Candlestick Swindle
Candlestick Park 1996, outside view (looking generally north)
photo: Chris Carlsson
San Francisco has its quota of great untold stories, but few can match the Candlestick Park Swindle in the extent of financial hanky-panky, the wide involvement of political and business leaders and the consuming myopia of the local press.
Here, on the eve of another move to build another ballpark in 1997, is the first complete account of how our first baseball stadium came to be generally acknowledged in just 10 years as the wrong building, built in the wrong place, with more money than was involved in the 1906 graft prosecutions:
A ball park, billed as costing the taxpayers $5 million, skyrocketed to $15 million in the year of its construction.
Henry E. North, foreman of the San Francisco grand jury at the time, conducted an investigation and called it a scandal. His grand jury issued a scathing report.
The local press doctored, then buried, the story for good.
Critics who warned of calamity in the choice of the cold, windy, distant location were hooted down by Mayor Christopher's administration.
North was pressured unmercifully until he called off his attack on the swindle. He died a broken man.
Today, as City Hall, the Chamber of Commerce and the San Francisco Planning and Urban Renewal Association (SPUR) begin to thrash the thickets for support for a new $40 million downtown stadium, the fact remains that Candlestick costs have rocketed to more than $20 million (The Guardian defies anyone to get the exact total cost from city hall, custodian of one set of bonds, or from the Bank of America, custodian of the other) and the needed Candlestick expansion and repairs to an estimated $10 million or so.
There is but one previous authoritative account of the Candlestick swindle: written by freelance writer Lewis Lindsay and published in the June, 1960 edition of Wolfe's new defunct magazine, The Californian. (This issue is missing from an otherwise complete collection of Californians in the main library.)
It all began early in 1953. Mayor Elmer Robinson's administration--and local businessmen--decided to import big league baseball for San Francisco's economic and recreational benefit. A downtown stadium was adequate for San Francisco's AAA minor league club, the Seals, but not for major league fare.
Hence, Robinson asked the Board of Supervisors to approve a $5 million bond proposition to construct a new stadium. Among the supervisors in approval: George Christopher, soon to become mayor; Gene McAteer, headed for the state senate; Francis McCarty, a future judge; Harold Dobbs, restaurateur and budding Republican candidate for mayor, and John Jay Ferdon, future district attorney.
In July of that same year, 1953, a local multi-millionaire contractor named Charles Harney purchased 65 acres of land at Candlestick Point from the city of San Francisco for $2,100 an acre.
Next year, a band of publicists headed by Curley Grieve, S.F. Examiner sports editor, beat the drums and called the natives to pass this bond issue proposition:
"To incur a bonded indebtedness in the sum of $5 million for the acquisition, construction and completion of buildings, lands and other works and properties to be used for baseball, football, other sports, dramatic productions and other lawful uses as a recreation center."
Major league baseball, they proclaimed, would bring untold wealth to the city for a mere $5 million, a price that would be returned many times. After voters approved this in November, 1954, the search began for a site. If there were any doubts the stadium would cost more than $5 million, they were dispelled in a personal meeting between Robinson's successor, Mayor Christopher, and the owner of the New York Giants, Horace Stoneham.
In April, 1957, Christopher and McCarty flew to New York to talk Stoneham into bringing the Giants to San Francisco. The Giants were losing money in New York, and scouting the country for a new home base.
To prove San Francisco's support for professional baseball, Christopher waved the $5 million stadium bond issue at Stoneham. According to testimony reported by the 1968 grand jury investigation, Stoneham replied contemptuously:
"Any figure other than 10 or 11 million dollars shouldn't even be discussed because there would be no possibility or probability of a major club moving to that particular community."
Back in San Francisco, Christopher reported the need for more money to other city leaders and businessmen. Since the proposition suddenly to double the original bond issue might run into trouble with the voters, they decided to create a non-profit corporation called Stadium, Inc., as a legal arm of the city.
Bypassing the Voters
Operating through this dummy corporation, the Christopher administration could bypass the voters to raise more money.
