In an unprecedented 45-day online auction that brought in nearly $31 million for Washington's 167 state-run liquor stores, 121 entrepreneurs cast winning bids, officials said Monday.
Local businessman Hardial Gill had hoped to bid no more than $300,000 for a state-run liquor store on Capitol Hill in Seattle.
So it’s understandable that he might suffer from buyer’s remorse after a flurry of last-minute bidding Friday pushed the price above $500,000.
But Gill, who figures the store made a profit of nearly $1 million last year, said he feels no such remorse. He looks forward to taking over the store in June and adding beer to the merchandise selection.
“We think it was a good deal,” he said.
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Gill is one of 121 entrepreneurs who cast winning bids in an unprecedented 45-day online auction that brought in nearly $31 million for Washington’s 167 state-run liquor stores, officials said Monday.
Total bids increased by $23.7 million on Friday alone, the last day of the auction.
Washington leases rather than owns the properties, so it was selling exclusive rights to apply for liquor licenses at each store’s current location. The 167 properties, plus 162 owned by entrepreneurs under contract with the state, will be exempt from a new law that allows only stores measuring 10,000 square feet or more to sell spirits.
That new law stems from voter-approved Initiative 1183, which privatizes the liquor retail industry in Washington. The switch is set to occur June 1.
The winning bidders still must obtain liquor licenses, arrange lease agreements and buy inventory.
State officials, in a Monday news conference at a liquor store in Lacey, Thurston County, said they had no way to know how much the auction would bring in because the circumstances were unique, but they described the final tally as a surprisingly large windfall.
The biggest winning bid was $750,100 for a store near South 72nd Street and Pacific Avenue in Tacoma, followed by $500,100 for the Capitol Hill store at 12th Avenue and East Pine Street. The lowest winning bid: $49,600 for a store on Division Street in Spokane.
A bid of $4.6 million for all 167 stores will not count because it fell short of the individual bids combined.
Leon Capelouto, a West Seattle land developer, bid $225,445 for a liquor store at the base of an apartment building that includes a QFC supermarket in the Alaska Junction neighborhood.
Capelouto owns the building and “just thought it was in my interest to control that space,” he said. “Like in every other state, there’s food stores that carry spirits, and then there’s liquor stores. And everyone survives.”
Although the state is about to get out of the booze business, opponents of I-1183 have filed a lawsuit to stop the change, arguing the measure violates state rules requiring initiatives to address only one subject. They say the voter-approved measure has a second subject because it includes a provision for public-safety funding. A judge rejected that claim, but opponents have appealed to the state Supreme Court.
The court is expected to hear arguments May 17. The entire measure would be nullified if the court determines voters would have rejected I-1183 without the public-safety provision.
More than 1,000 entities, including Target and large beverage retailer BevMo!, already have applied to begin selling liquor in their stores. Costco, the prime supporter of the initiative, also is expected to have a dominating presence in the market.
Entrepreneur Andy Thielen joined his brother Mike to cast a winning bid of $236,100 for the state store in downtown Olympia. “We’ve been driving by that store our whole lives, and we’ve been customers there for the past 20 years,” said Thielen, who also owns a local accounting firm.
He said he’ll keep the store’s employees and offer more selection and personalized service than larger rivals, including a Ralph’s Thriftway supermarket about a mile away. “I walk in the store now and ask for something, and the employees can point right to it. You’re not going to get that in a big-box store,” he said. “We’re also hoping people will want to support the local guys.”
The state-run stores, which average 5,000 square feet, carry more than 1,400 items, and shelves are cleared monthly.
“Typically in a big-box (or grocery) store, you’ll have a fraction of that offering — maybe 200 or 300 items,” said Pat McLaughlin, business-enterprise director at the Washington State Liquor Control Board. “I think these stores have a niche market to fill.”
Olympia resident Sheri Berken was running errands Monday when she stopped by the Lacey store for a bottle of vodka and met up with Thielen, a longtime friend who attended the state’s news conference. Although Berken shops regularly at Costco, she said she’ll buy her liquor at Thielen’s store.
“Now that I know he bought a store, I’ll support him,” Berken said. “I’m not used to buying liquor at Costco anyway, except for when I go to California.”
Richard Gates, a businessman formerly known as Dumb Dick, after a pawnshop he owned in the 1980s, cast a winning bid of $103,100 for the state’s liquor store in Shelton, Mason County. He plans to invest $400,000 in all, including buying the inventory. Because he owns the building, he won’t have to worry about negotiating a new lease.
“There’s a Safeway about a block away, but we’ll have a lot nicer selection,” he said. “And we have everybody in town trained to come here to buy their bottle of booze.”
Information from The Associated Press is included. Amy Martinez: 206-464-2923 or firstname.lastname@example.org