The PLCB has over $1.6 Billion in liabilities.....and wants to stay that way.

When your business has low debt, good cash flow, a decent profit margin, and service better than the competitors, you can expect somebody might want to buy it, so they can get the benefit of all those good things. And if you're in debt up to our eyes, have crappy management, legendarily bad customer service, your business doesn't look too good to the outside world, no matter how much demand there is for your product.

Yeah, we're talking about the PLCB. After 20+ years of "record profits," somehow they are more in debt now, than at any time in their history. Over $1.6 Billion in liabilities and a total position of $1.1 Billion in liabilities exceeding assets.

Why would any business want to be in that position? They wouldn't, unless they wanted to look like a bad investment to the outside world. If the PLCB was a real money making venture run by at least semi-competent people, then the private sector would have more interest because they know that:

1. They can run a consumer industry far better than any bureaucrat.  
2. They are inherently more efficient. 
3. They wouldn't be saddled with over a billion dollars in debt right off the bat.

YEAH! My business model sucks!

But the PLCB doesn't really care how much or what kind of debt they have. There is no mandate that says they need to be current, no benefit for being efficient, no propaganda value in saying "Look, we decreased our debt!" instead of "We gave 30 million more to the General Fund!" Although this year the amount they "gave" to the General Fund actually decreased $30 million, but you aren't hearing them say anything about that.

Why aren't they worried about their debt? The PLCB has a backup plan and it is called the taxpayers. They can't default - we cover it. Have to pay out more than you take in? No problem, we got it. Can't raise those variable prices fast enough to keep up with rising admin costs? Just give less to the General Fund, the taxpayers will make up the difference!

Remember when the PLCB tried to leech itself onto the state debt with a bond against future earnings? (Don't worry: we do.) Make yourself as unattractive as possible by hanging a 20 year debt obligation to your nose, and the people in favor of privatization (i.e., the majority of the adult population) have one less tool to work with.

Giant leech.  Like the PLCB but more useful.

I'd ask you to stay alert for any hint of debt reduction from the PLCB. With all this money coming in from ACT 39 and variable pricing, it shouldn't be long before you'll hear it every day. That's right, and I have a bridge for sale too...

Privatize.

Great Minds, Great Quotes...and the PLCB

Apply great wisdom to the situation of the PLCB...and you realize how badly this has all turned out.

"Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery." - Winston Churchill 

     What organization does that sound like?

“The only real mistake is the one from which we learn nothing.” - Henry Ford

“Failure isn’t fatal, but failure to change might be.” - John Wooden

“Don’t bury your failures, let them inspire you.” - Robert Kiyosaki

“It’s fine to celebrate success, but it is more important to heed the lessons of failure.” - Bill Gates

"It certainly wasn't a failure." 

- Joe Conti, about the failed wine kiosk program.

“Success is stumbling from failure to failure with no loss of enthusiasm.” - Winston Churchill

     Then the PLCB must be an immeasurable success; 

that's all they ever do!

"Failure is simply the opportunity to begin again, this time more intelligently." - Henry Ford

     "Intelligently" being the key word here. Of course, you have to have a Board that has some intelligence for this to work.

"Honesty is the fastest way to prevent a mistake from turning into a failure." - James Altucher

Graft, collusion, nepotism, lost paperwork, lying & 

destroying evidence are probably not what he's talking about.

"You have to be able to accept failure to get better." - LeBron James

Joe Conti, again: "It certainly wasn't a failure." Yeah, Joe: it was.

"Complacency breeds failure. Only the paranoid survive." - Andy Grove

Isn't that right, Charlie "40 Years At The PLCB" Mooney?

"Inability to make decisions is one of the principal reasons executives fail. Deficiency in decision-making ranks much higher than lack of specific knowledge or technical know-how as an indicator of leadership failure." - John C. Maxwell

And when you have all of the above -- plus $1.9 billion in liabilities -- 
you have the PLCB.

