DIXFIELD — I listened to the pros and cons and participated in the conceptual development of a request for proposal designed to get the best deal for Maine in a new liquor contract. Sounds simple enough, but when politics and money are involved, getting the best for Maine people is not always easy.
When I was appointed to the Maine Liquor and Lottery Commission, Dan Gwadosky, then director of the Bureau of Alcoholic Beverages and Lottery Operations, informed me about the inequities in the existing contract. He asked me to brainstorm alternatives.
The contract signed in 2003 appeared to leave money on the table. Liquor sales in Maine were increasing; Maine Beverage’s share of the total profit was increasing, and Maine’s share of the profits was increasing.
After Gwadosky’s untimely passing, the search for a new director began. This was not an easy task. The position paid little, so what was needed was a person who had the depth of knowledge and experience to do the job, and the willingness to accept a token salary in relation to required skills.
After a lengthy search, the LePage administration found Gerry Reid. Reid needed little briefing, and he hit the ground running. Throughout his tenure, he listened to all voices and developed his plan. He kept me informed and engaged as a commissioner, and when Peter Danton’s term on the commission ended, Reid was equally supportive when I became the commission’s chairman.
LIQUOR BUSINESS NEEDED A BOOST
As 2012 ended, politics began to rear its ugly head. Gov. LePage and members of his staff decided it was politically advantageous to play the blame game with the previous contract, and to spin the facts to make Gov. Baldacci and Maine Beverage Co. look bad. It was the wrong game to play, and they were wrong on the facts.
When Baldacci took office, he was left with a mountain of debt, and by law he was obliged to balance the budget. He had given his word not to raise taxes. Our liquor business was the only asset with real value. It had been underperforming as a state-run department. Some proposed that he sell the business and totally privatize it. Baldacci correctly rejected this advice, and proffered an RFP that resulted in the original liquor contract.
Could a successful bidder make a lot of money? Possibly, but to do it, the bidder had to increase the value and change the basic performance characteristics of the liquor business.
Maine Beverage, it must be remembered, was not simply given the liquor contract. Its 2003 bid offered Maine the most money over 10 years. The other three bidders offered less. Maine Beverage then passed Maine a check for $125 million up front. If Maine Beverage failed to perform, or if it performed the way the state had in prior years, it would have lost money.
What happened? Maine Beverage improved liquor sales and market share, and after 10 years, Maine had a significantly more valuable asset.
Gerry Reid recognized that Maine Beverage doubled the value of Maine’s liquor business, but he never once faulted Maine Beverage for its winning bid. In 2003, Pine State Trading was one of the losers in that bidding war. This time, it is a winner. Only the trademark marketing portion of the contract remains, and that is a very small part of the total.
BALDACCI BRILLIANT IN HINDSIGHT
Using hindsight, all bidders now realize the increased asset value. Gov. Baldacci’s decision to retain the business and let Maine Beverage increase the value has proven to be brilliant.
Gerry Reid’s visionary RFP approach held the asset’s value going forward and also recognized what others had failed to see. If we are smart about our marketing and pricing strategies in this hybrid configuration of a public-private partnership, we are now positioned to repatriate the profits that New Hampshire has been collecting.
Our efforts will build on the foundation erected by Maine Beverage and the understanding that the key to future growth and profits lies in the lowering of Maine’s key liquor prices. Consumers, the state – everyone benefits.
It was a pleasure to work with Reid during my tenure as commission chairman. It is time for the new director to perform the same magic for the Maine Lottery.
Dan Gwadosky, Gerry Reid, Peter Danton and I would all agree on two things.
First, unlike casino proceeds, all the money made by liquor and lottery ticket sales remains in Maine for Maine’s General Fund. Second, politics and blame games are fine for election time, but after elections are over, it is time to do the right thing for the people. This contract package does the right thing.
— Special to the Press Herald