Bidding starts for rights to liquor licenses at 167 state-run stores
The auction closes April 20, giving winners time to apply for liquor licenses, hammer out leases or ask the Liquor Board for permission to move to another location within a mile of that store — all before private retailers can begin selling liquor on June 1.
Seattle Times business reporter
The Washington State Liquor Control Board opened online bidding Thursday for exclusive rights to apply for liquor licenses at 167 state-run liquor stores.
The auction closes April 20, giving winners time to apply for liquor licenses, hammer out leases or ask the Liquor Control Board for permission to move to another location within a mile of that store — all before private retailers can begin selling liquor June 1 under voter-approved Initiative 1183.
Bids can be made and viewed through the board's website.
By Thursday afternoon, dozens of stores had bid, but the heaviest action was for all 167 stores as a group. The high bid for all 167 at 2 p.m. was $50,100. The bidder was simply "Sangha," a word that means a Buddhist community of monks and laity, but has no obvious connection to possible store buyers in Washington.
Liquor Control Board officials do not plan to release the real names of bidders while the auction takes place. Winners will be announced by May 1.
These stores and about 160 others owned by entrepreneurs under contract with the state are the only small retailers that will be allowed to sell liquor starting June 1. I-1183, which voters passed by a wide margin in November, requires other liquor retailers to measure at least 10,000 square feet.
Nothing prevents a chain that plans to sell liquor in large stores from bidding on these 167 smaller stores and closing them, said Pat McLaughlin, the board's business-enterprise director.
"They might, but in open markets like California and Arizona, they coexist with independent liquor stores," he said. "I don't believe the big-box stores are threatened. There's nothing to suggest that could be a strategy."
Joel Benoliel, chief legal officer at Costco Wholesale, which backed I-1183, said it doesn't plan to bid on the small stores, and he knows of no other retailers who supported the measure that are.
Maryland-based Total Wine & More, a big-box chain that has applied to sell liquor in Bellevue, also said it will not bid.
Leon Capelouto, who owns a West Seattle mixed-use development where the Liquor Control Board opened a fancy new store last year, said he "definitely" plans to bid for the right to sell liquor there.
"No individual is going to pay more than I will pay," he said. But he worries that a big company might win the whole batch of 167.
"It's not that I want to operate it; I just want to make sure I know who I'm doing business with," Capelouto said.
He is unconcerned that the liquor store would compete with a QFC that has applied for a license and is in the same development.
"People who want a bigger selection will come [to the independent store]," he said.
The minimum bid is $1,000 per store (or $1,000 for all 167, although that bid had risen to $100,200 by evening), and a 6 percent premium will be added to winning bid prices to cover the cost of the auction.
Proceeds from the auction will go to the state's general fund. Retail liquor license fees will be $166 a year.
Bidders can see historical sales and other information for individual stores at the online auction site, but about 30 percent of the amount involved sales to restaurants and bars, which could not purchase liquor directly from distributors or distillers until this year.
I-1183 allows such direct sales and limits liquor retailers to selling only 24 liters (about 2.5 cases) of liquor a day to other retailers. The existing 160-some contract stores are exempt from that limit.
McLaughlin said bidders who plan to buy inventory from the state, or to hire liquor-store workers who would otherwise be laid off, would save the state in shipping costs and unemployment benefits. Such savings will be weighed along with bidding prices, he said.
More than 900 state liquor-system workers, including McLaughlin, are expected to lose their jobs during the transition. The Office of Financial Management estimates those layoffs will cost the state $11.8 million in unemployment costs, including sick leave and vacation buyouts.
Melissa Allison: 206-464-3312 or email@example.com. On Twitter @AllisonSeattle.