Tragedy in life normally comes with betrayal and compromise, and trading on your integrity and not having dignity in life. That's really where failure comes. Tom Cochrane
Read more at: https://www.brainyquote.com/topics/failure

"Failure is not a single, cataclysmic event. You don't fail overnight. Instead, failure is a few errors in judgement, repeated every day." - Jim Rohn

"If you can't admit a failure, you're not an entrepreneur. You are not a good business person. There's nothing brilliant about what you are doing." - Mark Cuban

Failure comes only when we forget our ideals and objectives and principles. Jawaharlal Nehru
Read more at: https://www.brainyquote.com/topics/failure

One more time: "It certainly wasn't a failure."

Honesty is the fastest way to prevent a mistake from turning into a failure. James Altucher
Read more at: https://www.brainyquote.com/topics/failure

There are no secrets to success. It is the result of preparation, hard work, and learning from failure. Colin Powell
Read more at: https://www.brainyquote.com/topics/failure

There are no secrets to success. It is the result of preparation, hard work, and learning from failure. Colin Powell
Read more at: https://www.brainyquote.com/quotes/colin_powell_121363?src=t_failure

There are no secrets to success. It is the result of preparation, hard work, and learning from failure. Colin Powell
Read more at: https://www.brainyquote.com/topics/failure

There are no secrets to success. It is the result of preparation, hard work, and learning from failure. Colin Powell
Read more at: https://www.brainyquote.com/topics/failure

There are no secrets to success. It is the result of preparation, hard work, and learning from failure. Colin Powell
Read more at: https://www.brainyquote.com/topics/failure

Good ol' boys instead of real businessmen

In their continuing effort to change as little as possible (unless forced to by the threat of privatization), the PLCB appointed a bureaucrat lifer with no real world business experience to...ahem...lead them for the next two years (or until Wolf leaves office, whichever comes first). Charles Mooney, newly appointed as the PLCB's COO in July has been named the new Executive Director ("please don't call it CEO, we had one of those"), replacing John Metzger. With 37 years at the PLCB, you know he doesn't have an original idea in him; they've all leaked away years ago.

While the press release makes it sound like he was responsible for all improvement in the last decade, he was also around to agree with the wine kiosk debacle. Perhaps he will claim credit for the year it took to move the Mountaintop store 50 feet and the five years it took to put a store back in Renovo. He should also claim going against the wishes of the citizens in Lewisburg and Lock Haven.

In reality, as recently as 2013 be wasn't even listed as a Director in the PLCB Annual Report for 2012-2013. In fact, the only reason he even was promoted in FY 2013-2014 was that Jim Short (Director of Marketing and Merchandising) was found guilty of taking bribes. Dale Horst (Director of Retail Operations) moved over to that position (even though he had zero experience in marketing), and that left his position open. Just one more chance to get qualified people in the agency, ignored by the puppets on the Board. I guess they needed a "Yes" man instead of a business man.

Now that the PLCB has some breathing room thanks to McIlhinney's Mistake, the "Four Bottle Folly", the PLCB can go back to doing what they do best: as little as possible.

They certainly won't make things more convenient for the consumer (756 stores in 1973, 603 now, a 25% reduction); not using their buying power to keep prices down (as reported here and here). What they will be doing is using "variable pricing" to actually raise prices (as I noted here and here), and generally screwing the populace in order to keep themselves afloat (remember, they still owe almost $240 million and who do you think has to pay for that?)

A PLCB insider who hasn't done anything that isn't 50 years behind what the private sector has been doing is not an improvement. Privatize and rid ourselves of this fiasco of a business and fake business people.

New Positions, Old Positions

The PLCB says, over and over, they want to run like a business. I did a comparison of how they attempt to go about that in my "Run Like A Business - Really?" post at the beginning of this year.

One of the things businesses do, one of the most important things, is hiring personnel to do the work and run the operations. The PLCB way is not so much to hire qualified people in 99% of those occasions, as it is to prefer the policy of promoting from within. In general, though, those people know nothing about how real retail is run, because all they know is the Socialist Monopoly PLCB retail model, which has little to do being "run like a business." Governor Wolf continues the tradition of hiring hacks, people with no liquor retail experience, with his latest addition to the board.

