Delaware North western meltdown makes for shocking comparisons with Niagara Falls State Park

BY JAMES HUGNAGEL

As part of an ongoing effort to acquaint our readers with some of the more unsavory aspects of the business and personal dealings of Buffalo billionaire Jeremy Jacobs and his family-held multinational corporation Delaware North, which has the exclusive rights to operate food and beverage concessions in Niagara Falls State Park, we wrote three weeks ago about the disruptive turmoil that Jacobs and his clan stirred up at their swanky winter retreat of Wellington, Florida, a sleepy little equestrian-oriented paradise outside of Palm Beach.

A developer named Mark Bellissimo simply wanted to expand the stable facilities, add some amenities and make a little money in the process. The result was a nasty legal and political battle with the uber rich, horsey clan from Buffalo. Bankrolling sympathetic candidates for the village board to the tune of hundreds of thousands of dollars and bringing considerable legal and financial resources to bear, the Jacobses mostly prevailed, but at the cost of enormous bad feelings and bitter rancor in the previously placid small Florida retreat.

Jeremy Jacobs, Sr. owner of Delaware North

The ruthless, take-no-prisoners business approach of Delaware North, which last year posted revenues of over $3.2 billion based mostly on selling beer, pop and hot dogs at sports stadiums, parks and similar venues, was on full display back in 2003 when they participated, with state government, in the ouster of a woman entrepreneur who had established a very successful and attractive cluster of shops and restaurants at a state park in California.

Three decades prior to that, Diane Powers took a run-down motel located in a corner of Old Town State Park, near the site of possibly the oldest European settlement on the west coast and reflecting, to this day, a Spanish colonial-type ambiance, and turned it into a very popular destination called “Bazaar del Mundo”, a collection of shops and restaurants that, by 2003, was employing 550 people and grossing in excess of $22 million in sales annually.

Strangely enough, after watching Bazaar del Mundo develop into the most lucrative operation in the entire California Parks system, to the direct benefit of taxpayers, then-California Governor Gray Davis and his Department of Parks and Recreation put the operation out to bid. The decision to do so may or may not have been finagled by influential Sacramento lobbyist Darius Anderson, at one time Gov. Davis’ chief fund-raiser, who had been paid $280,000 by Delaware North to see to the matter.

Delaware North offered $2 million a year in rent and an additional $13.6 million in “improvements” over the life of the 10-year deal. In addition, the company agreed to pay the state 8.5% of gross sales up to $18 million, and 9% after that. Power’s bid was $1.5 million a year for rent and $9.9 million in capital improvements. She offered 7.3% of gross sales without any bump at $18 million. Delaware North won the contract, and Powers moved out in May, 2005 after legal challenges to the changeover fell short.

“Oh my God!” said Fred Grand, president of the Old Town Chamber of Commerce, which represented 450 businesses, “I am shocked and disappointed because of all the efforts that Diane Powers put in over the years to create something really spectacular there.”

You’d think the brain trust at Delaware North would have had this food and beverage thing down pat by then, but much like the Yosemite National Park debacle of last year that became a public relations disaster after Delaware North first lost the contract to competitor Aramark and then sued over trademarks it had obtained for historic names (including “Yosemite National Park”), the Old Town State Park concessions business collapsed spectacularly.

Delaware North announced in December, 2008, after a scant five years running the renamed “Puerto del Pasado” (having refused to purchase Bazaar del Mundo from Powers), that they were throwing in the towel. Revenues had plummeted from the $22 million achieved by Diane Powers in her final year, to $7.53 million for Delaware North in 2008. It was a stunning repudiation of the notion that large corporations, utilizing all the financial and management resources at their disposal, can do a better job than dedicated, locally-based business people.

Plenty of room at the Hotel California - but not for Delaware North!

At the time, it was generally agreed that Delaware North, despite the marginally higher rent paid and attempts at capital improvements to the park, really wasn’t a good fit, with their pre-processed greasy french fries and burgers and machine-dispensed drinks, in contrast to the variety of delectable ethnic food choices and specialty gift shoppes that the park had previously been endowed with when it had been run as Bazaar del Mundo.

At practically the very same time Delaware North was conniving its way into the California State Park system, it entered into a $10.2 million agreement with the New York State Office of Parks, Recreation and Historic Preservation, commencing on July 1, 2002, to operate food, beverage and gift shop concessions in the Niagara Falls State Park, feeding the eight million tourists who visit Niagara Falls every year, with a contract end date of Dec. 31, 2121. Comparing the two contracts side by side is enough to make the average taxpayer gasp.

Duration of Old Town State Park contract: 10 years. Niagara Falls State Park: 20 years.

Old Town State Park annual rent: $2 million. Niagara Falls State Park: $500,000.

Capital Improvements to Old Town State Park: $13.6 million by Delaware North. Niagara Falls State Park: $50 million Niagara Falls Landscape Improvements plan, paid for by taxpayers and Niagara Greenway.

That’s just life in this fabulously corrupt state of New York.

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