June 3 (Bloomberg) -- The Bass Pro Shops store in Rancho Cucamonga, California, is little more than an hour’s drive from Santa Monica, a West Coast enclave known for its anti-gun rallies and vegetarian cafes.
It might as well be on another planet. In this 180,000-square-foot, cathedral-like structure, shoppers can buy a Remington Varmint Rifle -- $569.99 with a $50 rebate -- grab a National Rifle Association flier by the door vilifying the state’s Senator Dianne Feinstein for her effort to ban assault weapons, or order a 12-ounce New York strip steak from the adjoining restaurant.
The architect of this shooter’s paradise is John “Johnny” Morris, a media-shy Missourian who became a billionaire stitching together shopping outlets for multiple outdoor sports and adding a touch of entertainment to the mix, often -- like other national chains -- using local taxpayer funds to expand his empire.
“It had been a very fragmented market, with a lot of independent retail shops catering to firearms, hunting and fishing,” said Sean Naughton, a vice president and senior research analyst who covers the consumer sector for Minneapolis -based Piper Jaffray Cos. “All these categories that consumers like to do, but there wasn’t a national chain.”
Since founding Bass Pro Shops LLC in 1972 in his father’s Springfield, Missouri, liquor store, Morris has expanded to 58 superstores, with 20 more on the horizon. The company makes a variety of fishing boats and house apparel brands, and controls a chain of full-service restaurants inside the stores.
He broadened the entertainment offerings with Uncle Buck’s Fishbowl & Grill ocean-themed bowling alleys, named after a beloved uncle whose moniker also adorns a house brand of candy and jerky scattered along the aisles.
Bass Pro said about 116 million people shopped at one of its stores in 2012 -- 41 million more than attended a Major League Baseball game during the year. Its website was visited 86 million times, according to data compiled by Experian Hitwise. The company said the average customer drives more than 50 miles to visit a store and stays for more than two hours.
According to a November 2012 report by Moody’s Investors Service, Bass Pro has annual sales of at least $2.6 billion. Morris, 65, owns the majority of the closely held company, according to U.S. Securities and Exchange Commission filings, after buying back a 28.5 percent stake from private equity firm J.W. Childs Associates LP in 2004 and a 13 percent stake from Gaylord Entertainment Co. three years later.
Bass Pro Shops is worth at least $2.6 billion, according to data compiled by Bloomberg, based on the average enterprise value-to-earnings before interest, taxes, depreciation and amortization, and enterprise value-to-sales multiples of two publicly traded peers: Cabela’s Inc., which offers an almost identical selection and store format, and Coraopolis, Pennsylvania-based Dick’s Sporting Goods Inc., which is entering the fishing and hunting business with Field & Stream branded stores.
Enterprise value is defined as market capitalization plus total debt minus cash. Morris has never appeared on an international wealth ranking, and has a net worth of at least $2.8 billion, according to the Bloomberg Billionaires Index.
“Bass Pro Shops could only have happened in America -- the home of the free enterprise system that rewards things like hard work, value, innovation and genuine friendly service,” the billionaire said in a hand-written note sent to Bloomberg News. “Being included on your list is not my favorite thing, but then again things could be worse.”
The company disputed its valuation.
“Bass Pro’s financials are and always have been private,” the company said in written responses to questions. “Any valuation of the company by outsiders is nothing more than speculation from people with no first-hand knowledge of Bass Pro Shops.”
Bass Pro’s critics complain about the company’s practice of accepting municipal subsidies to build megastores in their communities, often with the understanding they would create jobs or increase tax revenue.
The Public Accountability Initiative, a Buffalo, New York-based research group, estimated in a 2010 report that Bass Pro-anchored retail projects had won more than $500 million in taxpayer subsidies.
Another watchdog group, the Franklin Center for Government & Public Integrity, based in Alexandria, Virginia, estimated in August 2012 that Bass Pro and its closest competitor, Sidney, Nebraska-based Cabela’s, received or were promised more than $2.2 billion from taxpayers over the prior 15 years.
“Far from being surefire, Disney World-type attractions, Bass Pro stores often fail to spur growth and do not produce outsize economic advantages for the cities that subsidize their arrival,” the Public Accountability Initiative said in its report.
“For more than 40 years, Bass Pro and our team members have worked in partnership with the communities where we have stores to create jobs, grow the tax base, increase tourism and support local charitable causes,” Morris said in a statement sent by Dan McGinn, a company spokesman. “We believe in old fashioned values and we work hard to be good community partners.”
Bass Pro was sued in 2011 by the U.S. Equal Employment Opportunity Commission, which accused the company of discrimination against blacks and Hispanics in its hiring. While Morris isn’t named as a defendant, he’s accused in the complaint of condoning the hiring practices.
According to the third amended complaint filed in federal court in Houston on April 15, out of 14,374 employees hired during the EEOC’s administrative investigation, only 995, or 6.9 percent, were black. Only 8.4 percent, or 1,207, were Hispanic. Its investigation period ranged from 2005 to 2009, although it varied for certain stores.
