COPIA/GARRY MCGUIRE PROBLEMS AHEAD

A CHRONOLOGY OF

HODGE PODGE ATTEMPTS TO STAY AFLOAT

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By John Olney
December 9, 2008. Copyright, all rights and privileges reserved
Wine Country Marketing & Promotions, 1325 Imola West, #409, Napa, CA 94559
Web site: http://www.twccwcmp.blogspot.com/ E-mail: thewinecntryclb2@aol.com

I have been asked why I have written what I have so far about COPIA, and in particular, why I have focused so heavily on Mr. Garry McGuire. It is even said that I have a vendetta against the man! Nothing could be further from the truth.

I have been evaluating the performance of COPIA since back in July of this year with the thought of how the complex and land could be better utilized than under its current “model,“ as Mr. McGuire likes to describe what he is attempting to accomplish. I have some concepts for the use of the complex and grounds that I will reveal at a later date. But, listed below is what I base my observations and conclusions upon,

I have visited the site eight separate times during different days of the week and at different hours of the day.

I photographed seven of my visits so I can provide physical evidence of what I comment about concerning the attractiveness of COPIA and its appeal to the public.

I have read every article published in all the Bay Area newspapers and compared the quoted comments made by Mr. McGuire and other COPIA officials

My professional background includes extensive use of operations analysis techniques while working on both contracted military and civilian programs and projects.

Based on my findings to date, I am able to say he is the wrong person for the job of heading up COPIA and what it was intended to be. He is even more inappropriate as its leader to attempted to work COPIA out of its financial disaster through its Chapter 11 bankruptcy reorganization.

Why do I say these things? Because Mr. McGuire, instead of solving the problem of the existing COPIA, prefers moving COPIA concepts to distant cities and convert these “satellite franchises” into for-profit ventures.

What I fail to understand is where is IRS/GAO and their making a determination about the legitimacy of the COPIA non-profit status while it spends alleged tax exempt money to establish for-profit COPIA satellite “franchises?” They did such a review previously, but before Mr. McGuire’s announcement of the grandiose “franchise” COPIA concept which was first reported upon by back on July 20. 2008, by Andrew McIntosh of the Sacramento Bee. He provided the information about the IRS fine that was leveled against COPIA for operating like a for-profit company.

The July 25, 2008 Napa Valley Register article, "Copia: We are integral to Napa - Leaders cite ambitious plan for financial stability" by David Ryan, NV Register City Editor, quotes Mr. Garry McGuire written statement that says: " ... In the past four months we've made significant progress in moving toward our goal of becoming the leading consumer wine and food destination, both on our campus and online." (Highlighting by John Olney) Now, here is the subsequent chronology of announcements.

Just over three months later, on October 1, 2008, COPIA/Mr. McGuire announced that it was cutting back its operating schedule to weekends only and would be closed Monday through Thursday. Furthermore, COPIA would only keep open the retail store, Julia’s Kitchen and the garden.

Mr. Franson, in his October 16, Wines & Vines article, "Copia Struggles for Relevance," writes that: "McGuire said he wants to keep the restaurant, upcoming wine bar and store, but he welcomes complementary tenants. He's talked to nonprofit groups that are potential tenants, such as the Napa Valley Museum, but they have their own financial problems. “

I fail to understand how such a “free rent" offer would benefit the COPIA bottom-line, the bondholder's investment and the bond insurer's possible liability. And, what guarantee would COPIA have been able to provide a non-profit if they gave up their current location and moved into COPIA that they won't be evicted should COPIA go bankrupt and the bondholders seize the property? The non-profit, free rent tenants would have to scramble to find another location.

About a month later, a November 11, 2008, article in Wines & Vines, titled, “Nonprofit to downsize Napa operation and open San Francisco site,” by Paul Franson said “The headquarters of the nonprofit Copia Foundation -- and, so far at least, Julia's Kitchen restaurant and the expanded Cornucopia gift store -- will stay in Napa, if not necessarily in the existing building. McGuire says Copia Napa will also have a large wine bar, but arrangements for such a site seem to be on hold until plans are settled.”(Highlighting by John Olney)

These all seem to be for-profit types of business activities not those normally associated to non-profit organizations.

An article titled “Copia looks to sell, but stay,” dated, November 13, 2008, by Jennifer Huffman and Kevin Courtney of the Napa Valley Register, contained the comment from Mr. McGuire: “We are committed to Copia’s home base and headquarters remaining in Napa,” wrote McGuire. “The core business of Copia is healthy and growing.” However, Copia’s $78 million bond debt “is not sustainable,” he rote. “The best solution is to move Copia to a facility that is not encumbered by so much debt,” and get the highest price for the property itself, he wrote. (Highlighting by John Olney)

If COPIA was so healthy why did they have over 380 vendors on their creditors List?

