state officials. In 1995, the city Ethics Commission concluded that marathon employees had illegally laundered more than $50,000 in campaign contributions to 14 City Council members and other politicians around the state.
Burke’s political clout appeared to work in his favor from the beginning. A former City Council aide who was inspired by the 1984 Olympics in Los Angeles, Burke put together a team to bid for the original marathon franchise. Although his bid was ranked third by city officials, Burke won the contract anyway.
Padilla also voiced concern about the marathon being taken over by people from out of town.
“The fact that it is going to a non-L.A.-based company should also cause us some pause,” Padilla said.
But Devine said the race would only get better.
“We are going to put several million dollars more into the event, which will translate into more entertainment during the race and after the race,” said Devine, who previously owned and operated the Chicago Marathon before selling it to LaSalle Bank in 1994.
In a statement released Wednesday, Burke said the city’s marathon generated millions of dollars each year for the city’s economy and has raised more than $16 million for more than 50 charities since its inception.