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CLT gets some Love after all

It seems that Southwest Airlines is adding a flight from Charlotte to Dallas’ Love Field after all. Service starts on August 9th , the day after the airline’s second summer-seasonal flight to Houston Hobby ends. And yes, there’s a lot of drama associated with this, as Love Field is capacity limited to federal law — only 20 gates are allowed — and adding the Charlotte flight and seven other destinations in August including Raleigh comes by kicking Delta Air Lines out of the airport…

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Charlotte apartment vacancy rates up

And there are a lot more units under construction. Not a good combination really, especially over the lower term, when today’s 20-somethings finally settle down, have kids, and, yes, buy a house.

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Dave Gettleman on the clock

Will the 2015 Carolina Panthers be better than the 2014 edition, which backed into winning its division despite having a losing record? Based upon what we’ve seen so far in free agency, I’m not optimistic.

As James Datar of Cat Scratch Reader puts it:

It’s my sincere hope we’re not destined for another barren few months and that Dave Gettleman’s talk of “not shopping at the dollar store” doesn’t become this year’s “the answer is on the roster,” but there’s a possibility that’s the case. It’s not like the Panthers need a lot to compete in 2015, but they need more than they had last year. So far the biggest questions [are] unanswered…

Yup.  The Panthers pretty much appear to be going sideways, resigning players (Greg Olson, Dwan Edwards, Ed Dickson, Colin Cole) from last year’s decidedly up-and-down squad. The big addition — in terms of size and paycheck — is offensive tackle Michael Oher of The Blindside fame (two years for $7 million total) as a replacement for Byron Bell, who won’t be back. Even that move doesn’t qualify as much of an upgrade. As Tyler Conway of the Bleacher Report notes, Oter isn’t a very good pass blocker — Pro Football Focus ranked Oter 50th of 54 eligible tackles in pass blocking last year — and only sporadically effective as a run blocker. His conclusion:

According to Pro Football Focus’ grading system, Oher has gotten progressively worse each season. More disconcertingly, Oher hasn’t been a net-positive player since that initial campaign. He has largely subsisted on his ability to stay on the field and football teams’ relative unwillingness to replace a perfectly healthy player; it’s no coincidence the Titans released him after his first major injury.

Carolina will hope Oher hitting the open market proves to be a wake-up call. He’ll likely compete for the starting right tackle spot while working on the type of deal where it isn’t too complicated to move on if necessary.

To be fair, the Panthers’ big issue remains their salary cap situation — the team has only partially put Marty Hurney’s slew of big, questionable contracts behind it. Perhaps that’s enough to allow the team to move from shopping at the dollar store to shopping some at Target. We haven’t really seen evidence of that yet though — and until we do, it’s hard to get too excited about the upcoming season.

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The Ottawa pullback

And the promised look at why US Airways’ Charlotte-Ottawa flight is ending in early June. The simple answer is that the Canadian market has turned against US Airways.

If you go back to 2008 through 2012, US Airways clearly regarded Canada as low-hanging fruit, among the easiest expansion opportunities out there. Entering 2008, the airline’s routes from its eastern hubs (I’m excluding Phoenix from this analysis) to Canada were:

Philadelphia: Toronto, Montreal, Ottawa

Charlotte: Toronto

And then the route additions started:

2008: Charlotte – Montreal

2010: Philadelphia – Halifax, Charlotte – Ottawa

2011: Philadelphia – Quebec City

2012: Washington Reagan National – Montreal, Ottawa, and Toronto (with slots obtained from Delta in the slot swap)

Looks good right? Well, then the pullback began:

Washington – Ottawa didn’t make it through 2013

Washington – Montreal was dropped in the summer of 2014

Philadelphia – Quebec City service became seasonal this year

And now the elimination of Charlotte – Ottawa.

There have been significant capacity cuts on surviving cuts too. For example, in 2010, when US Airways added its Charlotte-Ottawa flight, it was also flying three-times a day from Philly to the Canadian capital. These days it’s only twice a day.

What of Montreal? Or put another way, given the recent Canadian route eliminations, can we expect Montreal service to last? The answer is “maybe.” US Airways has cut capacity to Montreal too. In March 2012, the airline offered:

Philadelphia – Montreal: 6 flights a day, three on large regional jets carrying 69 or 76 passengers, and three 50-seaters

Charlotte – Montreal: 2 flights a day, on a 76-seat large regional jet, the other on a 50-seater.

