Bass Pro's gone fishing for public cash

The company has reached nine new deals this year. In its previous 32 years, Bass Pro Shops opened 22 stores.

"We've never had retail growth like this," spokesperson Larry Whiteley said. "A lot of it is the demand for Bass Pro Shops stores across America."

Council Bluffs, Iowa, and Independence are the latest communities to bite on the Bass Pro promise: at least $30 million in local sales and more than 2 million visitors annually.

That's what Bass Pro officials guaranteed the city of Broken Arrow, Okla., and a private developer there in a three-way deal reached in March, the developer and city officials told SBJ. The city's tradeoff: financing construction of a $20 million Bass Pro Outdoor World and an additional $4 million in site improvements.

"Our financing wasn't any different than what other cities provide to get a Bass Pro Shops in," said Broken Arrow Mayor Richard Carter, who is elated about netting the retail giant.

Such is the Bass Pro business model these days. "Build it and Bass Pro will come" is the message sent to municipalities and developers around the country.

Of the nine new store announcements this year, six deals include public monies, most for financing new store construction and infrastructure improvements totaling $20 million or more. In some cases, Bass Pro anchors a larger commercial development. A combination of Bass Pro rent and portions of the city's sales taxes derived from that development are used to pay down the city's debt.

Bass Pro officials say cities, states and developers are pushing the expansion.

"They know from our track record what we have meant for a city or development," Whiteley said. "They're not just a retail store. Bass Pro stores are much more."

Bass Pro founder Johnny Morris doesn't comment on expansion issues and Bass Pro President Jim Hagale was unavailable for comment, according to Whiteley.

The outdoor retail machine which recorded an estimated $1.5 billion in 2002 sales, according to Business & Company Resource Center, a Gale Group online publication attracts tourists with its aquariums and wildlife displays next to the fishing, hunting and camping gear it sells. The company claims 63 million people a year visit its 22 stores. The Springfield headquarters store historically attracts 4 million people, according to company officials.

Classic case

In order to get the self-proclaimed destination retailer, Broken Arrow is borrowing approximately $24 million from Bank of America for store construction and site improvements at Stone Wood Hills, a 65-acre commercial development planned in Tulsa's largest suburb. Broken Arrow will lease the store to Bass Pro.

Stone Wood Hills developer Phil Roland said Broken Arrow's Bass Pro is expected to generate between $30 million and $50 million in annual sales. Those details were not disclosed in previous announcements and news reports because Bass Pro has strict confidentiality agreements with its developers.

If those sales materialize, Broken Arrow would reap between $1.05 million and $1.75 million in sales tax revenue based on 3.5 percent sales tax from the Bass Pro store alone.

Under the three-way agreement, up to 2 percent of Bass Pro's sales would be used to repay the 20-year debt obligation. In addition, Bass Pro's monthly lease payments an amount not disclosed publicly also would pay down debt.

"Essentially, what it will do is pay for itself and the city will own the building," said Carter, the city's mayor. "Bass Pro can stay there from now on. We hope they do. If they move out, we'll still have a building we can lease to someone else. We think there is really no risk to the city."

These "no risk" deals are happening around the country. Cities typically are shelling out about $20 million for a Bass Pro store between 120,000 and 160,000 square feet, and banking on sales and rent to repay the debt.

The reason: Bass Pro is a magnet for other commercial operations, such as hotels, restaurants and retailers, according to developers.

"(Bass Pro) generates traffic, which enhances the other retailers' business," said Roland, who added he's in negotiations for other retail and restaurant business. He owns more than 400 acres near the Bass Pro development and expects commercial and residential build-out to exceed $500 million. "As in any commercial development, you're always looking for an anchor tenant or two. We had to land an anchor before we went out any further."

Roland said attracting tenants to his development would be "a lot slower" without Bass Pro signed on.

Keeping promises

But do Bass Pro's promises materialize? Typically, yes.

The Bass Pro store that opened June 10 in Auburn, N.Y., which Bass Pro invested $12.5 million in, according to Empire State Development, the state's public economic development agency has revitalized a struggling mall, according to mall management.

Finger Lakes Mall General Manager Gina Speno said a year after Bass Pro announced it would become a mall anchor, the mall's occupancy rate jumped from less than 50 percent to 80 percent. And within two weeks of the store's opening, seven new tenants have come on board.

