Crocodile Rock in Allentown isn’t anybody’s favorite music venue or anything, but they get pretty decent concerts from time to time. They had Snoop Dogg a few years back, I saw Converge there one time, and they routinely book fairly well-known bands who are big on the indie circuit. Based on ticket sales, it was the 60th most successful nightclub in the world for 2011. They were recently talking about expanding their property to take advantage of the Allentown NIZ’s tax subsidies. The picture you should have is of a decent quality rock club that does good business for this market.
And yet, after losing their liquor license they might end up going out of business. Alcohol sales, it turns out, are the major source of their profits and booze buyers are cross-subsidizing the ticket sales.
I bring this up to remind you that alcohol is a magic elixir that makes all kinds of questionable business models work out. Take a low-margin business like a restaurant or a music venue or a bookstore that can barely make money selling its core product, and then mix in some magic alcohol revenues and VOILA! Subsistence margins grow big and fat.
Obviously this doesn’t work if the core product is crap, but generally speaking, businesses who can cross-subsidize with high mark-up items like alcohol are going to be better off than those who can’t.
And that’s why PA needs to end the fake scarcity of this excellent business model, unwind the tavern license cartel, and allow all businesses to partake.