The company denied the allegations in its formal answer to the EEOC’s complaint, and accused the agency of trying to coerce it into a settlement, according to a letter from Bass Pro’s attorneys filed in May as part of the case exhibits.
“The company forcefully denies the allegations by the EEOC,” Bass Pro said in its statement to Bloomberg News.
In contrast to the EEOC’s portrayal of him, Morris comes across in rare print interviews and fishing videos on the company’s website as folksy and avuncular, often dressed as if he’d just come off the dock with a stringer of Bluegills.
Morris graduated from Springfield’s Drury College in 1970 with a bachelor’s degree in business and economics. He got into retailing when the local discount store wouldn’t stock the lures and other angling gear he needed for his attempt at becoming a professional bass fisherman. He rented a U-Haul trailer, stocked up on $10,000 of equipment, and persuaded his father to let him convert an 8-foot-by-8-foot section of the family’s Brown Derby liquor store into a tackle shop.
Morris branched into mail-order catalogs in 1974, catering to fishermen who wanted to restock their tackle boxes when they returned home from the nearby Ozarks. Four years later, he introduced the Bass Tracker -- fully rigged, ready-to-fish aluminum boats, complete with motors and trailers. His Tracker Marine Group now owns brands that include Nitro, Sun Tracker pontoons, Tahoe, and Mako saltwater boats, all sold inside Bass Pro stores.
The billionaire’s idea for a supersized store came in 1981, after buying a building with 80,000 square feet of retail space -- barely half the size of his typical outlet today. He didn’t know what to do with the extra space until a visit to the Freeport, Maine, headquarters store of retailer L.L. Bean, which inspired him to add aquariums, mounted-trophy collections, waterfalls and other curiosities.
“The difference between Bass Pro and other traditional retailers is the destination aspect,” said Kristina Koltunicki, a credit analyst at Standard & Poor’s. “It’s really a family event. There’s an entertainment aspect to it.”
Morris has attracted critics since at least 2002, when municipalities, taking note of Bass Pro’s value as a destination and source of sales-tax revenue, began offering him -- or the developers building his stores -- incentives to locate in their area. In 2006, a smaller competitor, St. Paul, Minnesota-based Gander Mountain Co., initiated a public campaign against the subsidies used to lure Bass Pro and Cabela’s.
In Buffalo, Bass Pro was poised to receive subsidies of $35 million to build a store in Canal Side, a 20-acre historic area, according to the Erie Canal Harbor Development Corp. After nine years of talks, the company pulled out in July 2010, following the Public Accountability Initiative report and a lawsuit filed against the company and municipal agencies by a group of citizens complaining about the subsidies.
“It’s sort of funny because they had had a lot of success in the local media in getting their story out,” said Kevin Connor, director of the Public Accountability Initiative.
Bass Pro said in its statement to Bloomberg News that because of “development challenges,” it gave up after spending $1 million in a good faith effort to locate in Buffalo.
The criticism was revived this year in Florida’s Hillsborough County, where commissioners debated whether to spend $6.25 million on road improvements to attract a Bass Pro store to Brandon. They approved the deal in February, despite complaints by small businesses that a larger competitor was being subsidized by the government.
“There have been a number of false and misleading reports, which the company believes were promoted to some extent by competitors, regarding public support for projects where Bass Pro stores are included,” Bass Pro said in its statement. The company said its stores contribute to the creation of jobs, increased sales taxes and property values.
“They draw a lot people and economic activity, and with that will come revenue, both in the form of property taxes and sales tax,” Mark Sharpe, a commissioner for Hillsborough County, said in a telephone interview. “This is something that is going to bring back a return and will shortly pay back the full investment and then begin to actually be a net revenue plus for the County.”
The incentives debate is of little concern to shoppers at the Rancho Cucamonga Bass Pro, an outlet that, along with the building’s landlord, will collect municipal payments of as much as $1.1 million a year, according to city financial documents. The company said it pays “multimillion dollars” in annual rent, and made a “substantial” investment to open the store.
On a recent weekend day in May, diners dive into breaded alligator and the Bass Pro Burger at the 11,090-square-foot Islamorada Fish Company Restaurant, while gazing at an 11,000 gallon saltwater aquarium behind the bar.
Inside the cavernous main store, visitors gawk at separate 35-foot and 24-foot waterfalls that splash into a 24,000-gallon aquarium stocked with bass and local fish, all surrounded by stuffed mule deer, coyotes, black bears, Desert Big Horn sheep and other taxidermic trophies.
For hunters, there’s the gun counter on the second floor, where they can pick up a Beretta A400 Xtreme shotgun or a box of Hornady Zombie Max Certified Zombie Handgun Ammunition.
And for shoppers who get hungry, Morris even provides a fudge shop, featuring chewy praline, coconut bon bon, rocky road and other confections.
It’s all a sweet deal for Johnny Morris.
“I feel very blessed to have spent my whole life around the great sport of fishing,” he said in his note. “I feel especially blessed to have had the steadfast loyal support of my family and extended family of very talented and passionate Bass Pro Shops, Tracker, and Big Cedar team members by my side. Together, we’ve shared a remarkable journey -- and it’s not over yet.”
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