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Dog-beating CEO could still cost his old company

A viral video showing former Centerplate CEO Desmond Hague kicking and thrashing a puppy in an elevator dropped the company into hot water and prompted Hague to resign this week. But Centerplate's problems may not be over.

The San Diego Chargers take the field against the Arizona Cardinals during their NFL preseason game at Qualcomm Stadium on Aug. 28, 2014 in San Diego.
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The San Diego Chargers take the field against the Arizona Cardinals during their NFL preseason game at Qualcomm Stadium on Aug. 28, 2014 in San Diego.

In San Diego, for example, where Centerplate will bid to hold on to a major contract to sell concessions at the San Diego Chargers' Qualcomm Stadium, it can expect aggressive moves by larger rivals to take advantage of the negative publicity, experts told CNBC.

"Absolutely I think those other companies will have a clear shot at that contract," said Patrick Rishe, an economics professor at Webster University who specializes in sports finance and marketing. "Any social injustice matters will receive the NFL's grave attention and will be met with considerable force. So I suspect that Centerplate will lose business as a result of these actions, even with the CEO's departure."

Aaron Allen, an independent restaurant consultant, agreed, saying that Centerplate rivals will likely go after the company on contract bids.

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"[Centerplate] is operating in an intense area of food service," Allen said. "There are some very savvy salesmen that are aggressively looking to land these contracts when they come up for bid."

The city of San Diego owns Qualcomm Stadium. Before Centerplate announced Hague's resignation on Tuesday, Mayor Kevin Faulconer released a statement to the San Diego Union-Tribune saying that he will review the city's $17 million contract with Centerplate that expires in February of 2015.

"The city intends to review the contract with the city attorney's office to consider all options," the mayor said.

Centerplate could still win the contract, of course. The company has reasons for confidence moving forward, given its track record. Privately held Centerplate raised its revenue from $200 million in 2009 to $1 billion in 2013, Allen said.

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Reached for comment, Centerplate referred CNBC to its announcement of Hague's resignation from Tuesday. The company said that its COO, Chris Verros, will take the helm and tried to focus on the future.

"This past week has been very difficult for our company, our employees and our clients in particular, and I have no doubt that Chris' experience, vision, integrity and commitment to our values and mission will help us all move forward together," said Centerplate Chairman Joe O'Donnell in the statement.

'All of their contracts at risk'

Allen said that Centerplate essentially needs to outbid all of its competitors in order to keep all of its contracts. Centerplate should be used to that by now, he noted, given its track record of landing big contracts against significantly larger companies.

Firms like Aramark, Compass and Sodexo, which are six to 10 times the size of Centerplate, will directly compete for the San Diego contract and others, Allen said.

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Reached by CNBC, Aramark and Compass declined to comment. Sodexo could not be reached for comment.

"I would say certainly that Centerplate has put all of their contracts at risk," Allen said. "I expect that they will lose tens of millions of dollars in the future."

—By Ike Ejiochi, special to CNBC.com

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