CARD practices predatory pricing – this is a risky ploy in the real world, but not when you have guaranteed taxpayer funding

12 Sep

The story about Off The Wall Soccer and CARD has been bothering me. I sat in a board meeting last month and listened to the owners describe how CARD is putting them out of business, and it just pisses me off.

I remember when they opened that business, in a 20th Street warehouse that had been left empty for some time – what a good thing that was for that entire neighborhood. Sixteen years later, it is shocking to see a government agency go toe to toe with a viable business, pirating revenues to pay their burgeoning pension debt.

When I blogged this previously I heard from owner Dave Stahl and asked him for more information. He showed me the stream of written communication, as well as minutes from a 2006 board meeting which included a record of the conversation. At that time, staff acknowledged having made a spoken agreement with the owners of Off the Wall Soccer, and the board directed them to honor the agreement.

In my conversation with Stahl, he reported they reneged on their own agreement so many times, I can’t recount it.  All I know is, you better get it in writing if you are dealing with CARD. In a letter dated  August 10, 2016, CARD Director of Parks and Rec, Terry Zeller said, “I understand your description of past events in regard to your business and what you feel has and has not transpired as a result of conversations and meetings with CARD and its Board. As I mentioned before, without a policy or agreement created from these past discussions, I can only work from the present and your current concerns.”

What I hear Zeller saying is, OTWS made their deal with ex-staffers Steve Visconti and Jake Preston, and they’re gone now, so the deal is dead. Furthermore, says Zeller, “we cannot eliminate programs based on perceived competition. Local competition is present in almost all of the programs we offer.” He goes on to list programs from daycare to art lessons, programs that are also “offered by many private businesses, churches and non-profits.”

Zeller just ignores his own predatory pricing scam. Defined as “the pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market,” this method of eliminating your competition is risky for a private business. But CARD gets almost $4 million a year in tax money, getting less than half their revenues from program fees. In private business, if a service or product can’t pay for itself, you dump it. But CARD is subsidized by the taxpayer – they don’t have to support themselves.  They can undercut, undercut, undercut – until their competitors in the real world fail. And then they have a monopoly, and they can charge what they want.

They don’t have to play by the rules, either, because people rarely call them on their bullshit. Thanks to Dave Stahl and his partners at Off The Wall  Soccer, for calling this out in the open.  Their business is in dire straits, most of their clients having been lured away by CARD’s half price scheme. As teams defected, others were fairly well forced to go along – you can’t have team sports without a few teams, after all.  While CARD board member Jan Sneed admitted to having made the agreement with OTWS, the staff has gone ahead and scheduled exactly the programs they promised not to schedule.

This is exactly the treatment I got from CARD board and staff when I tried to find out more about their efforts to build a new aquatic center.  I had attended an early, publicly announced meeting – they said they were looking for people to sign up for a committee. I signed  up. I never got any notice of any meeting, although time and time again I’d see reports from the committee scheduled on board agendas. Former CARD general manager Steve Visconti played me like a pro – at first he apologized, my name must have gotten lost… it just went on like that.

It is imperative this agency increases funding, because their salary and benefit costs are going up all the time. While they are budgeting less than $500,000 this year for capital improvements, they continue to spend almost their entire budget on salaries and benefits – this year $5.5 million, last year $5.1, the previous year, about $4.9. This year they budgeted over $420,000 for pension premiums, and that amount increases by about $10,000/year.

They say they can’t maintain their facilities without more money. Please! Of their $482,000 capital improvements budget, $250,000 goes to fix rot at Park Pavilion. What were they thinking when they bought that thing? They wanted to rent it out – compete with local businesses.   Rotten from top to bottom, but they paid over $1 million, before interest.  Meanwhile, they deferred a $500,000 fix-it for Shapiro Pool in 2006 – that was 10 years ago. Today they say Shapiro is beyond repair.

After I talked to Dave Stahl I attended a special “informative meeting” with CARD board, staff, and three consultants who detailed CARD’s options for more funding. I’ll get back to that another time.

 

 

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