Who runs the "business"? The Board seems to have abdicated that responsibility, reserving to itself the job of rubber-stamping license applications (and reading letters from the Governor), testifying to the Legislature about how wonderful things are (despite how they look), and hiring people to actually run the "business." People like Joe "Da CEO" Conti and John Metzger and whoever Metzger's replacement will be when he retires at the end of September.. Nice work, boys.

Now we have the new made-up position of COO (Chief Operation Officer), which you usually find in businesses with more than one thing going on. Maybe he is in charge of the liquor testing lounge too. Just another $120+K slot that didn't exist before this year, filled by another born and bred PLCB insider, the former Director of Retail Operations Charles Mooney.

Besides getting paid every two weeks, just what has Mooney done? Not much so far, that we can see. But that's not surprising, considering that he was the guy who took years to replace Renovo's store, a year to move the Mountaintop store 50 feet (give or take), and pulled the State Stores out of downtown Lewisburg and Lock Haven against the wishes of the community, the local Representative, and their state Senator. You can read some other consumer friendly (I'm kidding) things he's had his hands in here. I don't expect much to change in the new position. Charlie's replacement is another brainwashed 30 year PLCB vet, Carl Jolly, so you know there won't be any innovation happening, just like during Charlie's tenure. Same old, same old, that's the way we've always done it here at the good old State Store System.

I'm not sure how this is going to work. In a real business, all the "Chief" officers are higher up the food chain than Directors. But at the PLCB we now have a COO and have had CIO (Chief Information Officer), both ostensibly under the Executive Director, at least according to the PLCB's own wire diagram in their Fiscal Year In Review (page 9 if you are following along). Just like every business you've never seen.

It is a typical PLCB answer to a PLCB problem. Throw money (or in this case, Mooney) at it and see if that fixes it. Adding more bureaucrats to an already top-heavy, incompetent organization is not the fix that is needed. Neither is keeping and promoting the old guard who only know the PLCB way. PLCB lifers have no real business experience, because the PLCB isn't a real business.

But if the PLCB is intent on creating high-paying positions that they don't have anybody qualified to fill, I'll offer these suggestions so they can fully mimic what a real business does.

CXO - Chief experience officer - A chief experience officer is the officer responsible for the overall user experience (UX) of an organization. This executive is ultimately responsible for the strategy and user interface design to connect the consumer to the organization's products and services, and may further oversee marketing communications, community relations, internal relations and HR relations. This would then supply someone convenient to blame for the millions of customers who have and continue to have poor experiences with the PLCB. Very handy for the Board to deflect criticism; this should be someone especially expendable.

CFO - Chief Financial Officer - This person manages the corporation’s financial risk.  They deal with data analysis, financial planning and record keeping. Being $240 million in the hole might require somebody to blame, so who better than the CFO?

CHRO - Chief Human Resources Officer - With all the new hires, the PLCB will need to be open longer hours and Sundays, and deliver products. That's gonna take a CHRO to combat the likely 40% turnover rate for new employees (and to blame for it).

CMO - Chief Marketing Officer - Somebody has to be in charge of the new, exciting coupons (and take the blame for their inevitable failure to meet revenue expectations).

CRO - Chief Revenue Officer - You really need this guy to explain to the unions and other PLCB supporters (and maybe even the Democrats in the Legislature) that "revenue" is not "profit". 

CSO - Chief Strategy Officer - Somebody has to be the point of focus to fight every pro-consumer initiative, every threat to the status quo, and any changes that weren't approved by Gifford Pinchot himself. (This position is unique in that it doesn't accept blame, it creates it. Very useful.)

How a real dysfunctional business works. Maybe the PLCB's not that far off...

Of course, all of these people need to report to a CEO, which they haven't had since Conti smeared crap all over title like an incontinent monkey, so you can add that salary to the total. You should be able to waste at least a few million on these folks and their staff  in addition to your new COO position. To make sure you expend the maximum amount, remember to only hire people with no experience in real life retail or liquor — just like was done over the past 80 years.

The only way the liquor and wine business in this state will ever "run like a business"...is if it is a business. Even better: lots of businesses.

Privatize. Accept nothing less.

