Review of the Rose Bowl Operating Company (RBOC)

1. Review of the Rose Bowl Operating Company (RBOC) City CouncilFebruary 3, 2014 (Finance Committee, Oct 28 & Nov 18, 2013)

2. Background • The City of Pasadena has three operating companies • Rose Bowl Operating Company (RBOC) • Pasadena Center Operating Company (PCOC) • Pasadena Community Access Corporation (PCAC) • Established by Title 2 of the Pasadena Municipal Code • Operate independently within parameters established by City Council • Municipal Code • Operating Agreements • PCAC’s is currently in development

3. Creation of the RBOC • May, 1991 Organizational Study of Arroyo/Seco Rose Bowl Department • Lack of management hierarchy • Lack of essential business functions • Lack of accountability and authority • Options: 1) Status quo, 2) Not-for-Profit, 3) Contract-out • September, 1991 Analysis of Operating Alternatives • November, 1991 Financial Operations Review

4. Creation of the RBOC • September, 1992 Council approves in concept • September, 1993 Council approves ordinance • May, 1995 Operating Agreement between City and RBOC executed • Purpose and Function of the RBOC: • “…to return economic and civic value to the City of Pasadena by managing a world-class stadium and a professional quality golf course complex in a residential open-space environment.” (P.M.C. 2.175.110)

5. RBOC Operations • FY14 operating budget $32.4m, 24 FTEs • Number of FTEs compares well to other stadiums • Employees are “at-will” but participate in CalPERS • Salaries compare favorably to comparable City positions • Lower overhead than City departments; no cost allocation except for charges from City Attorney’s Office

6. RBOC Oversight • Appointment of RBOC Board. Pursuant to Pasadena Municipal Code Chapter 2.175.030 The RBOC’s thirteen-member board is appointed as follows: • 1. Each Councilmember and the mayor shall nominate 1 member of a total of 8 members. • 2. The Mayor shall nominate 1 member from persons recommended by the 7 Councilmembers and 1 member who is a voting member of the City Council. • 3. The Tournament of Roses Association shall nominate 1 member. • 4. The City Manager, or his/her authorized representative at the election of the City Manager by written notice to the City Clerk, shall be appointed. • 5. The Chancellor of the University of California, Los Angeles shall nominate 1 member. • 6. All nominations, except the City Manager, or his or her authorized representative, are subject to ratification by the City Council.

7. RBOC Oversight • The qualifications for board members is set forth in Section 2.175.040 subsections A and B, as follows: • A. All seven members nominated by City Councilmembers shall be residents of the city, and the members nominated by Councilmembers from Districts 1 and 6 shall be residents of those districts, respectively. • B. Each member shall have recognized competence and wide experience as evidenced by but not limited to any of the following fields: banking; financial services; venture capital; real estate development or financing; real estate leasing and/or property management; senior management of a business; project management; accounting; business law; economic development; community service. Considered as a whole, the board should reflect experience in all these areas. Appointed members must be willing to serve actively for the full term. • Section 2.175.045 Appointment of Tenant Representatives – was intended to resolve any appearance of conflict of interest

8. RBOC Oversight • RBOC Board • Well qualified and diverse backgrounds • Standing sub-committees • Finance • Operations • Able to focus in-depth on Stadium and Golf Course issues

9. RBOC Financial Results • Between FY95 – FY04 combined net earnings of stadium & golf course were positive in all but one year • Ten year average of $1 million per year • From FY05 to beginning of renovation project combined net earnings have been stronger • No less than $1 million annually • High point of $3.6 million in FY06

10. Findings & Recommendations • RBOC structure has been successful • Stadium is being operated better today than prior to establishment of the RBOC • Operations are cost-efficient • Functions in a business-like fashion • Decision making is streamlined • Well-qualified Board of Directors provides oversight • Financial results may have been less than originally hoped • Function of the marketplace, limits on events and not management

11. Findings & Recommendations • RBOC operating agreement • Executed in 1995 • Many terms are outdated – dealing with transition from Department to Operating Company • Review of entire agreement may be appropriate • Recommendations for consideration by Council • Aimed mainly at enhancing oversight of all operating companies • Several would necessitate amendments to existing operating agreements

12. Recommendations to City Council • Present information, during annual budget review regarding anticipated adjustments in salary and benefit line-items (revised from that presented to Finance Committee) • Quarterly reporting to the City Council through General Managers and/or Board Chairs • Submit monthly financial information to the City’s Finance Director for inclusion in Quarterly Financial Monitoring Report to Finance Committee

13. Recommendations to City Council • Direct the City Manager to work with the GMs to develop a policy for capital project construction management and return to City Council for consideration • Direct City staff and RBOC to jointly undertake an analysis of event coordination in the Arroyo • Direct the City Manager to work with RBOC to develop other proposed amendments to update the operating agreement between the two entities

14. Additional thoughts • Staff considered merger of RBOC and PCOC into a sports and tourism agency • Perceived benefits: marketing, economies of scale • Perceived challenges: disruption, merging totally different personnel systems, disaffecting key stakeholders • General Managers are jointly exploring ways to enhance coordination