BILL ANALYSIS Ó
SB 324
Page 1
Date of Hearing: June 12, 2013
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Isadore Hall, Chair
SB 324 (Wright) - As Introduced: February 19, 2013
SENATE VOTE : 36-0
SUBJECT : Alcoholic beverages: tied-house restrictions:
advertising.
SUMMARY : 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).
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
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) Existing law, known as the "tied-house" law or "three-tier"
system, 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 was to prohibit the
vertical integration of the alcohol industry and to protect the
public from predatory marketing practices.
3) Generally prohibits 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.
4) Prohibits paid advertising by winegrowers, beer
manufacturers and distilled spirits producers in cases where a
SB 324
Page 2
retail licensee also owns a sports or entertainment venue. Over
the years numerous exceptions to this prohibition have been
added to the ABC Act
FISCAL EFFECT : Unknown.
COMMENTS :
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 at 3900 West Manchester Boulevard in
Inglewood, this indoor arena was 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 tennis matches, boxing matches,
college basketball tournaments and political events.
Additionally, the Forum has played host to some of the world's
greatest musical performances (e.g., Led Zeppelin, Elvis
Presley, the Jackson 5, Jethro Tull, the Bee Gees, Prince, U2,
Sting, Guns N' Roses, Janet Jackson, and Nirvana).
In 2000, the Forum was acquired by the Faithful Central Bible
Church which used it for church services while also leasing the
SB 324
Page 3
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.
Purpose of the bill : 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
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.
Prior legislation : AB 776 (Aghazarian) Chapter 221, Statutes of
2007. Created a new tied-house exception by authorizing a beer
manufacturer to sponsor or purchase advertising space and time
from, or on behalf of, an off-sale retail licensee that is an
owner or co-owner of a professional sports team (California
Cougars indoor soccer team) that plays its home games, in an
arena with a fixed seating capacity of 10,000 seats (Stockton
Arena) located in San Joaquin County.
AB 663 (Galgiani) Chapter 745, Statutes of 2007. Extended an
existing "tied-house" exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to include an outdoor
professional sports facility with a fixed seating capacity of at
least 4,200 (Banner Island Ballpark - home of the Stockton Ports
Class A baseball team) located in San Joaquin County.
SB 324
Page 4
AB 3046 (Chavez) Chapter 587, Statutes of 2006. Extended an
existing "tied-house" exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to the HP Pavilion in Santa
Clara County.
AB 1442 (Horton) Chapter 617, Statutes of 2005. Extended an
existing "tied-house" exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to the Home Depot Center, a
sports and athletic complex within the City of Carson in Los
Angeles and the Nokia Theater, located within the Los Angeles
Sports and Entertainment District, adjacent to STAPLES Center.
SB 1647 (Perata) Chapter 275, Statutes of 2004. Extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licenses to the Oakland Coliseum in
Alameda County.
SB 1189 (Costa) Chapter 47, Statutes of 2002. Extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licenses to the Visalia Oaks Stadium
in Visalia and the California Speedway in Fontana.
REGISTERED SUPPORT / OPPOSITION :
Support
Madison Square Garden Company (source)
Family Winemakers of California
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531