Woefully behind in ticket sales four days before a planned music extravaganza at the Inner Harbor, staffers at Maryland Preakness Celebration Inc. urged their boss to scale back the event.

Instead, executive director Donna Leonard ordered a $30,000, tractor-trailer-sized television screen to make the performers appear larger than life -- for a crowd that never materialized.

The episode was typical of how Ms. Leonard repeatedly ignored warnings as she pushed the nonprofit corporation deeply into debt by dramatically overspending its budget for this year's Preakness Week activities, according to Preakness Celebration board members, staff and creditors.

Compounding the corporation's fiscal plight was that money Ms. Leonard hoped would pour in from the week's events never did. The celebration was marked by poor planning, unrealistic expectations and plain bad luck, a review by The Sun suggests.

"The board approved the budget of $750,000, and she far exceeded it," said Barry F. Scher, co-chairman of the volunteer board of directors for the May 12-20 celebration, which included street festivals, a ball, a parade, a 5-kilometer footrace and a hot-air balloon launch.

"Why she didn't cancel events . . . when she saw what was happening, I don't know," Mr. Scher said.

Ms. Leonard's decisions -- and the lack of internal spending controls from the board of directors -- explain why the group is $1 million in debt, why scores of small businesses and individuals have been left unpaid and why the reputation of one of the state's premier attractions has been tarnished, The Sun's review found.

From interviews with dozens of people who dealt with Ms. Leonard, both supporters and detractors, a picture emerges of an ambitious young woman who was kept aloft by groundless optimism but had a faulty business sense.

By all accounts, the 35-year-oldBaltimore native worked tirelessly realize a dream of elevating the celebration surrounding Maryland's Preakness Stakes to the par of the highly successful festivities surrounding the Kentucky Derby in Louisville.

"Donna's a good person. She just lost her way . . . lost her focus at some point," said Diane B. Hock, president of Professionals on Request Ltd., an Ellicott City-based sports marketing agency, and a consultant on this year's Preakness Celebration.

"Sometimes your events don't go as planned. But when you have the bulk of the people around you saying, 'Please don't, please don't,' you don't do it anyway," Ms. Hock said.

Ms. Hock, who was hired by Ms. Leonard to assist in promoting events, is still owed $41,977 by the Preakness Celebration group -- including $16,000 her company paid out of pocket to cover expenses for a Preakness Eve Bash.

Ms. Hock is not alone. Preakness Celebration still owes at least $999,285 to more than 120 businesses, individuals and government offices, some of which were paid with checks that bounced or checks on which payment was stopped.

Legally, the debts are the responsibility of Preakness Celebration's board, made up of 27 business and civic leaders from around the state, including a representative of the Baltimore Sun. The board suspended Ms. Leonard from her $70,000-a-year job last month when it was besieged by calls and threats from angry, unpaid vendors.

At the time, the board also announced that it had referred the matter to the Maryland attorney general's office. The attorney general is awaiting further information from the board before deciding whether a state investigation is warranted.

Ms. Leonard referred all questions to her lawyer, who pointed a finger back at the board, saying that it pushed the notion of a bigger and better Preakness Celebration and that it did not help her succeed.

"When she was hired, she was given directives to make the Preakness Celebration a national event, and it was her perception that the goal was to mirror the Kentucky Derby Festival, which has a very active board with set criteria and set structure and set expectations," said Charles E. Rosolio, her attorney.

The financial trouble, he said, was "due in large part to the lack of support from the board and its failure to provide her with assistance in terms of staffing, in terms of obtaining corporate sponsors, and other areas where one would reasonably expect a board of this type to contribute."

The board, in fact, signed off on Ms. Leonard's plans to add several splashy new events to this year's celebration. But board members and others say it was her job as executive director to make them succeed -- or at least to pull the plug on doomed events before they left the organization nearly $1 million in debt.

'The head honcho'

Ms. Leonard, a former marketing director with Advantage International, a national sports event marketing firm in McLean, Va., came highly recommended when she answered an ad for the executive director's job at Preakness Celebration in 1993.