Harney and two of his employees were selected as the first board of directors of Stadium, Inc. Christopher told Harney that he would be the contractor to build the new stadium, and his 41 acres of Candlestick land would be the heart of the 77-acre location.
In 1957, Harney sold back 41 acres of the parcel he had purchased from the city in 1953 at $2,100 an acre. The 1957 price the city paid to Harney for its own former land was $65,853 an acre. That's a crisp total of $2.7 million.
The city's Real Estate Department approved the deal even though other land adjacent to Harney's was bought at about the same time for just $6,540 an acre. Harney made a profit of $2.6 million on the four-year land ownership switch.
Not so, Christopher and Harney later contended. Harney had graded and filled the land, and so naturally he was paid for his improvements. One fact raised doubts about that explanation: a $7 million fee awarded to Harney to construct the new stadium included $2 million for stadium construction, $2 million for grading and filling and $2.7 million for real estate.
Had it not been for the creation of Stadium, Inc., the Christopher administration would have been required to hold open, competitive bidding for the contract, and voters would have seen the price tags.
By operating through Stadium, Inc., Christopher was able to evade the city charter and arrange the contract in a privately negotiated deal.
Through the same apparatus, his administration was able to float another $5.5 million bond issue without voter approval. The interest rate on these bonds was set at 5% whereas the interest on the original $5 million bond issue was only 2.4%, a difference that would eventually cost the city hundreds of thousands of dollars.
Evading an Investigation
In February, 1958, Harney and his employees were removed from the board of Stadium, Inc., after, as the grand jury report later pointed out, "Three influential men then were substituted to represent the city's interest--Alan K. Brown, W.P. Fuller Brawne and Frederic P. Whitman."
The maneuver came too late to prevent North from instigating a Grand Jury investigation into the strange transactions.
North, like Christopher, was a Republican and a conservative member of the San Francisco business community. Until his retirement, at 70, he had been executive vice-president of one of the largest property owners in the city: the Metropolitan Life Insurance Company. He had a strong sense of civic duty, however, and the Candlestick Park deal smelled to him of garbage.
The report North issued, as the result of the Grand Jury investigation, was potential dynamite. It showed that, shortly before the city purchased Harney's land at $65,853 an acre, adjacent pieces of tideland were sold by the city for less that $4,000 an acre. It did not make sense that Harney's land, partly under water, should have brought $61,000 more from city coffers.
On Dec. 2, 1958, the San Francisco Chronicle carried partial coverage of the Grand Jury report. On page 5, the year Harney purchased the city land was stated as 1933 rather than 1953. Of course, the 20-year difference would provide a reason for the tremendous increase in value, because the initial purchase price would have been at depression levels.
Undoubtedly, it was a typographical error. And no doubt it was by unintentional omission that other salient features of the Grand Jury report were omitted altogether and never printed by the Chronicle or any other major newspaper.
North charged that all bond issues negotiated by Stadium, Inc. were illegal evasions of the city charter. Bond payments had to be made from city funds, not the dummy nonprofit corporation, and so the whole deal amounted to legal subterfuge; a way to make taxpayers foot the bill without letting them vote on it.
The report, drafted by North and signed by 18 other citizens, estimated annual payments on the bonds of $990,000 for the first 15 years of the debt period. Against that, the city was to draw $225,000 a year in rent from the Giants and $225,000 a year from advertising and parking revenues, leaving a balance of $640,000 to be paid annually from taxes or city funds. It was estimated that the city could make up the balance by commanding the juicy television rights; instead, Christopher arranged for rights to go exlusively to the Giants.
Altogether, it was a marvelous deal for the Giants. In their last New York season, attendance at the Polo Grounds plummeted to 684,000. The club had gone broke and it was almost impossible to give away its stock. After the Giants first season in San Francisco in 1958, attendance tripled over its last year in New York, and their stock soared to $1,000 a share. In terms of revenue, the increase in gate receipts alone meant $3 million the first year.
