State Liquor Licenses - Tilted Forum Project Discussion Community

kutulu · 02-13-2006, 12:45 PM

I saw this today in the paper. I found it to be very interesting.

Quote:

Liquor licenses go on sale
Limited few will be issued to businesses that apply

Yvette Armendariz
The Arizona Republic
Feb. 13, 2006 12:00 AM

For the first time since 1988, Arizona retailers and aspiring bar owners will be able to apply to buy a limited number of new liquor licenses from the state.

Applications can be filled out starting today.

For the past 18 years, the only way to get a bar or liquor license had been to buy it from another business. The renewable and transferable certificates have become prized assets for nightclubs, pubs, grocery stores and pizza parlors. Prices on the secondary market have skyrocketed, making them an investment, much like housing, for their buyers.

Prices for the licenses have reached four and five times their value when last issued.

Today an aspiring bar owner would need to pony up $85,000 to $90,000 to buy an existing Series 6 license needed to operate a bar. They were selling for as low as $65,000 three years ago.

Thinking of selling packaged liquor? One of those Series 9 licenses recently fetched $240,000. Three years ago, prices tended to range between $110,000 to $135,000.

So according to this article, AZ hasn't issued a NEW liquor license to any business since 1988. That's odd because since that time, the state has grown in population by about 50%. Of course, supermarkets, drug stores, convenience stores, bars, and restaraunts have been added to keep up with demand. Since the state hasn't issued any new ones, apparantly people just bought tons of licenses with no intention of ever building anything and just used them for investment puropses. That's fucked up big time.

The state is going to sell these at market value so that the value of current licenses without establishments do not go down. I think that's wrong too, it's just a cash grab to add money to the state funds. Screw the people sitting on licenses and waiting to gouge prospective business owners.

Am I missing something here?

The_Jazz · 02-13-2006, 12:50 PM

I think that this is actually a political issue that we can reach consensus on here at TFP Politics. Basically, the state is screwing the licensees. There's no middle ground since the state created the market themselves by not issuing any new licenses at all. I don't see any middle ground here.

ratbastid · 02-13-2006, 01:25 PM

Goes to show. People will turn anything into an investment opportunity.

If you think about it, it's a pretty damn smart move. You're going to monopolize the market on a resource that is defined to be finite, in an environment of basically unlimited demand. Doesn't take a brain surgeon to know that's a good call.

I'm not real offended about it. I'd be sad if I was a restaurant or bar owner in AZ, but like The_Jazz says--for those of us all the way across the country, it's sort of a "hunh."

pan6467 · 02-13-2006, 01:55 PM

I know in Ohio the number is limited also, but the way to get around it for most businesses is to purchase one at a "future" rate. Which means, if I own a business and I can't sell because the township is dry, and then the township opens up and allows sales, I can activate my license that I bought.

It is a scam and a damn good one, as who is going to challenge the state? You try, and they'll make sure that license never gets used.

Also, when I owned my pizza business, I found out licenses are transferrable to owner not location. So if I bought the guy's license down the street I could transfer it to my business so long as the laws and ordinances were the same.

As for investment..... yes this is a BIG way to make money, buy low and sell high. Buy up all the licenses you can as places close then sell them for as much as you can get.

The_Jazz · 02-13-2006, 02:10 PM

I still think that the state has found a way to let someone theoretically corner the market on licenses. If someone buys all the available licenses, they can set the price and dictate development. It's not cool, that's for sure.

xepherys · 02-13-2006, 02:45 PM

Well, with the rate of growth in Phoenix, this can't stand up to market demand for long... Someone wants to open a bar, so they buy a license for $90,000. Because they have to make that money back, their prices are higher than an established location. They go out of business and during the liquidation, sell it for cheaper. This can only happen so many times before one group holds an excess of licenses, or the price comes down due to lack of demand. If a business can't put together a model to recoup it's costs, it just won't bother to open.