Francis H. Craighill III, a managing partner of Advantage International, continues to tout her abilities and energy working on large sports events for his company, even in the wake of the Preakness Celebration debacle.

Ms. Leonard also got high marks in Baltimore for her efforts promoting the festivities surrounding 1994's Preakness Week -- her first.

"It was most successful," said Mr. Scher. "There was a small deficit . . . but it was very small. She did a good job the first year."

Mr. Scher and other board members said it was Ms. Leonard's experience with Advantage International and her handling of the 1994 Preakness Celebration that made them comfortable giving her virtually free rein this year.

But Ms. Hock said that confidence may have been misplaced.

"At Advantage, she had just a small piece of the big puzzle, so she was kept in check," said Ms. Hock, who worked with Ms. Leonard at the time. "She couldn't spend $100,000 on printing if she only had a $10,000 budget because it threw everything else off."

At the Preakness Celebration, "she was the head honcho," Ms. Hock said. "She signed a $60,000 deal here, a $100,000 deal there. She signed those deals with no guidance. At Advantage, she couldn't have done those things without the managing partner signing off on them."

Armed with big ideas for this year, Ms. Leonard expanded the scope of the Preakness festivities and proposed several new high-profile events -- all with the approval of the board of directors.

One was the two-day Music Fest '95 at Rash Field, on the Inner Harbor. It featured such jazz and rock artists as Wynton Marsalis, Dr. John, Little Feat, David Benoit and Tom Scott.

A second new event was the Preakness Eve Bash -- featuring Deborah Harry, formerly of the rock band Blondie -- at a transformed warehouse on Key Highway. Early on, Ms. Leonard billed it as "a semi-formal, funky, hip, MTV nightclub" event.

"We asked ourselves, how can we make this a week that people will come to Maryland and Baltimore from all over the country?" Ms. Leonard said at a March news conference announcing the 1995 plans.

The answer, she said, was more music by nationally known performers.

By May 8, Ms. Leonard was crowing to the press that this year's Preakness Celebration would be "Woodstock, the Mardi Gras and the Super Bowl all rolled into one."

"Ultimately, we'd like to make Baltimore the music mecca of the entire mid-Atlantic for that entire week," she told a Sun reporter.

The next day, Ms. Leonard ordered the huge, JumboTron television screen from the Logistics Group for use at Rash Field. The company is still owed $45,000 for that and other items.

At the time, Ms. Leonard said that this year's promotion included early advertising in areas such as Pittsburgh, Philadelphia and Washington. She said the group was seeing some ticket sales from those areas, as well as from New York.

Ms. Leonard apparently had told the board of directors the same thing a few days earlier.

At the May 3 board meeting, she submitted her $775,000 budget, which showed an increase in expenses for some events. But it appeared to board members, including co-chairman Robert D. Shannon, that she was keeping within that budget.

In the weeks before Preakness Week, Ms. Leonard told promoters and sponsors that she expected as many as 40,000 to attend the Rash Field concerts. But even if only 10,000 attended, Preakness Celebration would break even, she told the board.

"With Ms. Leonard's documentation in hand, Mr. Shannon summed up that, even in the worst case scenario, it appears that Preakness Celebration will be in the black," according to a copy of minutes of the May 3 meeting obtained by The Sun. "But with a little extra effort, we can build a cushion for the future."

Yet, those who worked with her now say there were early indications the Preakness Celebration was in trouble and that she ignored their warnings.

"Knowing that the financial situation was poor, I was told to order items [fencing, tents, street closures] that I knew we could neither pay for, nor did we need," Terry Romanoli, a veteran Preakness Celebration staffer, said in a May 31 memo to one board member.

"Whenever I expressed my concerns to Donna (for example, 'Why do we need 5,000 chairs on Rash Field when Ticketmaster has only sold 100 tickets?') my sole explanation was, 'Terry, you don't understand.' "

Only a few hundred tickets -- 153 for Saturday and 382 for Sunday -- were sold in advance for the Rash Field concerts, according to Preakness Celebration officials. That number increased with tickets sold at the gate, but fell tremendously short of even conservative expectations.