While the Giants were reaping enormous profits at taxpayers expense, City Hall and the local newspapers were trying to make it appear that San Francisco, too, was earning money. The News-Call Bulletin, the now defunct Hearst paper, once stated that when all returns are in, the season just ended (1960) will have yielded the city about $530,000. The fact was that the sole revenue to the city was $50,000 received to maintain buildings and grounds.
The other Hearst paper, the Examiner, stated, on the other hand: City Hall officials said $375,000 of the revenue figure will be used to pay the annual cost of the city's $5 million bond issue. The Chronicle published this figure: Of the remaining $527,000, the first $375,000 must go toward payment of the city's $5 million stadium bond issue.
The fact was that all revenues from the ball park and its parking lot had to be used to pay off the $5.5 million worth of bonds issued by Stadium, Inc., with the exception of the $50,000 maintenance income. The other $5 million worth, issued by the city, had to be paid off through real and personal or property taxes collected by the city.
The result: a projected loss, not profit, of $640,000 the city must pay from taxes or other general city revenues (according to the Grand Jury report), and a loss this year of at least $360,000 (according to figures supplied to The Guardian by the city controller's office and Mike Barrett, the Bank of America executive who handles Stadium, Inc.'s trustee account.)
Some annual loss on Candlestick Park will continue until 1993, when the stadium will finally be free of debt and owned completely by the city--unless, it is torn down before then or reconstructed, which will add more debt.
There was another interesting development at Candlestick: Stevens California Enterprises, which got the food and beverage concession at the ball park, bought all its milk until two seasons ago from Christopher's milk company, Christopher Dairy Farms. The Borden Co. now has the lucrative contract.
Even though City Hall and the newspapers were misstating facts about the Candlestick story, San Francisco restaurateurs, hotel owners and shopkeepers at least began to realize that they were not making any money from the ball park, as promised by the ballyhooers. Only the Giants, Harney, and Christopher were making money. The Giants were attracting few additional tourists to San Francisco, and area fans who journeyed to isolated Candlestick Point, several miles away, did not stop to patronize downtown establishments. Some downtown business men were angry, and if North's crusade were given time and publicity, they might cause an uncomfortable controversy.
Christopher sent emissaries to North, but he would not be wooed or pressured from his stand. To the contrary, he made even more vigorous attacks on Christopher and the ball park deal. The lives of future generations had been mortgaged by this shoddy piece of business, he maintained. Christopher was diverting city funds from various departments: $1.4 million from street improvement bonds, $1.2 million from state gasoline taxes given to the city for road improvements, $1.5 million from sewer bonds for services to the Giants ball park.
A Hidden Payoff?
Already the cost was $15 million, and it might exceed $20 million when various exits, entrances, widened access streets and the like were built to handle the anticipated large crowds. Privately, North informed civic and business leaders that there was an underhanded payoff in the deal, and he intended to expose it.
Christopher reacted viscerally to North's charges. With newspapermen present, he asserted North was drunk, incoherent, and fixable. The description was published in the newspapers.
North went to Nate Cohn, one of the foremost criminal lawyers in California, and they filed a $2 million libel suit against Christopher. In a pre-trial hearing, Christopher's attorney filed a thick brief with 45 motions for dismissal of the suit, hoping to tie up the case inextricably. In just an hour and a half, Superior Court judge Preston Devine threw out all 45 motions, indicating clearly that Cohn and North had a good case.
Breaking Down North
Christopher's friends in the business community went to work on North. The publisher of one of the three daily newspapers, North told me, called on him and said: "Henry, why don't you play ball? You're giving the city a bad name, stirring things up like this."
At the Pacific Union Club across the street from the Fairmont Hotel on Nob Hill, where North was already in disfavor for bringing Jewish guests despite the no-Jews-allowed policy, fellow Republican business executives started a snub-North routine. One day, for example, an old business friend greeted North:
"Say, Henry, I see in the papers there's some fellow named Henry North filing a suit against the mayor and stirring things up. Must be another Henry North in this town, huh?"
"No, that's me," North told him.
"Is that so?" the old friend said. He turned his back on North and never spoke to him again.
