There are three big players in the outdoor sports world of mega-marketing - Bass Pro, Cabela’s and Gander Mountain.
Bass Pro is privately owned by John Morris. Gander Mountain and Cabela’s are publicly traded companies. Cabela’s, though, has more in common with Bass Pro than Gander Mountain for the simple reason Gander Mountain will not demand “tribute” from local governments in order to get them to locate a store in their jurisdiction.
That is why it is a misnomer to say Bass Pro’s business plan - or Cabela’s for that matter - is to land in a community where they can simply make a good profit based on sales. They shop for the best location and then weigh the deals that local jurisdictions are willing to pony up.
It takes the game to the next level that Sam Walton started when his firm started expanding nationwide. When they became a big fish in the pond on their way to becoming the 900-pound gorilla they started demanding developers and/or cities to provide square footage in land costs or construction at a level significantly below prevailing markets. If a community wanted to land them, they’d have to make up the difference somehow.
Wal-Mart a few years back abandoned its initial search for a Super Wal-Mart in Manteca along the Highway 120 Bypass. They refused to pay more than $7 per square foot for land although the going rate at the time was close to $12 a square foot. None of the property owners they contacted were interested in taking a financial bath to help improve Wal-Mart’s bottom line. Wal-Mart took the attitude “you need us more than we need you” but developers and landowners said “thanks, but no thanks.”
Manteca’s leaders knew what they were getting into with Bass Pro Shops. But unlike most other deals across the country where Bass Pro Shops directly received some type of public bond or redevelopment agency money up front usually in the $25 million-plus range and/or had their property tax “suspended”, that did not happen in Manteca.
While Manteca didn’t exactly outsmart Bass Pro Shops, they cut a deal that essentially did not risk money upfront but ended up giving up 55 percent of the sales tax for 35 years excluding Measure M public safety tax that Manteca keeps 100 percent. The deal has a $1 million annual cap on sales tax being given up in exchange for leasing of the 1,922 parking spaces at The Promenade Shops at Orchard Valley for 35 years. That means the city is forfeiting a maximum of $35 million and not $60 million as some critics contend.
And the deal was with the shopping center developer and not Bass Pro Shops directly. The developer in turn gave Bass Pro what they wanted to get then to locate in Orchard Valley.
Philosophically, the deal is a little hard to stomach. If you look at it pragmatically, though, Manteca actually got a good deal without giving away the bank.
By splitting sales tax and not providing money upfront, Manteca is splitting what it would not otherwise have received. Virtually all of Bass Pro sales are to consumers outside of Manteca. Those consumer dollars would not have been spent in other local stores.
You could make the argument - and be correct - that Manteca benefitted significantly from the Bass Pro deal as well as the Costco sales tax split that goes for 10 years. Bass Pro grabs consumer dollars that wouldn’t have landed in Manteca plus it lured Best Buy, JC Penney and now the upscale outlets that are in the process of leasing space with Vans the first store to open.
Costco simply took $60 million of consumer dollars that were tracked being spent by Manteca consumers at the Costco stores in Modesto and Tracy every time they used their cards and kept it in Manteca. It also pulls in consumer dollars form Lathrop, Ripon, Escalon, and even Oakdale.
The change in shopping patterns means they’re more likely to shop at the Manteca Kohl’s store than the Modesto Kohl’s store as well.
Manteca has successfully caught up and stopped consumer dollar bleed for the most part and is moving ahead of other cities. Two shrewd deals were made.
It is now time for civic leaders to swear off any more sales tax-sharing deals.
Bass Pro is privately owned by John Morris. Gander Mountain and Cabela’s are publicly traded companies. Cabela’s, though, has more in common with Bass Pro than Gander Mountain for the simple reason Gander Mountain will not demand “tribute” from local governments in order to get them to locate a store in their jurisdiction.
That is why it is a misnomer to say Bass Pro’s business plan - or Cabela’s for that matter - is to land in a community where they can simply make a good profit based on sales. They shop for the best location and then weigh the deals that local jurisdictions are willing to pony up.
It takes the game to the next level that Sam Walton started when his firm started expanding nationwide. When they became a big fish in the pond on their way to becoming the 900-pound gorilla they started demanding developers and/or cities to provide square footage in land costs or construction at a level significantly below prevailing markets. If a community wanted to land them, they’d have to make up the difference somehow.
Wal-Mart a few years back abandoned its initial search for a Super Wal-Mart in Manteca along the Highway 120 Bypass. They refused to pay more than $7 per square foot for land although the going rate at the time was close to $12 a square foot. None of the property owners they contacted were interested in taking a financial bath to help improve Wal-Mart’s bottom line. Wal-Mart took the attitude “you need us more than we need you” but developers and landowners said “thanks, but no thanks.”
Manteca’s leaders knew what they were getting into with Bass Pro Shops. But unlike most other deals across the country where Bass Pro Shops directly received some type of public bond or redevelopment agency money up front usually in the $25 million-plus range and/or had their property tax “suspended”, that did not happen in Manteca.
While Manteca didn’t exactly outsmart Bass Pro Shops, they cut a deal that essentially did not risk money upfront but ended up giving up 55 percent of the sales tax for 35 years excluding Measure M public safety tax that Manteca keeps 100 percent. The deal has a $1 million annual cap on sales tax being given up in exchange for leasing of the 1,922 parking spaces at The Promenade Shops at Orchard Valley for 35 years. That means the city is forfeiting a maximum of $35 million and not $60 million as some critics contend.
And the deal was with the shopping center developer and not Bass Pro Shops directly. The developer in turn gave Bass Pro what they wanted to get then to locate in Orchard Valley.
Philosophically, the deal is a little hard to stomach. If you look at it pragmatically, though, Manteca actually got a good deal without giving away the bank.
By splitting sales tax and not providing money upfront, Manteca is splitting what it would not otherwise have received. Virtually all of Bass Pro sales are to consumers outside of Manteca. Those consumer dollars would not have been spent in other local stores.
You could make the argument - and be correct - that Manteca benefitted significantly from the Bass Pro deal as well as the Costco sales tax split that goes for 10 years. Bass Pro grabs consumer dollars that wouldn’t have landed in Manteca plus it lured Best Buy, JC Penney and now the upscale outlets that are in the process of leasing space with Vans the first store to open.
Costco simply took $60 million of consumer dollars that were tracked being spent by Manteca consumers at the Costco stores in Modesto and Tracy every time they used their cards and kept it in Manteca. It also pulls in consumer dollars form Lathrop, Ripon, Escalon, and even Oakdale.
The change in shopping patterns means they’re more likely to shop at the Manteca Kohl’s store than the Modesto Kohl’s store as well.
Manteca has successfully caught up and stopped consumer dollar bleed for the most part and is moving ahead of other cities. Two shrewd deals were made.
It is now time for civic leaders to swear off any more sales tax-sharing deals.
