The biggest name in airport newsstands is in a fight to hang onto stores at McCarran International Airport.
Clark County Commissioners on Tuesday denied The Hudson Group of East Rutherford, N.J., a chance to enter negotiations with airport officials that could have extended the leases on 18 stores from 2010 to 2019.
The denial, in the form of a 3-to-3 vote with one commissioner abstaining, means other companies will have a shot at competing for rights to operate stores that collectively generated $38.7 million in sales in 2007.
It came after impassioned pleas by potential competitors for a crack at one of the most lucrative concessions at an airport that is among the top revenue generators in a business, airport retail and food sales, that generates $5.2 billion annually in North America.
With 2007 revenue of $625 million from 550 stores in 70 airports, Hudson is the self-proclaimed leader in airport news and gift sales. But other heavyweights from the industry lined up with lawyers and longtime locals to make a case for their chance to dethrone Hudson at McCarran.
"We are a quality company; all we seek is an opportunity," said Richard Bryan, former U.S. senator from Nevada on behalf of The Paradies Shops of Atlanta, a company with more than 450 stores in 70 airports in the United States and Canada. "The news and gift concession is the crown jewel of all your concessions."
Clark County Department of Aviation Director Randall Walker argued on behalf of entering negotiations to extend Hudson’s current agreement, which expires in 2010.
Walker said that since Hudson bought out previous leaseholder WHSmith Airport Services in late 2003, it increased revenue at the stores 91 percent even though traffic at the airport increased just 32 percent.
The negotiations with Hudson would have also covered the company’s offer to pay McCarran 20 percent of revenue for rent, an increase from the current 18 percent rate.
Hudson also won the support of Culinary Local 226 by promising it wouldn’t dissuade workers from joining the union. That promise alone could have increased Hudson’s costs by $7,300 annually per employee, or about $1.1 million.
The money would have gone toward health benefits union workers get with no employee contribution and a defined-benefit retirement plan, said Frank Schreck, a Las Vegas attorney who spoke on behalf of Hudson.
"There is no guarantee that any employees will be rehired by any new master tenant," Schreck said.
Although commissioners praised Hudson, they were also swayed by presentations from Paradies and other companies, such as Las Vegas-based Ayala’s at McCarran and remarks from an attorney representing HDS Retail and Areas USA, two other airport sales firms.
The vote Tuesday means McCarran officials will produce a request for proposals for the news and gift concession, which will likely generate heated competition between Hudson, Paradies and other firms.
Commissioners Chris Giunchigliani, Lawrence Weekly and Susan Brager voted in favor of allowing Hudson to negotiate a new deal with McCarran. Commissioners Chip Maxfield, Tom Collins and Bruce Woodbury opposed. Commissioner Rory Reid abstained.
Contact reporter Benjamin Spillman at firstname.lastname@example.org or 702-477-3861.2004 $34.9 million Hudson revenue at McCarran $5 million McCarran’s cut 2005 $36.4 million Hudson revenue at McCarran $5.1 million McCarran’s cut 2006 $44.6 million Hudson revenue at McCarran $6.4 million McCarran’s cut 2007 $49.2 million Hudson revenue at McCarran $7.1 million McCarran’s cut