Tuesday, February 05, 2008

Bass Pro Shop Agreement Is No Development At All

Memphis’ proposed deal with Bass Pro shop reminds us of the punch line from that classic joke: “O.K., we’ve determined what you are. Now we’re just haggling over your price.”

Apparently, we’ve now established that our price is $420,000, and what we are is desperate.

That’s the only way to explain the proposed “development agreement” between Bass Pro Shop and Memphis and Shelby County Governments. Normally such agreements look like the results of a poker game with each side winning some and losing some.

Straight Flush

That’s sure not the case with this agreement, because all the cards are squarely in the hands of the sporting goods store. That’s why we predict that the 20-page draft agreement will have trouble clearing three formidable hurdles that lie ahead – approvals by Memphis City Council, Shelby County Board of Commissioners and Shelby County Mayor AC Wharton.

The mantra for every successful negotiation is: “You have to be willing to walk away.” This proposal sends an unmistakable message that not only were City Hall negotiators unwilling to leave the negotiating table, but they seemed willing to give the store more and more until it ended up with a strangle hold over the signature building on our riverfront.

So, what does Memphis get in return for its largesse? Precious little - unless you are excited by $35,000 a month in rent payments. Keep in mind: city and county governments spend that much money every 20 minutes, every hour of every day.

Guilty as Charged

This would be a great time for city/county truth in advertising requirement. This agreement is anything but a “development agreement.” There is nothing in the entire document that requires Bass Pro Shop to ever do anything in The Pyramid.

In fact, the “development agreement” isn’t binding or requires any specific actions from the national hunting and fishing retailer.

And yet, in exchange for about $1,200 a day in rent, Bass Pro Shop would be given exclusive control of The Pyramid until summer, 2009. All in all, it’s a testament to Bass Pro Shop’s well-deserved reputation for masterfully stringing along governments on its timetable.

Toothless

If you are unsure that Bass Pro Shop is in the driver’s seat, just consider a few gems sprinkled through the proposed agreement:

“The lease…will provide that if the Partner Developments are not secured to the satisfaction of Bass Pro, Bass Pro shall have the right to terminate the project without further obligation or liability.”

“It is understood that if Bass Pro is not satisfied with the results of its investigations, studies and planning, for any reason and at any time, Bass Pro is not obligated to execute any other document or continue to pursue the project, and it may terminate this Agreement without any liability or obligation effective fifteen (15) days following written notice to the City and County.”

“Provided that this Agreement has not been terminated during the Planning Phase, Bass Pro shall give notice to the City and County when Bass Pro has developed a plan for the project that it believes to be feasible and economically viable.”

“It is understood that if Bass Pro is not satisfied with the progress or results of the permitting process for any reason and at any time, Bass Pro is not obligated to execute any other document, or continue to pursue the project, and it may terminate this Agreement without any liability or obligation effective fifteen (15) days following written notice to the City and County.”

Got it?

Driving The Deal

The message is unmistakable: Bass Pro Shop is in the driver’s seat. It can pull out whenever it wants (with 15 days notice) and for whatever it wants, and city and county governments have no recourse to do anything about it.

And for this, local government is supposed to be willing to give this store exclusive control over The Pyramid?

Or as the legal wordsmiths put it, “…in consideration of the payment of the monthly fee…City and County (and their respective representatives) shall deal exclusively with Bass Pro on all matters pertaining to the development and use of the Pyramid during the Development Period, and neither the city nor County shall, and no person or entity shall on either the City’s and County’s behalf, negotiate, correspond or enter into any written document or agreement whatsoever (whether binding or non-binding) with any party regarding the prospective use of the Pyramid.”

In a city with a history of the public getting outnegotiated by private sector lawyers, this agreement sets a new standard. Never have so many words been used to give so little to so many people in Memphis.

Special Designs

According to the agreement, Bass Pro Shop deserves this special consideration because it has “devoted substantial internal resources and undertook a preliminary design of the project, and Bass Pro hired various consultants to study various aspects of The Pyramid.” That seems to be an especially curious claim considering that the first official from the company toured the old arena little more than two months ago.

We’re excited that Bass Pro has allegedly done so much to put together an exciting design for The Pyramid. That’s why it seems even stranger that no company official was willing to make a public statement about this project and their excitement over the prospects for the future, or best of all, just show us their designs for the future.

That future, according to the agreement, will see The Pyramid – unless “the Partner Developments are not secured to the satisfaction of Bass Pro” – become home to a hotel, aquarium, restaurants, traveling exhibits, conference space, additional retail, museum and boat showroom.

Bigger And Better

In other words, it will be a regular Bass Pro Shop writ large.

But, if the prospects of this fishing store as the welcome mat for Memphis don’t fill you with civic pride, there’s always the company’s leaping bass logo - all 3,000 square feet of it – that will be affixed to each of The Pyramid’s four sides.

It must have swelled the breasts of city negotiators, because, if and when the company develops The Pyramid, Bass Pro Shop has the contractual right to be the tenant for 55 years.

