With Pasadena City officials starting to hash out a proposed $897.8 million budget blueprint for fiscal year 2022, City Manager Steven Mermell has issued a grim outlook for the city’s landmark Rose Bowl stadium, which will mark its centennial season next year.
The financial picture for the beloved 99-year-old stadium’s has been a tenuous, ongoing concern in recent years, facing burgeoning competition for live sports and music events in the Los Angeles area. Deeply worsening the outlook: The impact of being shuttered for more than a year by the coronavirus crisis, which forced the iconic college football bowl game that bears the stadium’s name to leave the state.
In a May 17, 2021, letter to City Council offering context on the city’s fiscal picture, Mermell said: “the future financial position of the Rose Bowl Stadium has been brought into stark relief by the pandemic.”
Mermell added: “The financial challenge associated with the Rose Bowl is as significant as anything the City has faced in decades, and until the matter is resolved, fiscal prudence is required more than ever.”
The city manager’s red flag waves as the city — still emerging from its own financial battering during the pandemic — once again is poised to transfer money from its general fund to the Rose Bowl. The city owns the arena, but it is run by the non-profit Rose Bowl Operating Company, whose 13-member board includes city officials and people appointed by the city, the Tournament of Roses and UCLA.
The Rose Bowl Operating Company projected that, despite an eventual return to pre-pandemic-era revenues, the bowl’s financial recovery is unlikely to be sufficiently robust to cover increasing debt service and operating costs. Revenue gaps ranging from $5.4 million and $7.7 million per year are anticipated for the next few years, the group said.
Meanwhile, capital improvement costs over the next five years may top $12 million per year, according to the city.
The city’s fiscal plan appears to be slight increase from last year’s pandemic-jolted budget — including a projected $286.7 million allocated for its general fund Nonetheless, the city is still feeling the effects of a pandemic-fueled recession, during which sales tax and hotel occupancy tax revenue took big hits. The total costs of the economic hit to the city are still being assessed but over the last two years, the recession blew a $70 million revenue hole into the city’s budget, officials said.
In fiscal year 2021, the city’s general fund covered the Rose Bowl’s debt service obligation — about $11.5 million. In the process, it depleted the general fund’s 5% Contingency Reserve.
In the coming year, there would be more of the same.
The city manager’s office estimates that the recommended budget for 2022 assumes the general fund would need to fund $10 million of the Rose Bowl’s $12.5 million yearly debt service.
Such a load would deplete the city’s reserves in “just a few short years, leaving no financial resources in the event of an emergency or significant economic downturn,” according to Mermell’s letter.
In fiscal year 2020, for instance, net income from the Rose Bowl’s anchor tenants — UCLA football and the Tournament of Roses — fell by more than 30%, with attendance dropping more than 60% compared to five years before, according to the city.
Last June, in the heart of the pandemic, the city intervened, approving a transfer of $11.5 million to the Rose Bowl Operating Company from the city’s reserve funds.
The money was enough to keep up with the Rose Bowl’s debt payments — fueled by recent renovations officials said were necessary to keep the stadium competitive.
But projections of increasing shortfalls were enough for the Rose Bowl Operating Company’s treasurer, Rich Schammel, to tell elected leaders last June that the funding gaps were “doubly bad … because it means that not only can we not pay the debt service, but it means we have no working capital to pay salaries” or other operating expenses.
“It’s a serious situation,” said Darryl Dunn, the RBOC’s CEO & general manager.
“Just like an old house,” Dunn said, “we have challenges with an old stadium.” He noted that competition, including the $5 billion SoFi Stadium in Inglewood, has further complicated the bowl’s financial outlook.
Striving to stay competitive has resulted in huge outflows for renovations — to the tune of $180 million between 2010 and 2014.
It’s unclear if fans will return to pre-pandemic numbers soon, as the crisis eases.
“We are tied heavily to the attendance of our events,” he said. “We need UCLA to have a strong attendance year.”
Dunn said there have been some bright spots for business — even during the pandemic.
The site’s golf business has been booming. And Rose Bowl officials have tapped “incremental” revenue, including hosting graduations, movies and other drive-thru events, allowed by county public health orders.
Rose Bowl officials are bidding to be a World Cup venue in 2024, if games come to the U.S. The bowl will also host games during the 2028 Olympics in Los Angeles.
Dunn said officials are studying other ways to attract live audiences, from expanding the golf course driving range to offering family-friendly events at the course. Officials are also looking at how they can tweak seating to offer more “premium experiences.”
“We need to stay competitive. We’ve got to take care of our facility, and we continued to look under the rocks for revenue opportunities and to work with the community and make sure they understand the challenges facing the Rose Bowl,” Dunn said.