March 2015:

Philadelphia – Montreal: Five flights a day, all on 50-seat regional jets

Charlotte – Montreal: Once a day, on a 50-seater.

So nearly a 40 percent cut in capacity over the last three years. Not a good sign.

American Airlines does do well in Montreal though, but I’m not sure that helps the case for keeping the remaining Charlotte – Montreal flight — this may be a case where other AA/US hubs (Chicago, Philadelphia and  Miami) can offer enough connection option to render a long route on a high cost per seat mile 50-seat regional jet to Charlotte redundant. Time will tell.

Update: Delta sees an opportunity in this and is starting Atlanta – Ottawa service in July.

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Ghosts of North Wilkesboro

SBNation offers up a fascinating look at North Wilkesboro — most noted for its race track that hosted NASCAR back in the day — moonshine, and Junior Johnson. A bit of flavoring;

The spring and fall races at North Wilkesboro in 1996 would be the last.

Drivers shrugged. “It costs us thousands of dollars to take a team to a track like that,” Darrell Waltrip, then a driver and owner, told The Associated Press in 1996. “Even if they doubled the purse, it’s still hard to cover the expenses we incur when we go to little race tracks like that. We beat the cars all up, we get in fights, tempers flare, it’s just that kind of arena.

“We don’t want to leave our roots behind. We don’t want to forsake the people who helped us get where we are. But time marches on. I think we call it progress.”

H/t: RH

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Chop Shop on chopping block

Says here that  Crescent Communities is planning to redevelop the parcel in NoDa that currently houses the Chop Shop. Is this at all surprising? No.  As land prices continue to go up in Charlotte’s hot neighborhoods — and NoDa would certainly qualify — it’s just difficult to generate enough revenue from a (large) music club to pay the increased rents. Think high expenses from of all the space you need but very inconsistent revenue streams.

I  wouldn’t be at all surprised if we saw other notable Charlotte music clubs either close or forced to move in the short-to-medium term for exactly the same reason.

Bonus observation: In order to make a medium- to large music club work down the road may require the club owner to actually own the property and not lease it.

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Can the Democrats retake the U.S. Senate in 2016?

It’s quite possible writes Larry J. Sabato in Politico. The basic reason why is pretty simple:

In 2016, the Republicans seem to have their backs to the wall, defending 24 seats to the Democrats’ 10. Just two Democratic seats—Harry Reid’s in Nevada and Michael Bennet’s in Colorado—are not solid, both in states where the GOP surged in 2014.


Meanwhile, Republicans must defend seven incumbents that represent states carried by President Obama in 2008 and 2012: Kelly Ayotte of New Hampshire, Chuck Grassley of Iowa, Ron Johnson of Wisconsin, Mark Kirk of Illinois, Rob Portman of Ohio, Marco Rubio of Florida, and Pat Toomey of Pennsylvania. An eighth state Obama carried in 2008 but narrowly lost in 2012—North Carolina, home to two-term Republican Richard Burr—also merits mention with these other states.

So long as Grassley runs for a seventh term—and he says that he will—it’s doubtful Democrats can credibly challenge him.

But under the right conditions—i.e., strong Democratic Senate candidates combined with a solid national lead for the Democratic presidential nominee—all seven of the other seats are vulnerable. Three of the states (Illinois, Pennsylvania, and Wisconsin) are more Democratic than the nation as a whole and have a history of voting Democratic for president even when the party loses a close race nationally, as in 2000 and 2004. This reality has placed Kirk, Toomey and Johnson at the top of the endangered senators list.

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Smaller high schools not always the answer

In recent years, there’s been a trend toward smaller high schools, including taking an existing high school and subdividing it into several smaller schools. In practice, this hasn’t always worked out so well.  As the Raleigh News & Observer reports:

Over the past decade, East Wake High School has gone from being at the national forefront of education-reform efforts championed by Bill Gates to a cautionary reminder that not all new educational ideas work as planned.

Political, business and education leaders had touted the concept that transforming high schools such as East Wake into separate small schools would show that traditional high schools were obsolete. Now Wake County school leaders say the model didn’t achieve all they had hoped when the program began in 2005 and are consolidating the Wendell campus back into one school.

