Up to Their Hip Boots in Subsidies

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Today’s guest blog is by David Ewald of Ewald Consulting; he will address both the Big-Box and Smart Growth tracks of our May 7-8 Conference.

Since September 2005 I’ve been involved in an anti-subsidy battle around the country. Cabela’s, a competitor in the hunting, fishing and camping retail space, relies on public subsidies according to its public statements to cover about 30 percent of the construction costs for its stores. It has been a challenging and rewarding effort that was kicked off by Gander Mountain, the #3 player in the same industry that refuses to take incentives.

Well, this was another tough week for Cabela’s as for the third year in a row they were forced to give back money to the city of Buda, Texas for failing to meeting the job targets they promised in order to receive more than an eye-popping $60 million in subsidies. Let’s hear it for clawbacks!

The apologists for the failure to meet the targets point to the weak economy for retailers right now. Isn’t that one of the main points to make when arguing against subsidies? When government partners with retailers such as Cabela’s they are accepting some of the risk inherent in the company’s business cycle. I’m not amazed when the shortfalls occur. What does amaze me is the public statements made by the public officials who continue to be swayed by Cabela’s promises of economic development and great returns for the community.

Bass Pro is a privately held company that engages in some of the same activities. In just the past few weeks the city of Augusta, Georgia has taken preliminary steps to give Bass about $25 million in subsidies to build a store there. This is amazing given the current state of the economy!

I’m looking forward to talking more about this on May 7 and 8 at the Good Jobs First Conference. In the meantime, visit www.sayno2outdoorsretailsubsidies.com for more information on the effort.

One Response to “Up to Their Hip Boots in Subsidies”

  1. DG Hubbard Says:

    You refer to some pretty large sums of money that these retailers obtained from local government – economic status irrelevant. Good times or bad, $60 million can go a long way. I am sure that money certainly could be used elsewhere for more pressing needs. Cabela’s and Bass Pro Shops have stores in dozens of states across the US, were all of their stores granted these subsidies for construction? How easy is it for big retail outfits to get this money?

    On one hand, I see the arguement for taking this money and putting it back in the hands of taxpayers, or using for more worthwhile causes like education programs, etc. The entreprenuer in me disagrees.

    Who is to blame here? The government for their short-sighted use of tax payer dollars, OR big retail for not creating/sustaining the jobs the money was alloted for, OR the consumer for not making better choices about the business we support with our spending?

    Interesting, yet scary stuff.

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