Fallout From the Cabelas / Bass Pro Merger

[Ben]

Sadly interesting story on the state of Sydney, NE since the merger. I wasn't aware it was instigated by a hedge fund guy looking for quick cash.

I'm still not that jazzed with it myself. The local Cabelas has more Redhead and other Bass Pro stuff than Cabelas stuff. I find it lacking in quality a bit over Cabelas branded stuff.


https://www.foxnews.com/us/paul-singer-sidney-nebraska-cabelas-bass-pro-shops-merger

[K Frame]

About 20 years ago I interviewed for a job at Cabella's HQ in Sidney. Looked good, got the offer, but the economics just weren't there for picking up my life and moving halfway across the country.

[MikeB]

The other side of the coin is this was another town that apparently depended on one business to stay afloat. While I’m not a fan of the way many of these people like Singer do business, the town should have made sure a long time ago that they were not wholly dependent on Cabelas employing everyone.

[Ben]

The other side of the coin is this was another town that apparently depended on one business to stay afloat. While I’m not a fan of the way many of these people like Singer do business, the town should have made sure a long time ago that they were not wholly dependent on Cabelas employing everyone.

That's a good point.

[makattak]

The other side of the coin is this was another town that apparently depended on one business to stay afloat. While I’m not a fan of the way many of these people like Singer do business, the town should have made sure a long time ago that they were not wholly dependent on Cabelas employing everyone.

Sidney is a city in and the county seat of Cheyenne County, Nebraska, United States. This city is nine miles north from the Colorado state line. The population was 6,757 at the 2010 census.

Exactly what should a town of less than 7,000 have done to diversify employment?


Honestly, the ever increasing size of businesses (mergers, acquisitions, etc...) strikes me as a very concerning symptom of our country's problems. Small, agile, responsive companies are getting eaten up by sclerotic behemoths. (Of course, this is an example of two behemoths merging to becoming a gargantuan behemoth, but it's a similar problem.)

Does that sound healthy to you? Our governmental policies are simply ensuring that the big businesses get bigger. (More compliance costs, more legal costs, etc... all make a larger company better to defray governmental overhead.)

[MillCreek]

I know many people here think unfettered capitalism is a great thing, but the American business landscape is littered with the ruins of formerly viable companies that were financially eviscerated by hedge fund investment firms who gutted the companies and then split town.  Now what to do about that, if anything, I have not the faintest.  Perhaps it is a good thing that the suits on Wall Street get richer by clicking the mouse, and the persons who had the jobs actually making/selling things lose those jobs when their companies are consumed by the hedge funds.

[K Frame]

I know many people here think unfettered capitalism is a great thing, but the American business landscape is littered with the ruins of formerly viable companies that were financially eviscerated by hedge fund investment firms who gutted the companies and then split town.  Now what to do about that, if anything, I have not the faintest.  Perhaps it is a good thing that the suits on Wall Street get richer by clicking the mouse, and the persons who had the jobs actually making/selling things lose those jobs when their companies are consumed by the hedge funds.

Unfettered socialism, of course. That way everyone and everything is ruined equally.

[cordex]

Now what to do about that, if anything, I have not the faintest.

Get back to me when you have a better solution.  I don't disagree that bad things do happen in a free market.  We do have plenty of very good examples of what happens when people try to exert top-down control over markets to prevent those bad things from happening.  As Mike hints at, the fruit of those examples is consistently and exponentially worse.

Also, I might note that you're something of a well-to-do "suit" who gets richer by "clicking a mouse" and shuffling papers and that you don't currently actually make or sell things.  I'm not arguing that you don't deserve to be well compensated for your work, but it's an interesting choice of rhetoric considering.

[dogmush]

I know many people here think unfettered capitalism is a great thing, but the American business landscape is littered with the ruins of formerly viable companies that were financially eviscerated by hedge fund investment firms who gutted the companies and then split town.  Now what to do about that, if anything, I have not the faintest.  Perhaps it is a good thing that the suits on Wall Street get richer by clicking the mouse, and the persons who had the jobs actually making/selling things lose those jobs when their companies are consumed by the hedge funds.

You may be right.  I am not of the opinion that unfettered capitalism is to blame for that particular problem, as our system is most assuredly fettered, but I might be wrong.  I'd like to get the Crony out of the Capitalism, so we can figure out which part is causing more problems.

The problem is people tend to like money and power, and try to accumulate both.

