LAX Concession Clash: Councilman Bernard Parks Hands $30 Million To Magic Johnson's Company
Overturning the wishes of LAX staff, a five-member council committee on Monday awarded an airport retail contract worth $30 million a year to a business group that includes Magic Johnson.
Councilman Bernard Parks provided the key vote, refusing to go along with LAX's preferred vendor, Areas USA. The Lakers' legend was the highest-profile supporter of Parks' failed 2008 campaign for the county Board of Supervisors.
Separately, the Board of Referred Powers put off a hearing on five food and beverage contracts, Those contracts have been hotly disputed, raising allegations of conflicts of interest and lobbyist influence.
Los Angeles International Airport is attempting to freshen the food and retail options for passengers, which have remained stagnant for many years. The dominant food contractor is HMS Host, while the dominant operator of gift shops and other retail outlets is Hudson News.
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LAX staff had recommended awarding the $30 million retail contract to Areas USA. But by a 4-1 vote, the Board of Referred Powers opted to grant it instead to a joint venture comprised of Hudson News, Magic Johnson Enterprises, and Concourse Ventures.
In explaining his vote, Parks said he believed the Hudson-Magic group offered the best local partnerships.
Jeff McConnell, a lobbyist for Areas, noted that his company's proposal included Swift Services, a local, minority-owned firm, as well as Homeboy Industries, a well-known gang-diversion group. He said that minority-owned firms made up more than 30% of the Areas bid.
McConnell also argued that Areas' proposal would have included yet another minority-owned firm, Crews of California, which currently partners with Hudson at LAX. But, he said that Hudson had threatened to sue the company if it teamed with Areas, which prompted Crews to back out.
Ben Reznik, the top lobbyist for Hudson, denied the allegation. He declined further comment after the hearing.
On two other retail contracts, the Board of Referred Powers sided with LAX staff in awarding the business to Hudson. The end result is that most of the retail business will end up where it started -- with Hudson News.
"This flies in the face of the airport's desire to have competition," McConnell said.
Areas can appeal the decision to the full City Council, and may also sue.
Thus far, most of the attention has fallen on the food and beverage contracts, as two heavyweights -- SSP and Host -- slug it out for a contract worth $60 million per year over 10 years.
That contract is expected to be heard on Sept. 20.
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