BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 324|
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CONSENT
Bill No: SB 324
Author: Wright (D), et al.
Amended: As introduced
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 11-0, 4/9/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, Correa,
De León, Galgiani, Hernandez, Lieu, Padilla
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Alcoholic beverages: tied-house restrictions:
advertising
SOURCE : Madison Square Garden Company
DIGEST : This bill extends an existing "tied-house" exception
in the Alcoholic Beverage Control Act (ABC Act) pertaining to
the general prohibition against advertising arrangements between
retail, wholesale and manufacturer licensees to include a fully
enclosed arena with a fixed seating capacity in excess of 13,000
seats in the City of Inglewood (the Forum).
ANALYSIS :
Existing law:
1.Establishes the Department of Alcoholic Beverage Control (ABC)
and grants it exclusive authority to administer the provisions
of the ABC Act in accordance with laws enacted by the
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Legislature. This involves licensing individuals and
businesses associated with the manufacture, importation and
sale of alcoholic beverages in this state and the collection
of license fees for this purpose.
2.Separates the alcoholic beverage industry into three component
parts of manufacturer (the first tier), wholesaler (the second
tier), and retailer (the third tier). The original policy
rationale for this body of law, known as the "tied-house" law
or "three-tier" system, was to prohibit the vertical
integration of the alcohol industry and to protect the public
from predatory marketing practices.
3.Prohibits paid advertising by winegrowers, beer manufacturers
and distilled spirits producers in cases where a retail
licensee also owns a sports or entertainment venue.
This bill extends an existing "tied-house" exception in the ABC
Act pertaining to the general prohibition against advertising
arrangements between retail, wholesale and manufacturer
licensees to include a fully enclosed arena with a fixed seating
capacity in excess of 13,000 seats in the Forum.
Background
Tied-house laws generally prohibit suppliers and retailers from
sharing common owners and legally restrict alcohol beverage
suppliers' ability to gain control over retailers through
indirect means. Generally, other than exemptions granted by the
Legislature, the holder of one type of license is not permitted
to do business as another type of licensee within the
"three-tier" system.
Over the years numerous exceptions to this prohibition have been
added to the ABC Act [e.g., Sleep Train Arena (formerly known as
ARCO Arena) in Sacramento, Oakland Coliseum in Oakland,
Arrowhead Pond Arena in Anaheim, Kern County Arena in
Bakersfield, the National Orange Show Event Center in San
Bernardino, California Speedway in Fontana, Grizzly Stadium in
downtown Fresno, Raley Field in West Sacramento, HP Pavilion in
San Jose, the Home Depot Center in the City of Carson and
numerous other venues].
The Forum . Located in Inglewood, this indoor arena was
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constructed in 1967, for approximately $16 million, by Jack Kent
Cooke, then owner of the Los Angeles Lakers (NBA) and founding
owner of the Los Angeles Kings (NHL). The circular structure
was designed by renowned Los Angeles architect Charles Luckman
and was intended to evoke the Roman Forum. Both the Lakers and
Kings moved to the new Staples Center in 1999.
For the better part of 40 plus years this venue has hosted a
plethora of events such as musical performances, tennis matches,
boxing matches, college basketball tournaments and political
events.
In 2000, the Forum was acquired by the Faithful Central Bible
Church which used it for church services while also leasing the
building for various events. In recent years, the building has
suffered from competition from newer and more state-of-the-art
arenas, as well as deferred maintenance needs. In 2012, a
subsidiary of the Madison Square Garden Company bought the
facility for approximately $23.5 million. The company has been
working on a plan to renovate the Forum and make it a
world-class entertainment venue once again.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 4/18/13)
Madison Square Garden Company (source)
Family Winemakers of California
ARGUMENTS IN SUPPORT : According to the author's office, this
bill amends ABC "tied-house" provisions to include the Forum on
the list of exemptions in the law, thereby allowing the Madison
Square Garden Company to develop certain alcoholic beverage
sponsorships with various manufacturers and distributors. The
author's office points out that existing law precludes any
signage paid for by an alcoholic beverage manufacturer or
distributor unless such an exception is created. The author's
office emphasizes that such an exemption would put the Forum on
an even playing field with other arenas and stadiums in
California and help support the company's efforts to make the
Forum economically viable.
The bill's sponsor, the Madison Square Garden Company, states
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that the project is expected to generate several hundred
full-time jobs immediately during rehabilitation and several
hundred more full-time jobs annually for operations once it is
completed. The company estimates that the total economic
impact, over the life of the project, will be hundreds of
millions of dollars.
MW:ej 4/22/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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