PLCB Provides Value? Don't Bet On It

The Wine Spectator put out their list of the top 100 value wines broken down into 6 categories.  You can see the lists here. Who wants to guess how well the PLCB at selecting those wines?

Read on.

Now I didn't check all 100 but took the top five of each category and went from there.  Even with the PLCB's new and improved search function I checked most of them multiple times to be sure but that doesn't mean one or two were entered in some weird way that only the PLCB can understand. I will say this, only a few were above the suggested retail price.

1. Light White

• 1 in stock,  Don't get too excited the one in stock is in less than 20% of the stores
• 2 available SLO
• didn't stock 2

2. Rich White

• 1 in stock (at 5% of the stores) 
• didn't stock 4

3. Elegant Reds

• 1 in stock
• 1 maybe in stock but the PLCB didn't list the vintage
• 1 available SLO
• 2 not in stock

4. Big Red

• 1 maybe in stock but again, the PLCB didn't list the vintage
• 4 not in stock

5. Rose

• 1 in stock
• 4 not in stock

6. Sparkling

• 2 in stock!
• 3 not in stock

Remember that in PA not in stock means your are never going to see it not that they happen to be out at the moment.

Extrapolate that out and our State Controlled Monopoly with all that buying power and supposedly well trained (but under certified) buyers would have managed to stock maybe 25%, might be able to get an additional 10% and for 65% of the wines listed missed the boat completely.

If you hurry there is still time to get these well rated value wines......out of state.

Have a great New Years!

Why can't the PLCB put out financials in a reasonable amount of time? Real business does.

The fiscal year ended on June 30th, and with it, the PLCB year. Here we are, about a month later, and not a peep from the PLCB about how they did.

A real business would have been filing quarterly reports, but I guess we citizens, the so-called 'owners' of this public nightmare, aren't important enough to rate that consideration. It isn't like some clerk is Harrisburg is sitting there with a pull-down adding machine waiting for the mail to be delivered. This is the age of computers. The day after the fiscal year ends, they know what they made within a few tenths of a percent, they know what they spent, and they know what is owed to them. So where is it?

PLCB - Moving at the speed of early 20th century business.

I'm not asking for audited results, just for the normal BS they put out in September last year: gross sales, sales net of taxes, taxes collected, what they spent, operating income. I can understand if it doesn't match the audited amounts done months down the road: things change a bit. But unless there is a major accounting screw-up, or costs that they try to hide (remember the $33+ million in computer system overruns), the number will be close enough to give the public an idea of what is going on. Just why does that take 2 months? Could it be because privatization is in play?

Here are my predictions for this past fiscal year:

The PLCB had record sales again. No surprise there with a police enforced monopoly, a growing population and things costing more over time: what else would you expect?

There should be some crowing about record amounts of taxes turned in, but how is that a surprise when sales go up? Tax payments are done by tens of thousands of businesses, but the PLCB is the only one that puts out a press release saying that they did their job. Congratulations, guys.

The PLCB will not have record Net Operating Income or what they call "profits". It went down last year and I'm betting it will go down again this year. You gotta wonder how they can have record sales all the time, but rarely record profits (or 'unwasted use tax', as I like to call it).

Store, Warehouse, and Transportation Costs went up 8% last year and i say they will be up by at least the same amount this year.

Administrative, Alcohol Education, and Support Costs went up 9% last year and they will go up again by 8-10%. Don't even think that was because of the education part, since the total was even more in 2011. Went down after Rep. Turzai started pointing it out and then went back up to what it was. It's going to go up again.

So there you have it.  We'll have to wait and see how well my prognostication did whenever the PLCB can figure out how to work those computers.

Until then - keep buying out of state. It's the patriotic thing to do.

The PLCB annual report - Let's look at some numbers

By all accounts, the PLCB had a good sales year. Well, hurray. It's nothing to brag about -- though they will, and have -- since they are the only game in town. The population grows (slowly, but it grows), the economy gets better, and people spend more money on booze. It isn't because the PLCB is doing a good job; it is because the citizens have no other choice.

