BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        AB 866|
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                                   THIRD READING 


          Bill No:  AB 866
          Author:   Eduardo Garcia (D), et al.
          Amended:  6/8/16 in Senate
          Vote:     27 - Urgency

           SENATE GOVERNMENTAL ORG. COMMITTEE:  10-0, 5/10/16
           AYES:  Hall, Berryhill, Block, Galgiani, Glazer, Hernandez,  
            Hill, Lara, McGuire, Vidak
           NO VOTE RECORDED:  Bates, Gaines, Hueso

           SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

           ASSEMBLY FLOOR:  Not relevant

           SUBJECT:   Alcoholic beverages:  advertising:  San Diego:   
                     Inglewood


          SOURCE:    Author
          
          DIGEST:    This bill extends an existing tied-house exception in  
          the Alcoholic Beverage Control (ABC) Act pertaining to the  
          general prohibition against advertising arrangements between  
          retail, wholesale and manufacturer licensees to include outdoor  
          stadiums with specified seating capacities located in the Cities  
          of Inglewood and San Diego, specifically, the future home of the  
          National Football League Los Angeles Rams and Petco Park, home  
          of the San Diego Padres Major League Baseball team.   

          ANALYSIS:
          
          Existing law:
          
          1)Establishes the Department of ABC and grants it exclusive  
            authority to administer the provisions of the ABC Act in  








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            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)Separates the alcoholic beverage industry into three component  
            parts, or tiers (referred to as the "tied-house" law or  
            "three-tier" system), of manufacturer (including breweries,  
            wineries and distilleries), wholesaler, and retailer (both  
            on-sale and off-sale).  The original policy rationale for this  
            body of law was to: (a) promote the state's interest in an  
            orderly market; (b) prohibit the vertical integration and  
            dominance by a single producer in the market place; (c)  
            prohibit commercial bribery and to protect the public from  
            predatory marketing practices; and, (d) discourage and/or  
            prevent the intemperate use of alcoholic beverages.   
            Generally, other than exceptions 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.  

          3)Prohibits, in general, an alcohol manufacturer, wholesaler, or  
            any officer, director, or agent of any such person from  
            owning, directly, or indirectly, any interest in any on-sale  
            license, or from providing anything of value to retailers, be  
            it free goods, services, or advertising.

          4)Prohibits paid advertising by winegrowers, beer manufacturers  
            and distilled spirits producers in cases where a retail  
            licensee also owns a sports or entertainment venue.  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, the  
            Forum in the City of Inglewood, Levi's Stadium in the City of  
            Santa Clara, and other venues].









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          This bill:

          1)Extends an existing tied-house exception pertaining to the  
            general prohibition against advertising arrangements between  
            retail, wholesale and manufacturer licensees to include: (a)  
            an outdoor stadium with a fixed seating capacity of at least  
            43,000 seats located in the City of San Diego and (b) an  
            outdoor stadium with a fixed seating capacity of at least  
            70,000 seats located in the City of Inglewood.

          2)Contains an urgency clause to take effect immediately.

          Background

          Purpose of AB 866.  According to the author's office, the home  
          of the San Diego Padres Major League Baseball team is Petco Park  
          which is located in downtown San Diego. This state of the art  
          facility is owned by the City of San Diego and operated under  
          the auspices of the San Diego Padres Baseball Club LP, the  
          holder of the alcoholic beverage on-sale retail license.  The  
          author's office notes that existing ABC laws contain numerous  
          exceptions to the general prohibition against advertising  
          arrangements between retail, wholesale and manufacturer  
          licensees.  

          This bill includes Petco Park on the list of exemptions in the  
          law, thereby allowing the Padres LP to develop certain alcoholic  
          beverage sponsorships with various manufacturers and  
          distributors.  The author's office emphasizes that this  
          exemption would put Petco Park on an even playing field with  
          other arenas and stadiums in California.  Additionally, the  
          author's office notes that AB 866 contains an urgency clause  
          because Petco Park is hosting the 87th Major League Baseball  
          All-Star Week July 10-12, 2016.