“East Wake has had 10 years,” said Wake school board Vice Chairman Tom Benton, whose district represents most of eastern Wake. “They’ve recognized, based on all the measures, that at best it’s flat-lined and it’s time to look for something different.”

The tone was more upbeat in 2003 when the Bill & Melinda Gates Foundation first announced that it would provide what would eventually become more than $20 million to help create innovative small high schools in North Carolina. It was part of an effort by Microsoft co-founder Bill Gates that would result in his foundation’s providing $650 million nationally to support small high schools.

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Charlotte’s Chiquita Slip-Up

Got a new column out for Carolina Journal on Chiquita. The article in full.

CHARLOTTE — The common complaint about economic incentives is that they amount to having the government pick winners and losers. That’s certainly true. However, as recent events in Charlotte show, another problem with incentives is that government handouts can go to winners and losers.

In 2011, state, Mecklenburg County, and Charlotte officials went bananas over the possibility of getting Chiquita Brands to move to Charlotte. No, this didn’t involve turning large portions of the Queen City into a banana plantation, but rather in attracting Chiquita’s corporate headquarters from that other Queen City, Cincinnati. To help seal the deal, state and local governments offered up to $22 million in incentives over 10 years.

Chiquita’s stay in Charlotte lasted nowhere near a decade. The company was bought out in January by a Brazilian firm and promptly announced that it will leave town by the end of the year. The move will cost Charlotte 320 high-paying jobs. Under its agreement with the state, county, and city, Chiquita will repay all incentives it has received to date.

“You can’t expect loyalty from any company if you’re paying them to move,” The Charlotte Observer quoted Mecklenburg County commissioner Bill James as saying. “Government was basically prostituting themselves to get them here. … Nobody falls in love with a prostitute.”

James is correct that there’s no reason to expect loyalty from a business that came to your town because you threw the most money at it. But his criticism misses the real reason Chiquita left.

Chiquita’s executives did not spend 2014 looking to move a mere four years after shifting their corporate headquarters. No, Chiquita’s problems were more basic: Though an iconic brand, it had long been an underperforming business. For example, the company posted a net loss of $18 million for the third quarter of 2014, results hailed by company officials as “the strongest in the last five years for this period.” Ouch.

Ultimately, like many underperforming companies, Chiquita was sold. Chiquita’s preferred merger partner would have been Fyffes, another banana company based in Ireland. Instead, Cutrale-Safra bought Chiquita for $1.3 billion.

We also have learned that Chiquita was considering a merger as far back as 2011, at the same time it agreed to take North Carolina money to move its headquarters to Charlotte. The state, the county, and the city made a basic mistake as well: not performing due diligence, not realizing that Chiquita was a sick company, and failing to understand that this sort of forced relocation was almost certain to happen down the road.

Unsurprisingly, economic development officials defend the use of incentives in general and the ones offered Chiquita in particular. “The incentives tend to be very good business deals, very modest frankly compared to others,” said Bob Morgan, the Charlotte Chamber CEO, to the Observer. “They’re a win-win for the public sector as well as the company. There’s risk in any business deal. You mitigate against those risks with clawbacks.”

Wrong. Giving public money to loser corporations imposes real costs, even if clawback provisions let government get its money back eventually. The first, obviously, is that incentive money could have been used for other purposes, including reducing taxes. Incentives allow companies to divert the money from government coffers for free for years.

Also, by publicly awarding millions in incentives to a company, state government is effectively becoming the company’s champion. There’s a psychological cost when public officials invest their faith in a company that either fails to deliver or packs up and leaves.

So there are many losers when government makes poor choices in offering incentives to businesses, even if clawbacks are part of the deal.

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Asheville misses Davidson College

From the Asheville Citizen-Times:

When men’s basketball powerhouse Davidson left the league after last year’s tournament to join the Atlantic 10 Conference, what also departed was the SoCon’s largest fan base for tournament games, an estimated 21 percent of the 103,474 fans who have attended the tourney in Asheville the past three seasons.

In addition to dominating play on the court — the Wildcats were 55-5 against league opponents their final three seasons, with three-regular-season and two tourney titles — the program ensured good attendance for every game it played at U.S. Cellular Center, with numbers ranging from 2,000 to more than 3,000 in the 6,000-seat venue arena for each of the eight games it played in Asheville from 2012-14.

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March 2015
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