PLCB touts "record sales": report shows net income down

That doesn't stop the PLCB from presenting their annual report as if they had something to do with the growth in sales. Here are some things they crow about in the report:

1. License fees returned to local municipalities $ 4,521,545 -- If the PLCB didn't get in the middle, local communities would get this revenue as a regular stream when businesses paid for their licenses TO THE LOCAL COMMUNITIES.

2. Philadelphia and Allegheny counties received $8,269,803 in returned local sales taxes. -- Again, if the PLCB wasn't in the middle, the taxes would be collected and distributed anyway. It must be nice to crow about following the law...except, of course, when it comes to trips and gifts for senior level PLCB employees.

3. Paid Total Annual Rent of $42,034,434 for 606 stores. -- This begs the question of how much rent would be paid if there were 2400 or so private stores? 2400 stores is about what the national average is for a population of almost 13 million.

4. Tweets sent: 723. -- Now this is pretty funny. A $2 billion enterprise managed to send out fewer tweets than my 16 year old niece does in a month. And then they go on to say that the PLCB was mentioned 2,516 times. This post counts as one of those mentions, just as an example, and so does this: "Hey @WolfForPA, can you do something about the PA Liquor Control Board, like get rid of it? ‪#‎priorities‬ ‪#‎wine‬ ‪#‎freedom‬" (tweeted by @mainlinehousewife on Nov. 4)

5. Updated the Fine Wine and Good Spirits eCommerce site with 'complete and accurate product names,' product descriptions and standardized acronyms. -- Really? From the people who completely cocked up the beer registration list just a few years ago? Let's look at just a couple easily-found examples.

George Dickel Tennessee Whiskey. The No. 8 brand is listed in the bourbon section and the No. 12 brand is listed in the Whiskey section

Jack Daniel's Tennessee Whiskey has one listed in the bourbon section "Jack Daniel's 1St Edition Straight Bourbon Master Distiller Collection" Which only exists in the mind of some PLCB employee since Jack Daniel doesn't label ANY of its whiskeys as "bourbon." Not one. All the others are listed in the Whiskey section as they should be, except for one that is in the Blended Whiskey section; but Jack doesn't do blended whiskey either. I will give them credit though: it only took them 80 years to finally learn how to spell "Jack Daniel's" correctly. I pointed out mistakes on that as recently as this past spring.

6. Also restructured the website search engine to allow searches using misspelled words, abbreviations, and synonyms producing much improved search results for customers. -- Let's see how that works.  Sticking with Jack Daniel's type in Jack Danial's into the search box.  You only misspelled it by one letter putting an "a" instead of an "e" in Danial's. The result.....a page and a half of Calico Jack rum first, but JD does show up on page 2.  

How about we just forget the "'s" and put in Jack Daniel into the search box.  Again a page and a half of Calico Jack rum and then the JD on page 2. An improvement! ...until you realize that if you spell Jack Daniel's correctly and search for it, you still get a page and a half of Calico Jack rum first! The trick, apparently, is to just put in Daniel's, and you'll get all the JD  listings. Just don't misspell it or forget the "s" or the apostrophe, because then you get nothing contrary to what the PLCB says. Not quite ready for prime time and certainly not a product a $2 billion company should be proud of.

I can find a lot more but let's look at some money.

Sales on the captive Pennsylvania population did go up 3.2%, which is to be expected, given that the state has a monopoly and overall spirits and wine sales were up nationally. But Gross Profit only went up 3%...and Net Income (which in a 'real' business would be called 'Profit') went down by 3.6%! Wondering why? Here's a clue: operating expenses went up 5.2% (which is a lot, considering what it bought them, as we'll see in a bit). Operating income went down, even though the much-ballyhooed 'bailment' is in effect (where the PLCB doesn't pay for a product until it leaves the warehouse). Contributions to the BLCE went up 4.1 %, but BLCE enforcement of border bleed is at the lowest it has ever been. Oddly, during this record alcohol sales year, the amount that went to Drug and Alcohol programs went down 3.6%, which seems a little contradictory, given the 'control' mission of the PLCB.
 