ZeRoGRaViTY · 02-13-2006, 03:00 PM

So you are saying hypothetically, if some fantastically rich and lucky person would to buy ALL liquor licenses in that state and decided to not sell alcohol, it could potentially become a dry state?

Financially it is a smart move to make no new licenses, but people going out to a bar or picking up a 12 of guiness shouldn't be regulated by people who treat these licenses like a ty cobb rookie baseball card. And, shame on the government for treating these licenses as such and not recognizing the 50% growth in population. But then again the government won't do anything unless someone petitions this and yells, kicks and screams loud enough.

To me it just seems like another case of the government taking away rights and priveledges of business owners as well as consumer.

Can anyone say prohibition '06?

kutulu · 02-13-2006, 03:03 PM

Quote:

Originally Posted by xepherys

Well, with the rate of growth in Phoenix, this can't stand up to market demand for long... Someone wants to open a bar, so they buy a license for $90,000. Because they have to make that money back, their prices are higher than an established location. They go out of business and during the liquidation, sell it for cheaper. This can only happen so many times before one group holds an excess of licenses, or the price comes down due to lack of demand. If a business can't put together a model to recoup it's costs, it just won't bother to open.

You'd think, but it hasn't happened yet. Somehow there were enough licences already in existence for the state to increase the population by as much as they did without an influx of licences.

The travesty is that by selling the new licences at 'market value', the state is contributing to the racket that penalizes new businesses. It seems criminal to me.

The_Jazz · 02-13-2006, 03:14 PM

Quote:

Originally Posted by ZeRoGRaViTY

So you are saying hypothetically, if some fantastically rich and lucky person would to buy ALL liquor licenses in that state and decided to not sell alcohol, it could potentially become a dry state?

Financially it is a smart move to make no new licenses, but people going out to a bar or picking up a 12 of guiness shouldn't be regulated by people who treat these licenses like a ty cobb rookie baseball card. And, shame on the government for treating these licenses as such and not recognizing the 50% growth in population. But then again the government won't do anything unless someone petitions this and yells, kicks and screams loud enough.

To me it just seems like another case of the government taking away rights and priveledges of business owners as well as consumer.

Can anyone say prohibition '06?

Hypothetically, yes, that's what I'm saying. Or if licenses aren't transferable within a certain area (city limits, etc.), the same reasoning stands.

I don't see how this is a financially smart move for the state since they are only now starting to make their money back. First, they've been missing out on the revenue for 18 years. Second, they're stiffling new business development, assuming that one license can be used for multiple locations (I have no idea one way or the other). My point is that competition between local business and out of state businesses would definitely be shaded towards the non-locals in that scenario.

Prohibition isn't very probable, given the likes of me and my friends who golf in Phoenix at least a couple of times a year.

Elphaba · 02-13-2006, 04:05 PM

Washington state has cornered the market in a different way. Restaurants and bars can obtain a liquor license under stringent rules, but the number of licenses are not limited. The catch here is that the public can only buy alcohol from state run liquor stores, with beer and wine being the only exception. That exception occurred after the repeal of our "blue" laws.

At least we don't have "dry" vs. "wet" counties.

Marvelous Marv · 02-13-2006, 06:02 PM

Quote:

Originally Posted by kutulu

You'd think, but it hasn't happened yet. Somehow there were enough licences already in existence for the state to increase the population by as much as they did without an influx of licences.

The travesty is that by selling the new licences at 'market value', the state is contributing to the racket that penalizes new businesses. It seems criminal to me.

So the state is raking in money from overpriced liquor licenses. It's just another "sin tax," although somewhat cleverly disguised.

I'm sure every politician in the state would tell you it wasn't a tax increase, though.

Marvelous Marv · 02-13-2006, 06:04 PM

Quote:

Originally Posted by ratbastid

Goes to show. People will turn anything into an investment opportunity.

If you think about it, it's a pretty damn smart move. You're going to monopolize the market on a resource that is defined to be finite, in an environment of basically unlimited demand. Doesn't take a brain surgeon to know that's a good call.