[makattak]

I know many people here think unfettered capitalism is a great thing, but the American business landscape is littered with the ruins of formerly viable companies that were financially eviscerated by hedge fund investment firms who gutted the companies and then split town.  Now what to do about that, if anything, I have not the faintest.  Perhaps it is a good thing that the suits on Wall Street get richer by clicking the mouse, and the persons who had the jobs actually making/selling things lose those jobs when their companies are consumed by the hedge funds.

We have set our laws so that a single person (or family) owning a company is a very risky proposition and our culture has encouraged people to have zero loyalty to their employees or, conversely, their employers.

Additionally, we have set our tax laws such that you make money by increasing stock price, not paying an income from that business ownership, leading to investments towards larger, more valuable companies rather than long term returns (dividends.)

We have a law and culture problem.

"Capitalism" or "free markets" is neither moral nor immoral, but we surely don't have "unfettered" free markets. We have distorted markets and we are seeing the consequences of that distortion. (We also have entrenched bureaucracies and interest groups, which further distort the "free market".)

What we have is too much government and not enough resistance to its pernicious influence by the culture.

[MillCreek]

Also, I might note that you're something of a well-to-do "suit" who gets richer by "clicking a mouse" and shuffling papers and that you don't currently actually make or sell things.  I'm not arguing that you don't deserve to be well compensated for your work, but it's an interesting choice of rhetoric considering.

I am reasonably certain that getting up at 0330 every work day and going to the healthcare system to work directly with patients, family and providers to solve their problems qualifies as work.  Certainly as much as someone who works in IT, for example.

[grampster]

In 1982, my brother and I and a friend were headed west for a tramp in the mountains south of Jackson, Wy and then up to Yellowstone.

I believe it was Sidney, Neb where we stumbled upon the Cabelas store in the downtown of Sidney.  This was before the new Cabelas store was being built at the I-80 interchange.

It was an old brick building with creaking wooden floors and the odor of wool, leather and gun oil blessed the air in that building.  It was an awesome experience to wander around that store.

[Unisaw]

This story was an ill-advised hit job by Tucker Carlson.  Paul Singer wasn’t the only investment firm that was pushing Cabelas to make significant changes.  One of the investment managers I hired in my work was pushing management at Cabelas to cut costs dramatically.  For instance, they identified the food courts as something management was building even though they made no economic sense, and I think that was an appropriate criticism by a shareholder.  Ultimately, it is management’s responsibility to manage the business in the interests of the owners.  When they fail to do so, there are consequences that may involve the headquarters town.

[MikeB]

This story was an ill-advised hit job by Tucker Carlson.  Paul Singer wasn’t the only investment firm that was pushing Cabelas to make significant changes.  One of the investment managers I hired in my work was pushing management at Cabelas to cut costs dramatically.  For instance, they identified the food courts as something management was building even though they made no economic sense, and I think that was an appropriate criticism by a shareholder.  Ultimately, it is management’s responsibility to manage the business in the interests of the owners.  When they fail to do so, there are consequences that may involve the headquarters town.

Therein lies many of the problems. Shareholders often look to much to the bottom line. It’s also what can lead to venture capitalists gutting businesses and other issues. Those food courts probably didn’t make a lot of money, but often whenever a conversation about Cabelas came up, the food court would be a topic of discussion. Also the giant fish tanks which also probably made no economic sense. Those things can and do bring in customers as well as being a part of the brand. Sometimes for a successful business things that don’t make economic sense do make business sense. The shareholder is typically too far removed to see it. I think we be better off with a lot less public companies. Kind of hard to put the genie back in the bottle though. Our laws and regulations make conglomerates and public companies almost easier to manage than private business.

[MikeB]

Exactly what should a town of less than 7,000 have done to diversify employment?

Maybe nothing, but I would bet they gave that business exclusive tax breaks or land or other benefits they didn’t give to other smaller businesses. Maybe some other business would have grown. Maybe they should have let the business move elsewhere and just had a smaller town vs having the whole town be dependent on one business. I don’t know enough specifics about that town and Cabelas to say; but we have seen this type of thing play out over and over so maybe small towns should start taking these things into consideration.

[makattak]

Maybe nothing, but I would bet they gave that business exclusive tax breaks or land or other benefits they didn’t give to other smaller businesses. Maybe some other business would have grown. Maybe they should have let the business move elsewhere and just had a smaller town vs having the whole town be dependent on one business. I don’t know enough specifics about that town and Cabelas to say; but we have seen this type of thing play out over and over so maybe small towns should start taking these things into consideration.

Small towns don't have tax incentives to offer. Cabela's opened their first store there in 1970. It wasn't because of the tax situation, I can be sure.