I talked to North several times during the siege because I was publishing articles about Candlestick Park in my magazine, The Californian (now defunct). In those days he was full of fight, willing to take on City Hall and the entire business establishment even if it meant losing every friend he had. He promised to tell me the names of the men involved in the payoff, and he excoriated Christopher.
"You know what I call men like George Christopher? Black Republicans. Men who never did anything in their lives for the good of the common people. They've never realized that this country as a whole is no better off than the great masses of its people."
The Fateful Fifth
Then they went to work on his wife. Unlike Henry, she was not involved in politics and her life revolved around her friends and social affairs. Her friends snubbed her and she no longer received invitations. She cried, she pleaded, she begged Henry to call off the ball park investigation and the lawsuit, when that did not move him, she threatened him with divorce. Henry began hitting the bottle.
On June 2, 1960, shortly after I published a detailed article by Lewis Lindsay called "The Giants Ball Park: A $15 Million Swindle," the press broke the story that North had buried the hatchet with Christopher. In its first edition, the Chronicle correctly reported that North and Christopher had drunk a fifth and a half of Scotch together at Christopher's home, and praised each other for publication. "He's a great mayor," North saidand agreed that legal entanglements were finished. The Chronicle dropped mention of the Scotch in later editions that went to most of its readers.
Cohn was outraged. "We had this suit won," he told me. "North assured me he was going through with this no matter what happened. But they got to him through his wife, the poor old bastard. You see how they do things in this city? It's so goddamned rotten you can't believe it."
When I called on North again, I found a complete transformation in his appearance. The look of a peppery fighter with ruddy cheeks had given way to a physical wreck; a baggy-eyed, tired, meek looking man weighed down by defeat.
The saddest part of the story was that his wife divorced him anyway. Not long afterward, North died of a heart attack. Harney died in December, 1962.
With North out of the way, with the daily newspapers blacking out the most important parts of the Candlestick Park story, with The Californian reaching only a few thousand citizens, it looked as though the scandal would never be investigated. In an effort to stir up something, I personally appeared before the Finance Committee of the Board of Supervisors and urged their help. One committee member, Al Zirpoli, had said before that he would favor an investigation.
No committee member challenged any facts I presented. When I finished, John Jay Ferdon, Committee Chairman, said only that he would not favor an investigation. He did not say why. (Six years later, when he had become District Attorney, he told me I was right about Candlestick.) Zirpoli, later to become a federal judge and the judge to hear draft resistance cases, said, "I agree with what Mr. Ferdon says." He suggested, "If there is wrongdoing, your best course of action is a taxpayers' suit."
I went looking for wealthy liberals to finance a taxpayers suit, but none were in season. Cohn would have taken the suit if I could have found somebody to pay him for his time. All that he could do now was take me to business friends and introduce me.
The typical reaction came from Sam Cohen, owner of a plush restaurant on Maiden Lane said:
"Sorry, Burton, I cant get involved. Do you know what Christopher can do to me with his power at City Hall? A Health Department inspector can find something wrong with this restaurant any time he wants. A door is too narrow, my stove does not meet regulations, anything to run me out of business. That's how they do it. You can't fight them."
Since nobody in the city would fight, I asked Sen. Estes Kefauver, chairman of the Antitrust and Monopoly Sub-Committee of the Senate Committee on the Judiciary, to investigate. He replied: "As interesting as a study of how the San Francisco ball park deal took place would be, I do not conclude that it is a matter that should be gone into on the federal level. I think that it is entirely a local or state matter, and that the Subcommittee would perhaps be criticized if it moved into this area."
Now Another Ballpark
Here we are eight years later, with a Candlestick Park that enrages so many people that a new mayor, Joe Alioto, wants to scrap it for a new stadium. His announced philosophy is that great public projects should not be waylaid just because all of the people aren't getting enough spaghetti and zucchini. And no doubt many San Franciscans believe that a ball park is a great public project, greater than a school, housing complex or a modern transportation system. That attitude could be the most tragic part of this story.
- Burton Wolfe, originally published in the San Francisco Bay Guardian, March 1972