Ultimately, only 1,600 people attended the concerts over the two days, including a rain-drenched Sunday. The disappointing turnout plunged the group further into debt.

"I can honestly say that she honestly thought she could pack Rash Field both days and pay everybody off, and everything would be fine and dandy," Ms. Hock said. "I think she thought she could pull it out."

The Rash Field concerts were not the only problem.

The Preakness Eve Bash -- "the alternative cocktail party for progressives," featuring Deborah Harry -- also was troubled from the outset.

On May 15, four days before the Bash, Ms. Leonard sought Ms. Hock's help in salvaging the event after representatives of the Grant-A-Wish Foundation -- the charity that was supposed to benefit from the proceeds -- raised "major concerns" about the gala.

"The event was seriously unraveling (i.e., no building permits, inspections and extremely low ticket sales, etc.)," Ms. Hock wrote in her own five-page memo, dated June 9, that was circulated to the board.

Initially, 1,700 tickets at $60 each were supposed to be sold for the Bash. But even with the last-minute push, only 1,000 were sold. The $60,000 generated by those sales was needed just to pay the decorator that Ms. Leonard hired -- while bills for catering, the bar, renting the warehouse, printing and advertising remained.

The board's accountant and lawyer still are sorting through the losses for each event, but board members say the Bash and the Rash Field concerts appear to be responsible for the bulk of the current debt.

The Derby model

One of Ms. Leonard's goals was to boost the Preakness Celebration into national prominence on the level of the gala Kentucky Derby Festival -- a goal that was encouraged by the board.

What's in dispute is how quickly she was expected to achieve it.

She was sent by the board to observe the operation in Louisville. On another trip, Preakness Celebration's co-chairmen -- Mr. Scher, a vice president of Giant Food, and Robert D. Shannon, a regional vice president of Coca-Cola Enterprises -- also met with Derby Festival officials.

Mr. Rosolio, Ms. Leonard's lawyer, used those trips as evidence that the board was pushing her hard to broaden the scope of Baltimore's celebration this year.

"She would never have aggressively pursued making the Preakness Festival the national event that it turned out to be had she not gotten direction from the board to do so," he said.

Mr. Scher and other board members acknowledge that they often talked of the Derby Festival, but said Ms. Leonard was never under orders to make the Preakness Celebration that big.

"There were comments that a number of people on the board TTC have made that we'd like to see it equal or surpass the Derby. But there was no pressure on the board's part for her to do it, absolutely not," Mr. Scher said.

He said the board sent Ms. Leonard to Louisville on a fact-finding trip because the 39-year-old Kentucky Derby Festival is a national model of success.

"Very simply, she was new in her position, and the Kentucky Derby Festival has a long-standing record of accomplishments, and the board thought she could pick up a lot of good ideas," he said.

While similar in some respects, the Derby Festival is very different from the Preakness Celebration in the size of its budget -- and in controls on spending that were absent in Baltimore.

Unlike the Preakness Celebration, which had a budget this year of $775,000, the Derby Festival has an annual budget of roughly $3.5 million.

And unlike the Preakness Celebration, the Derby Festival's 73-member board exercises tight financial controls and develops advance marketing strategy, according to Daniel A. Mangeot, president of Kentucky Derby Festival Inc.

"We have really tight financial controls, implemented by a finance committee and a treasurer. We do 80 events, and they all are treated like an individual profit or loss center. If an event doesn't make money, we don't have the event next year," Mr. Mangeot said.

"You have to treat this just like any other business, and you have to have controls just like any other business," he said.

Virtually no controls were operating at Maryland Preakness Celebration Inc. -- where the board gave Ms. Leonard authority to act alone in signing checks and approving expenditures. The organization's problem now is that she spent nearly $1 million it did not have.

"Her biggest flaw is that she tried to be too big too fast," Ms. Hock said.

"She has incredible vision as to what the Preakness [Celebration] should be. She just went from A to Z, without stopping from B to Y on the way there."

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