I'm not real offended about it. I'd be sad if I was a restaurant or bar owner in AZ, but like The_Jazz says--for those of us all the way across the country, it's sort of a "hunh."

I doubt it will be long before other states want to get in on that action. It increases state revenue, while providing plausible deniability in regard to raising taxes.

They can always say limiting the number of liquor licenses is "protecting the public."

02-13-2006, 01:55 PM	#4 (permalink)
pan6467 Lennonite Priest Location: Mansfield, Ohio USA	I know in Ohio the number is limited also, but the way to get around it for most businesses is to purchase one at a "future" rate. Which means, if I own a business and I can't sell because the township is dry, and then the township opens up and allows sales, I can activate my license that I bought. It is a scam and a damn good one, as who is going to challenge the state? You try, and they'll make sure that license never gets used. Also, when I owned my pizza business, I found out licenses are transferrable to owner not location. So if I bought the guy's license down the street I could transfer it to my business so long as the laws and ordinances were the same. As for investment..... yes this is a BIG way to make money, buy low and sell high. Buy up all the licenses you can as places close then sell them for as much as you can get. __________________ I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

02-13-2006, 04:05 PM	#10 (permalink)
Elphaba Deja Moo Location: Olympic Peninsula, WA	Washington state has cornered the market in a different way. Restaurants and bars can obtain a liquor license under stringent rules, but the number of licenses are not limited. The catch here is that the public can only buy alcohol from state run liquor stores, with beer and wine being the only exception. That exception occurred after the repeal of our "blue" laws. At least we don't have "dry" vs. "wet" counties. __________________ "You can't ignore politics, no matter how much you'd like to." Molly Ivins - 1944-2007

02-13-2006, 12:50 PM	#2 (permalink)
The_Jazz Asshole Administrator Location: Chicago	I think that this is actually a political issue that we can reach consensus on here at TFP Politics. Basically, the state is screwing the licensees. There's no middle ground since the state created the market themselves by not issuing any new licenses at all. I don't see any middle ground here.

02-13-2006, 01:25 PM	#3 (permalink)
ratbastid Darth Papa Location: Yonder	Goes to show. People will turn anything into an investment opportunity. If you think about it, it's a pretty damn smart move. You're going to monopolize the market on a resource that is defined to be finite, in an environment of basically unlimited demand. Doesn't take a brain surgeon to know that's a good call. I'm not real offended about it. I'd be sad if I was a restaurant or bar owner in AZ, but like The_Jazz says--for those of us all the way across the country, it's sort of a "hunh."

02-13-2006, 02:10 PM	#5 (permalink)
The_Jazz Asshole Administrator Location: Chicago	I still think that the state has found a way to let someone theoretically corner the market on licenses. If someone buys all the available licenses, they can set the price and dictate development. It's not cool, that's for sure.

02-13-2006, 02:45 PM	#6 (permalink)
xepherys <3 TFP Location: 17TLH2445607250	Well, with the rate of growth in Phoenix, this can't stand up to market demand for long... Someone wants to open a bar, so they buy a license for $90,000. Because they have to make that money back, their prices are higher than an established location. They go out of business and during the liquidation, sell it for cheaper. This can only happen so many times before one group holds an excess of licenses, or the price comes down due to lack of demand. If a business can't put together a model to recoup it's costs, it just won't bother to open.

02-13-2006, 03:00 PM	#7 (permalink)
ZeRoGRaViTY Upright Location: Rochester, NY	So you are saying hypothetically, if some fantastically rich and lucky person would to buy ALL liquor licenses in that state and decided to not sell alcohol, it could potentially become a dry state? Financially it is a smart move to make no new licenses, but people going out to a bar or picking up a 12 of guiness shouldn't be regulated by people who treat these licenses like a ty cobb rookie baseball card. And, shame on the government for treating these licenses as such and not recognizing the 50% growth in population. But then again the government won't do anything unless someone petitions this and yells, kicks and screams loud enough. To me it just seems like another case of the government taking away rights and priveledges of business owners as well as consumer. Can anyone say prohibition '06?