Special Purpose Indeed

Curiously, the agreement calls for creation of the “Memphis Special Purpose Entity,” which will act as landlord and enter into the agreement with Bass Pro Shop. It adds a new layer to the building’s operation, since the Pyramid Public Building Authority – the city-county agency created about 20 years ago to build the arena – still exists and must sign off on any proposed deal.

To get all this done, city and county governments will put $30 million of public money into the megastore, and it likely will come from yet another special tax district, this time, a TIF (Tax Increment Financing) District and Pyramid Tourism Development Zone.

In the end, the combination of Bass Pro Shop’s skills at political foot dragging and the reality of “government time” could mean that we could be years away from knowing if the store really plans to develop The Pyramid.

The Clock’s Ticking

After all, it was summer, 2001, when we all learned that the Grizzlies would be prime tenants of The Pyramid until 2004, when the building’s future would become uncertain. Despite the knowledge that the building would be closing, city and county governments waited three years to form the Pyramid Reuse Committee, and it was summer, 2004, when Bass Pro Shop began discussions with the powers-that-be about their ambitions for the building.

In December, 2004, the store signed its first of three non-binding letters of intent, and at a press conference in February, 2005, officials with Bass Pro Shop said they would take control of The Pyramid in six months. We’re still waiting.

We are now 79 months from the time when we learned that The Pyramid would be shut down. We are now 42 months from the time when Bass Pro Shop said it planned to put a megastore in The Pyramid. And yet, the clock is still running on a definitive agreement from the sporting goods store.

Predictions

It seems likely to us that the city and county legislative bodies – if not Mayor Wharton himself – will have little patience with the suggestion that this “development agreement” really means anything and may well insist on a level playing field that gives both Bass Pro Shop and Ericson Group an equal chance to put up or shut up.

Secondly, it appears more and more likely that the same criticisms that were made about the public concessions to Michael Heisley’s Grizzlies are about to erupt in the wake of the proposed agreement with Bass Pro Shop. There are some of the same opponents to FedEx Forum who believe that although the Bass Pro Shop is on a smaller scale, it is based on similar principles to FedEx Forum.

In other words, there may be a “development agreement,” but it may well take more time than Bass Pro Shop thought to pull in its latest catch.

6 comments:

Michael parker said...

Honestly, does this city really NEED a sporting goods store that damn big?! After months on end of Bass Pro Shops, Inc playing a game of cat and mouse with the city of Memphis, do we really need to ink this deal with them?? I would say no but that is just my opinion. Go with the other deal and make some real money for this city.

Anonymous said...

Given the historical track record in Memphis, I predict this "development" agreement will be approved amid local politicians smiles and declarations that this is a great deal for Memphis.

bob said...

This is another non-binding letter of intent, albeit with a wrinkle that they pay a little rent while we wait.

Anonymous said...

the bass pro intent is a negotiation tactic, if bass pro is not willing to include a penalty payment then there should not be an exclusivity agreement. if bass is unwilling to include either a penalty payment or a non-exclusivity agreement than, i think, the city should reassess the viability of the site. i do not believe the ericson proposal is the best use of the pyramid or mud island. to start negotiation with ericson is as big a mistake as signing a exclusive agreement with bass pro. politicians should be looking at the right thing and not the fastest decision.
the pyramid is an iconic building, for better or worse when our skyline is pictured the pyramid is unmistakably memphis. under either proposal bass pro or ericson the pyramid as we know it will be gone and this new identity will be the defining piece in our skyline. i'm not excited about either of these proposals with that much a stake.
i do like the your proposal of a extension of the convention center.
i would like the city to even go more outside of the box. i think the city should work a deal with st. jude children's. you have an entity in st. jude that has a magnificent track record in fund raising and philanthropy and a city (memphis) that is struggling to attract upper crust industry and jobs. the pyramid could serve as the beginning of a bio-park that partners with st. jude as a place to look for cures and treatments to some of the worlds most rare diseases. this would attract industry and professionals alike, it would also tie the pyramid to an entity that has an impeccable reputation around the globe. this would unequivocally promote memphis around the globe as not only a place of distribution but science and medicine. it would attract venture capital and the city could use a special revenue fund to fuel further development.

Memphis Real Estate Broker-Joe Spake said...

Let's just hope that the public outrage erupts BEFORE the binding agreement is executed.
I think idea of the convention center expansion into the Pyramid that you posted is a very practical solution, but practical doesn't seem to be in our leaders' vocabulary

taipan126 said...

What's the problem here? Do you own a local mom-&-pop sporting goods or gun shop? A large business wants to bring jobs, touristis, money, shopping, and convenience to your town and you are surprised that the local government wants to help make it so? WTF? Bass Pro Shops is a great company. They can put up their stores anywhere and make money while boosting the local economy. Citiies compete for the priveledge of having such a business in town. It's not just "a sporting goods store." It is an attraction or locals as well as out-of-towners. But poster Michael Parker is correct in that nobody needs such a store, but with the exception of the handful of bloggers here, everyone WANTS such a stoire. They sell nothing that anybody truly needs, yet in the midst of this media & politician invented "recession" (patently false as GDP continues to increase every month - there is no recession) BPS wants to spend millions of dollars to open a new store in your town which nobody needs. Go figure. I guess your neighbors are not as broke and stupid as you seem to think.