“Remember The Maine”: McDonnell’s ABC proposal sunk by the State of Maine.

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    ( – promoted by lowkell)

    Maine will get at least $144 million EVERY TEN YEARS for it’s whole sale operation while we in Virginia, a state 6X larger, gets $160 million ONCE TIME AND ONE TIME ONLY.

    By Paul Goldman

    As a decorated military man, Governor McDonnell surely knows the story of the Battleship USS Maine, whose mysterious sinking in the Havana Harbor, killing 3/4 of the crew, is generally considered the catalyst to the Spanish-American war. Now, over 112 years later, a bombshell report done for the State of Maine on the issue privatization of hard liquor sales in a control state may sink McDonnell’s ABC privatization plan.

    The numbers tell it all. Under the McDonnell proposal, the state’s incredibly valuable wholesale hard liquor business [remember, the retail business is separate] will be given away – there is no other fair term for it – to politically connected special interest groups, many FOB’s, Friends of Bob, for a collective one-time payment’s of $160 million, the money getting them the needed special licenses to likely create an oligopoly down the road.

    The Governor says this is a “good deal” for private enterprise. He is being modest: if he pulls this off, he is the RICKEY HENDERSON of governors.

    Here’s why.

     

    Our Pine Tree State neighbors way to the North got into a jam in 2004, a big budget deficit, and so they did the following: for the sum of $125 million, the State of Maine sold to a private management company the right to run – not own – the government’s wholesale hard liquor business for a 10 year contract term. For this sum, plus an agreement to share some of the profit if it reached a certain yearly amount, the winning private bidder got to keep all they could make for the next 10 years. Come 2014, the state got the business back and could do what they wanted, another contract, run it themselves, whatever.

    According to news stories, this profit sharing agreement has resulted in Maine receiving an additional $19-25 million in these first 6 years of the 10 year contract term.

    Bottom line: Let’s take the $19 million number and further assume there is no further profit sharing through 2014. THIS MEANS at minimum, the State of Maine will have received, by the end of the contract, $144 million PLUS THEY WILL STILL HAVE 100% OWNERSHIP OF THE WHOLESALE BUSINESS!

    Maine has a population barely more than 1.3 million people.

    Virginia has a population closing in on 8,000,000. Thus, we are roughly 6 X larger. Yet, according to Governor McDonnell, it is fair for Virginia to give away FOREVER the state’s wholesale hard liquor business for $160 million!! That’s right, it is no longer our asset, it is gone.

    Say what? Right now, the real value of the Maine whole sale hard liquor is wrapped up in its gubernatorial campaign, the state wanting to renegotiate the contract because it is clear the $125 million was too low, and even the winning bidder appears to know that. A study by the accounting firm  Deloitte & Touche of the situation completed last year has fueled the realization that the whole sale business is worth a lot more than the state realized in 2004 when it entered into the 10 year contract.

    THE QUESTION FOR GOVERNOR McDONNELL: how is it possible that the state of Maine, with a consumer base 1/6 of Virginia, will wind-up getting hugely more for it’s wholesale operation than Virginia?

    Do the Math: By 2014, if nothing changes, Maine will have at received at least $144 million, will have 100% ownership, and will now if it wants be able to extend a new 10 year contract at a better price! Then, in 2024, it can enter into a third contract at a still better price [bigger population].

    In simple terms: Maine will get at least $144 million EVERY TEN YEARS for it’s whole sale operation [assuming it still wants to outsource the management] while VIRGINA GETS $160 million ONCE TIME AND ONE TIME ONLY!!!

    With all due respect Your Excellency, the Governor, you can’t be serious?  

    • Dan Sullivan

      rounds by order of magnitude to the side of special interests and biggest donors…

    • walkabout

      Obviously, Republicans like McDonnell believe in privatizing as many publicly-owned entities as they can as quickly as they can.