Don't overlook another big one: Return on Assets (usually called Return on Investment) went down 14.8%! ROA gives an idea as to how efficient management is at using its assets to generate earnings. Also, even though there was only 1 more store than last year, wages as a percent of sales increased an astounding 18.3%, which is not a good indicator of efficiency either.

Of course, a real business has to list all their debts on their reports to shareholders...and I don't see the over $600 million that is the PLCB share of the pension debt listed anywhere. Maybe it doesn't count since the taxpayers and not the PLCB have to cover it. 

Like any business with a PR department, the PLCB tries to put on its happy face when reporting on what a super duper job they are doing, but the end result is still less selection, less convenience, higher prices, no real increase in safety, and certainly more aggravation for the consumer than in states with a privately-run liquor retail and wholesale industry. One only has to travel to see that for yourself.

State Stores Lose Money...and the PLCB's proud of it

In the Bizarro World of the PLCB, where crap selection and lackadaisical service make a store "world-class," apparently it is also a good thing to have 45 stores (out of 620-ish, about 7%) losing money! Is this all about the PLCB's touted "Serve The Rural Areas With Booze!" program (see below; sorry about the Chinese Communist Party-style title, it's almost irresistible with the PLCB)? Not completely, it seems like it's more about the PLCB's business incompetence. Check out this piece at the Pittsburgh Tribune-Review, which reports that "The LCB data obtained by the Tribune-Review show that the losing stores weren't all rural: Two stores in Brighton Heights and Downtown and one in Philadelphia were unprofitable in 2009-10."

But put aside how completely awful at business you have to be to not run a profit when you have a police-enforced monopoly. Joe "Da CEO" Conti says it's a good thing! Here he is in an AP story about yesterday's hearings:

Conti said a standard state store carries nearly 2,500 types of liquor and wine*, and that the board maintains stores in rural areas, even when they are not profitable, as a matter of fairness for consumers, which may not be the case under privatization.
"The bill cannot force a grocery store to bid for a license," said Dale Horst, the PLCB's director of retail operations. "If the PLCB can't make any money because the sales volume is simply not there, these areas may not be served at all."

Here's a thought: the number of stores in the state is set by the PLCB, not by law. They claim it's to cut down on drunkenness, on the ill effects of alcohol abuse. Really? Or is it because they've already got stores in all the areas that can make money using their horribly inefficient business model? Wouldn't it make more sense to go private, and allow the local grocery store to sell wine and sixpacks, and liquor if they want to, than to force a State Store to carry 2,500 different kinds of booze?

Check this assbackwards reasoning. They won't allow specialty stores in Philly and Pittsburgh to carry a large selection of wines and spirits, like the big stores right across the border, but they'll tell you that you can "easily" order from 30,000 selections (you know, odd sizes, and double-entered SLO/on-shelf items, but it's a lot, Joe Da CEO says so!) on their SLO system and have it delivered (to the store, not to YOUR house, that would be too easy). But then they turn around and force rural stores to carry a relatively broad selection of stuff -- and lose money on it! -- rather than pare it down to a reasonable selection...and let them order other stuff by SLO! I mean, if I lived in Snow Shoe, I suppose I'd be glad, but it's not like it makes sense.

Of course it doesn't. It's Bizarro State. Fix it. Privatize, boost the number of licenses, and kill the case law. Let the PLCB focus on enforcement. Fix the booze tax situation. Make booze law that serves the citizens instead of bureaucrats and business. Please.



*Compare that to the 13,000 SKUs of liquor, wine, and beer at the latest Total Wine to open in Florida. Or, if you'd rather, compare it to under 500 SKUs at almost any gas station or drug store in rural Maryland...which most rural Pennsylvanians would find incredibly convenient compared to having to drive an hour to get to a part-time State Store in one of the nine Pennsylvania counties that only have ONE State Store. Conti and Hereditary Union President For Life Wendell W. Young IV will tell you that lots of stores with a minimal selection is so much worse than one store in the 522 square miles of Adams County, or the one store in the 898 square miles of Clinton County, or one in the 405 square miles of Wyoming County...If only the Legislature would kill the case law, or change the ridiculously strict population limits on licenses, or...something. Something like privatization.