"Now that they are open, the foot traffic is really noticeably different," Speno said.

But city officials in Grapevine, Texas, say results have been mixed.

Expectations in the Dallas/Ft. Worth suburb have fallen short after Bass Pro opened there in 1999, said Grapevine City Manager Roger Nelson.

"There wasn't the development we expected," Nelson said. "There's been a heck of a lot of tires kicked, but no deals. The problem is the property owners got awfully proud of their ground."

The only subsequent development there was the $480 million, 1,500-room Gaylord Resort & Convention Center that opened earlier this year, Nelson said. Gaylord Entertainment has "an investment" in Bass Pro, according to Gaylord's Web site. Gaylord Chairman E.K. Gaylord II and President Colin Reed have served on Bass Pro's board of directors.

An adjacent Embassy Suites, built by Springfield hotelier John Q. Hammons, and Big Buck Brewery & Steakhouse, owned by Buck & Bass Limited, a partnership of Bass Pro Shops and Big Buck Brewery & Steakhouse Inc., were constructed in conjunction with Bass Pro. The Grapevine Mills mega mall was built before Bass Pro, Nelson said.

Attendance forecasts also have fallen short of Bass Pro expectations. According to the Grapevine Convention & Visitors Bureau, an estimated 2 million visitors descend on the store annually, short of the 3 million Whiteley says drop in at each store.

Still, Bass Pro's Grapevine store is a factor in increasing city revenues, Grapevine officials say.

Grapevine's sales tax revenue jumped from $6.66 million to $10.38 million the year Bass Pro opened. In 2003, the city collected $16.3 million, according to a chart of the city's annual retail sales. Nelson would not disclose sales tax revenues specifically from Bass Pro, citing Texas law.

Nelson said there's more to it than sales tax, though.

"Also, the folks that will come in for (Bass Pro's) hunting and fishing shows, sometimes they'll stay overnight, so there's hotel/motel tax that gets generated," he said.

Critics

The Springfield retailer has certainly created a national buzz. But some cities are buzzing with criticism.

Opponents say Tax Increment Financing districts used by developers to woo Bass Pro and other companies take money away from schools and other tax-funded entities.

Bass Pro's financing strategy was attacked in Baton Rouge, La., where a newspaper's opinion editorial, titled "Building retail waste of taxes," criticizes Bass Pro's moves in suburban Denham Springs. While construction is under way for a Bass Pro store there, four area taxing bodies that agreed to front $50 million for the development $26 million for Bass Pro's store are still wrestling over the sales tax percentages each would sacrifice.

The editorial, which ran in the June 8 edition of The Advocate, said, "Bass Pro has convinced cities all over America to pay for their giant retail outlets. ... It's hard to imagine, however, the company sustaining that drawing power as the novelty of the giant retailer wears off and as the increasing number of outlets puts the stores closer to the average sportsman. The shine is sure to eventually wear off the Bass Pro silver. When it does, taxpayers might wonder whether it was worth the price of being one of the first kids on the block' to own the latest in' thing."

And in North Little Rock, Ark., where a Bass Pro has been proposed, a billboard reads: "We will welcome Bass Pro if they agree to pay."

Whiteley said Bass Pro is not the only retailer benefiting from public incentives. "It happens a lot more than you think," he said, adding that the company is aware of the critics.

"Like any company, we don't like criticism," Whiteley said. "But we think that once we've opened and shown what we can do, that all goes away. It has in several locations. It's not just what we bring in tax dollars. It's the increased business we bring those merchants around it. We add other jobs and lots of other taxes."

But Whiteley said as a private company, Bass Pro does not disclose sales and other financial data.

As for selecting new cities, Whiteley said incentives are part of the equation, but Bass Pro also considers the number of hunting and fishing licenses, outdoor activities such as lakes, campgrounds and hunting areas, and the local economy.

"We wouldn't take a tremendous offer over another offer (with a) better location and better opportunities. Of course, location, location, location is very important," Whiteley said.

Bass Pro has no intentions of slowing its expansion, Whiteley said.

With cities such as Buffalo, N.Y., offering an $80-million incentive package and Bass Pro scouting financial aid from cities in Arizona, more announcements are expected soon. "You can almost bet the farm on it," Whiteley said.[[In-content Ad]]