Shaky Ravens concessionaire Financial problems at Fine Host fail to hurt stadium debut

Food service

August 11, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Ravens fans may have felt a slight breeze while watching the first football game in the city's new stadium Saturday, but the Connecticut company hired to serve food and drink there has been battling a tempest.

Rather than battling lines of football fans eager for beer and pulled-pork sandwiches, Fine Host Corp. has spent much of 1998 contending with financial adversity amid allegations it misstated millions of dollars in losses as profit for more than three years.

The concessionaire's troubles have led to investigations by the U.S. Securities and Exchange Commission and the National Association of Securities Dealers.

Fine Host has pulled its stock from Nasdaq because it didn't expect to meet the stock index's listing requirements. It had fired its chief executive after details about losses of more than $30 million from 1995 to 1997 became known.

As a result, Fine Host's stock has plummeted from a high of $41.375 per share in October to a low yesterday of just over $1 on the Over the Counter (OTC) bulletin board.

But at least for now, the hurricane of bad news isn't likely to affect Fine Host's work at the Ravens stadium.

"We're very happy with them," said Jim Bailey, a Ravens executive vice president. "They've kept us fully informed and assured us that those matters involved corporate finance and won't have any negative impact to their local operations."

Under a 25-year agreement with the Ravens signed last August, the company will supply and sell food and novelties at the stadium. Neither Fine Host nor the Ravens would reveal terms of the deal, but sales of more than $8 million a year are expected.

Despite its problems, the company says its cash reserves -- $103 million as of April 1 -- are more than adequate to handle local expenses.

"If they were unable to perform, they would be in default and they would be out," said John Moag, chairman of the Maryland Stadium Authority. "But they've met all their obligations so far, and they're a fine operation."

The Stadium Authority, though it has the right to eject concessionaires under certain conditions, is negotiating with Fine Host to provide banquets and serve food at special events at the stadium.

Fine Host expects its problems will be resolved satisfactorily. Since the beginning of the year, the company says, it has lost one contract, gained 28 and renewed 48.

Fine Host provides concessions to more than 900 stadiums, prisons, universities and recreation centers in 41 states, including food service at the Miami Dolphins and Arizona Cardinals stadiums. At the Ravens stadium, the company expects to sell more than 6,000 gallons of beer at each game.

"The restructuring is going per plan, but it's a process," said Ann Julsen, a Fine Host spokeswoman. "They're continuing to work to reduce costs and shore up the business."

The company, which posted a net loss of $7.7 million in the first three months of this year on sales of $85 million, is scheduled to report its second-quarter results Friday.

At least for now, the team and the Stadium Authority appear to be more concerned with how well the kitchens run at the 68,000-seat stadium than with drops in stock prices or possible securities violations.

"It was a bit of a rough first night, because it was the first time they had really fired everything up and been cooking in the kitchens," Moag said of Saturday's debut. "But for a first run, I'd say we're all pretty happy."

Pub Date: 8/11/98

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