Liquor law change could spark a license bidding war

Posted at 5:21 PM, Apr 29, 2014
and last updated 2014-04-30 00:34:08-04

SALT LAKE CITY -- Getting a full-service club license in Utah is like finding Willy Wonka's golden ticket.

Janine Anne McKenty got one of three coveted club licenses that became available Tuesday. The Heber cafe owner was one of 14 applicants, waiting for months and pleading her case to the Utah Department of Alcoholic Beverage Control Commission.

"I'm so excited!" McKenty told FOX 13. "I didn't even imagine it was going to happen today."

Getting a license that allows for the sale of liquor is viewed as better for business -- even more so than a beer/wine license. Under a change in Utah's liquor laws, those full-service licenses may have gotten even more valuable.

Three years ago, the Utah State Legislature passed a law that allows people to transfer ownership of a license to someone else. It has now gone into effect and alcohol policymakers acknowledge there is nothing in the statute that stops a license holder from selling it to the highest bidder.

"This becomes real property in a sense," said DABC Commissioner Jeff Wright. "It could have value. It could be $10,000 or $100,000 or a million depending on who wants to pay for it."

DABC Commissioners declined to talk to FOX 13 about what is known as the License Transfer Act, saying they were still weighing its impact. Club owners said they believed their licenses suddenly got a lot more valuable.

"Basically, it makes the license a commodity," said David Morris, the owner of Piper Down in Salt Lake City. "I'm an entrepreneur, so I'd say it's good because the value of my business just increased by who-knows-what value. But it definitely takes some power away from the state and gives it to the free market."

The License Transfer Act has restrictions: Prospective buyers must meet a list of qualifications set down by the DABC, have the money ready and the license can't transfer out of the county it's in. If the deal isn't done in 30 days, the license forfeits to the DABC.

DABC Commission Chairman David Gladwell noted the law change also means licenses could be handed down from generation to generation.

With club licenses so sought after, the DABC was preparing to see more licenses being bought and sold -- skipping the lines. In May, there is only one club license available because of population quotas and a dozen applicants for it.

"Who knows where the prices are going to start and where they're going to end?" said Morris. "It's free market so if you want it bad enough and you've dumped $2 or 3 million into your business and you want a license to operate, how much are you willing to pay?"