          Furthermore, this bill adds the soon to be built National  
          Football League (NFL) Los Angeles Rams Inglewood Stadium to the  
          list of exemptions in the law.  The Rams and their #1 overall  
          pick in the 2016 draft (Quarterback Jared Goff - University of  
          California) will open the 2016 NFL season in their former home  
          at the L.A. Memorial Coliseum.  The Rams new venue, which is  
          scheduled to open in 2019, will be on the site of the former  








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          Hollywood Park horse racing track.  The 300-acre development's  
          footprint consists of more than 1.5 million square feet of  
          retail and office space, 2500 homes, a 300-room hotel, and 25  
          acres of parks. 

          Petco Park.  Petco Park is a baseball park, but also known as a  
          venue for concerts, football, rugby sevens and other events.  It  
          opened in 2004, replacing Jack Murphy/Qualcomm Stadium as the  
          home park of the San Diego Padres, the city's Major League  
          Baseball (MLB) franchise.  The ballpark seats approximately  
          43,000 and is named after the pet supplies retailer Petco, which  
          is based in San Diego and paid for the naming rights.  The  
          Padres previously shared Jack Murphy/Qualcomm Stadium with the  
          National Football League's San Diego Chargers.  The construction  
          cost of over $450 million was partially funded by the Center  
          City Development Corporation and the San Diego Redevelopment  
          Agency. The ballpark was intended to be part of a comprehensive  
          plan to revitalize San Diego's aging downtown.  The ballpark is  
          located across Harbor Drive from the San Diego Convention Center  
          and its main entrance behind home plate is located two blocks  
          from the downtown terminal of the San Diego Trolley light rail  
          system.  The official address of Petco Park is 19 Tony Gwynn  
          Way, in honor of the eight-time National League batting champion  
          who wore that uniform number during his entire major league  
          career with the Padres.  A 10-foot statue of Gwynn was unveiled  
          on the park grounds in July of 2007 - Gwynn passed in June of  
          2014 after battling salivary gland cancer.  Gwynn's .338 career  
          batting average over 20 seasons is the highest since Ted  
          Williams (the "Splendid Splinter") retired from the Red Sox in  
          1960 with a .344 career batting average. 

          Comments
          
          Although the stated purpose of this bill is to provide  
          exemptions for Petco Park and the new Inglewood stadium,  
          Qualcomm Stadium seats approximately 70,000 and therefore meets  
          the exemption threshold of 43,000 fixed seats at an outdoor  
          stadium in the City of San Diego thus making it eligible for the  
          same exemption. 

          Related/Prior Legislation
          








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          AB 1971 (Cooper, 2016) creates a stand-alone tied-house  
          exception in the ABC Act to allow holders of manufacturer  
          licenses, as specified, to purchase advertising from retail  
          licensees at outdoor stadiums and indoor arenas, subject to  
          specified conditions.  (Pending in the Senate Appropriations  
          Committee)

          SB 557 (Hall, Chapter 420, Statutes of 2015) extended an  
          existing tied-house exception pertaining to the general  
          prohibition against advertising arrangements between retail,  
          wholesale and manufacturer licensees to include a fairgrounds  
          with a horse racetrack and equestrian and sports facilities  
          located in San Diego County.

          SB 462 (Wolk, Chapter 315, Statutes of 2015) among other things,  
          extended an existing tied-house exception pertaining to the  
          general prohibition against advertising arrangements between  
          retail, wholesale and manufacturer licensees to include a  
          specified entertainment complex, known as the Green Music  
          Center, located on the campus of Sonoma State University.

          AB 600 (Bonta, Chapter 139, Statutes of 2014) extended an  
          existing tied-house exception pertaining to the general  
          prohibition against advertising arrangements between retail,  
          wholesale and manufacturer licensees to include an outdoor  
          stadium with a fixed seating capacity of at least 68,000 seats  
          located in the City of Santa Clara (Levi's Stadium - new home of  
          the San Francisco 49ers).
           
           SB 324 (Wright, Chapter 164, Statutes of 2013) extended an  
          existing tied-house exception 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  
          (the Forum) in the City of Inglewood.  
           
           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  








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          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.  
           
           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 licensees 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 licensees to the Visalia Oaks Stadium  
          in Visalia and the California Speedway in Fontana. 

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             Yes          Local:          Yes


          SUPPORT:  (Verified  6/21/16)








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          San Diego Padres  

          OPPOSITION:  (Verified  6/21/16)

          None received

          Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
          6/22/16 15:14:55


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