Bass Pro Shops: Rarely has a city gotten so little for so much.
photograph by Benkrut | Dreamstime
Would you invest in this business?
The opening has been delayed several times and is now set for late 2014. Competition is fierce. The market is mature if not saturated. Major exterior and interior details are still unsettled. The company is private and does not disclose its financials. The founder’s vision rules. The neighborhood is blighted. At least $30 million has to be spent on the infrastructure.
The business is Bass Pro Shops’ super store in the Pyramid.
In June, Bass Pro announced that the bigger-and-better grand opening would be in late 2014 instead of 2013. The story no longer inspires or disappoints. It simply exists, like the Pyramid itself, as part of the downtown landscape.
You’ll need a minimum of $5,000 or more likely $100,000 to get in the game. Mutual funds and insurance companies scooped up most of the Bass Pro Pyramid bonds in the initial offering. There were three different bonds on this project, two of them taxable and one tax-free, with different maturities as far out as 2030.
A taxable 2030 will get you 5 percent interest if you can find one. A tax-free bond priced at $98.50 at issue, slightly below par, is $108 or $109 today. Not because Bass Pro’s prospects or the future of downtown Memphis has changed, but because interest rates have fallen since 2011. The bonds are rated “A.” They’re backed by state and local sales tax collections in the downtown Tourism Development Zone (TDZ), a 1998 legislative creation. Property taxes are off limits. Bass Pro doesn’t start making payments until the store opens.
For all the abuse it has taken, the Pyramid arena was a roaring success and a model of efficiency in hindsight. From concept to completion, it took four years, opening in 1991. At a cost of $65 million, it served as home to the University of Memphis Tigers and Memphis Grizzlies basketball teams until 2004 and hosted an NCAA men’s basketball regional, a heavyweight boxing championship fight, cultural exhibitions, and numerous big-name concerts, concluding with Bob Seger in 2007.
Bass Pro Shops, which has 57 stores and 21 “future stores” on its website, signed a contract with Memphis in 2010 after five years of negotiations. The Center City Revenue Finance Corporation, an arm of the Downtown Memphis Commission, issued $215 million in bonds. So far the city has spent $15 million to acquire and tear down the Lone Star Industries silos, and several more millions to gut the Pyramid, haul away the Ramesses statue, demolish the walkways on Front Street, sod the entranceway on the south side, and build up the floodwall on the west side.
Rarely has a city gotten so little for so much. A city that needs every tax dollar it can get. A city so financially discombobulated that the state comptroller has been sending letters to the mayor and City Council warning of a financial takeover.
There is no other public or private development in the Pinch District, along Front Street, or between the Pyramid and the Memphis Cook Convention Center. The only evidence of Bass Pro Shops is a couple of truck trailers with the company logo and a “Coming Soon” promise. Not a single shotgun, fishing rod, or Tracker boat will be sold and taxed until late 2014 at the earliest.
Exactly what is coming soon is still not clear. Renderings have been created and scrapped for a band of glass and huge signs on the exterior, a 210-room interior hotel, and a revised version with cabins. The latest version includes an inclinator and elevators to the observation deck. An inclinator car was planned but never installed on the Pyramid 25 years ago. The only access to the observation deck is an interior staircase, rarely open to the public.
Meanwhile, Nashville left Memphis far behind. Using the same TDZ financing model, the capital city conceived Music City Center in 2007, got the Metro Council behind it in 2010, broke ground three months later, and opened the $623 million stunner this year.