DEL MAR — The group of investors planning to provide 25 percent of the financing for the city’s proposed $120 million purchase of the Del Mar Fairgrounds have withdrawn their offer — at least for now.
Del Mar reached an agreement with former Gov. Arnold Schwarzenegger to buy the state-owned facility, which makes up 20 percent of the city.
The purchase was to be funded with a $45 million loan from the state and by issuing $45 million in bonds secured by fair and track revenues.
Mike Pegram, Karl Watson and Paul Weitman, co-owners of the 2010 Preakness Stakes winner Lookin at Lucky and other thoroughbred race horses, were going to provide the remaining $30 million in exchange for a 55-year lease to operate horse racing at the site.
They also planned to invest additional money for track improvements. Pegram, who owns McDonald’s franchises in Arizona and casinos in Nevada, is a part-time Del Mar resident; Watson, who has a summer home in Solana Beach, and Weitman also own automobile dealerships in Arizona.
Gov. Jerry Brown has yet to say whether he supports the sale, but the new state budget eliminates $32 million in general fund money for agricultural activities and fairs.
Brown has also
called for a review of future operation, maintenance and oversight of all 52 fairgrounds, as well as the possible sale of some of those properties.
Late last year, Sen. Christine Kehoe introduced Senate Bill 1 to authorize the sale of the Del Mar Fairgrounds, but that legislation was put on hold until a budget was passed. SB 1 must be acted on by January 2012.
“It didn’t make a lot of sense for (the horsemen) to continue to spend money on lobbyists until the governor decides what he’s going to do,” Del Mar Councilman Carl Hilliard, who helped broker the deal with Pegram, said. “My sense is they are still interested.”
Although the Schwarzenegger deal is no longer valid, “once another deal is on the table, Mike Pegram and his group will be happy to sit down, I’m sure, and pick up the dialogue where we left it,” Hilliard said. “I wouldn’t say that it’s dead.
“We’ll have a new deal with Gov. Brown in due time and then we’ll put the financing back in place,” he said.
“The Pegram group did indicate that they might be willing to come back and reconsider the deal,” Mayor Don Mosier said at the July 25 council meeting.
“We’ve got a potential for a partnership,” he said. “But if this particular group of horsemen doesn’t choose to participate, and the state were to decide to sell the fairgrounds, then I think the city would be interested in soliciting other potential investment partners to move forward with the purchase.”
“There are others,” Hilliard said. “I don’t think there’s too much concern that we can’t do it. It’s if we get the chance to do it.”
“We are still very committed in the city to moving this thing forward,” Councilman Mark Filanc said.
In a related move at the July 25 meeting, council members adopted a resolution to form a Legislative Advocacy Subcommittee to help with Brown’s proposal to review the ownership, operation and governance of all state-owned fairgrounds.
Councilmen Hilliard and Terry Sinnott will provide information, meet with legislators and their staffs and advocate for the city’s position for better regional control and management of the Del Mar Fairgrounds.
They will also monitor bills pertinent to the fairgrounds sale and travel to Sacramento when necessary.
“When we do go up there we can complement and add to the effectiveness of our contracted advocacy group that’s already up there,” Sinnott said. “We can become … quite a bit more effective by meeting face to face with people.”