And just how do you suggest a town "diversify it's employment" without the use of the very preferential treatment you are now decrying?

[HankB]

The story said Singer's group had an 11% stake in the company.

Why isn't anyone vilifying the other 89%?

[MikeB]

Small towns don't have tax incentives to offer. Cabela's opened their first store there in 1970. It wasn't because of the tax situation, I can be sure.

And just how do you suggest a town "diversify it's employment" without the use of the very preferential treatment you are now decrying?

By not using it so that there is a level playing field. I actually think those preferential treatments are unconstitutional.

They may have started in the 70’s, but I would bet that they got some preferential treatment in the 90’s, 2000’s, or later. Or maybe got land cheap or other incentives. Maybe they got none of that and nothing the town did made any difference. Whichever way it is, it is still another example of a smallish town that had only one real employer which is always a recipe for disaster.

[cordex]

I am reasonably certain that getting up at 0330 every work day and going to the healthcare system to work directly with patients, family and providers to solve their problems qualifies as work.  Certainly as much as someone who works in IT, for example.

At least as much!  I don't disagree at all.  But then, I'm not the one using that rhetoric.

Also, I'm sure someone who works on Wall Street could tell a story about how they work ridiculous hours (no doubt true!) in part to help build the 401Ks and IRAs of hard-working Americans and keep retired people out of the poorhouse.

[Hawkmoon]

We have set our laws so that a single person (or family) owning a company is a very risky proposition and our culture has encouraged people to have zero loyalty to their employees or, conversely, their employers.

Additionally, we have set our tax laws such that you make money by increasing stock price, not paying an income from that business ownership, leading to investments towards larger, more valuable companies rather than long term returns (dividends.)

We have a law and culture problem.

"Capitalism" or "free markets" is neither moral nor immoral, but we surely don't have "unfettered" free markets. We have distorted markets and we are seeing the consequences of that distortion. (We also have entrenched bureaucracies and interest groups, which further distort the "free market".)

What we have is too much government and not enough resistance to its pernicious influence by the culture.

Things have changed. One hundred to one hundred fifty years ago, the great robber barons of American industry were (I think without doubt) capitalists. They set out to make money -- lots of money. They did that largely by making and selling things. To make more of those things, they employed more workers. I grew up in New England, and I'm an architect with some peripheral education in city planning. New England mill towns still have rows and rows of identical houses near the old factories and mills. These were worker housing -- they were houses built by the capitalist pig robber barons to house the people who worked in their factories. The pay wasn't enough to make the factory workers rich -- they weren't going to be vacationing in Monte Carlo on factory wages, but they had a living wage, and they had a decent roof over their heads. Courtesy of the big man in the big house.

Sam Colt is a good example. The area around the old Colt factory in Hartford, Connecticut, is still known as Coltsville. It was a neighborhood made up entirely of Colt factory worker housing.

The problem today isn't capitalism, per se, it's the shift in outlook and ownership. "Back in the day," the goal was to build up the company, which led to more jobs. Today, the trend is for the hedge funds to buy viable companies, milk all the capital out of them until they are no longer viable, then dump them. The fault, IMHO, can't be laid at the feet of "capitalism." The fault lies with greed, and with a system that rewards CEOs for destroying companies rather than building them up.

[MillCreek]

There are also the shareholders in the mix as well, many of whom think that company management is only as good as last quarter's returns, thus rewarding a short-term outlook.

[MechAg94]

Part of that can also be laid at the feet of govt.  It is govt tax law that encourages people to save pre-tax money which sits in the hands of investment groups.  Govt tax law encouraged investors to look at stock value rather than dividends when dividends were taxed as income.  I am far from an expert on that stuff, but govt tax laws, regulations and costs of employing people, etc, etc all have a big effect on the decision making of all these companies.

[Perd Hapley]

I am reasonably certain that getting up at 0330 every work day and going to the healthcare system to work directly with patients, family and providers to solve their problems qualifies as work.  Certainly as much as someone who works in IT, for example.

 

Somebody please let me know when that unfettered capitalism shows up.

[Perd Hapley]

https://babylonbee.com/news/capitalism-has-failed-us-mark-ruffalo-shouts-from-atop-massive-mountain-of-cash

[MillCreek]

https://www.businessinsider.com/joseph-stiglitz-private-equity-impact-us-economy-jobs-wages-2019-12?utm_source=feedburner&amp%3Butm_medium=referral&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29&utm_content=FeedBurner+user+view

I don't know enough about the proposed Federal legislation to know if it is good for the country or not, but I note who has written and sponsored the legislation.