The article, “No comment from Napa food and wine center’s CEO on fate of Wine Country site,” by Diane Peterson of the Santa Rosa Press Democrat, dated November 13, 2008, reported that Mr. McGuire said, “Our intent is to always operate a Napa Valley campus as well as expand to San Francisco,” McGuire said in his e-mail.

An article by Steve Hart in the Santa Rosa Press Democrat, “Cashless Copia closes - for now. Food, wine center in Napa has been losing about $4 million a year since 2001,” dated November 25, 2008 says a lot. “In September, Copia said it would adopt a new business model, using its food and wine experts to produce cookbooks, recipes, exhibits and courses to be taught on site, on TV and online…..‘The core business is shifting away from a museum and a discovery center and toward producing original content and distribution of food and wine knowledge,’ said McGuire. ‘It's a completely new business model, but part of itstays the same‘…..Copia also planned to open a 40,000- to 50,000-square-foot satellite campus in San Francisco that would include a TV studio, wine classes, wine bar and retail store….‘There are 16 million tourists a year who come through San Francisco,’ McGuire said in September…. ‘We're hoping we can reach them in San Francisco and share some of the food and wine education with them.’…..‘Copia also planned to get into the tourism business, providing Wine Country educational tours from the city,’ he said.” (Highlighting by John Olney)

I wonder if Mr. McGuire has conducted a market assessment/feasibility stury to make sure he doesn't get the same results that Napa COPIA has
experienced?

In the British wine magazine, Decanter, in an article titled “Copia 'will re-open 1 December,” dated November 24, 2008, written by Adam Lechmere, it was reported that Mr. McGuire said, “Lastly he stressed, 'We are committed to Copia's home base and headquarters remaining in Napa.' “

An Online Staff article for the Napa Valley Register titled “Copia closes through Thanksgiving, maybe longer, ” of November 24, 2008, says “Any long term plans and any potential reopening date announcement is not going to come until after the Thanksgiving holiday, according to Copia's public relations group. "

"Copia, a Food and Wine Center, Files for Bankruptcy'" article by Julia Moskin and Kim everson, New York Times dated December 2, 2008, said “Recently, Copia has tried to act more like a community center, showing classic movies, offering gingerbread-house-making workshops, and planning a hot-chocolate party at the end of the Napa Holiday Parade last Saturday."

Clearly, all of these proposed concepts and programs look like a hodge podge to me. I do not see the intent of the orginal COPIA concept and certainly the concepts do not sound like “education.” Rather they sound like profit and return on investment to owners/shareholders.

COPIA is non profit business by which funds were generated to create a center for the education of the public about the values of wine, food and the arts. It derived it’s funding through tax deductible donations and investments. The principal reason for such funding resources is because the underlying premises of the COPIA objectives and missions were not being accomplished by private enterprise. And why is this so? Because the investors in for-profit ventures could not envision COPIA returning them an interesting profit, e.g., return on their investment in the normal time cycle they desire. But investing in a non-profit company that offered them a tax deduction against profits earned elsewhere while also having the “guarantee” that they would receive their principal amount of investment back over a long period, plus earn respectable interest, was obviously attractive.

In a Decmber 3, 2008, Napa Valley Register Editorial it is stated what Mr. McGuire’s intentions are, and very well at that, and I quote, “McGuire has tried to drive the center towards a Web-based, food-and-wine education model that he believes has a chance of success, but is riding into a strong economic headwind. “

Computer tech is the background of Mr. McGuire, but I do not see how that background for a non-profit Napa COPIA to succeed in wine and food education when only housed in a retail store, restaurant and wine bar. Why?

Take wine for example: Non-profit Napa COPIA must buy all its wine products wholesale and offer them retail against well entrenched competition of the 5000 plus wineries of the USA, the strongest wine merchant on the Internet -Wine.com - and all the other retailers such as Wal Mart, BEVMO, Safeway, Longs, etc.

Similarly, any for-profit satellite COPIA operation located elsewhere wishing to focusing on food and wine educational DVD‘s, on-site retail wine sales and Internet sales, restaurants, and chases after establishing tourism from San Francisco to Napa and Sonoma also faces extremely well entrenched competition already located in San Francisco, Sonoma and Napa.

More importantly, I do not believe that what Mr. McGuire envisions as “franchise-able” really is franchise-able! Without using the name COPIA, one could do all that Mr. McGuire purports to be “franchise-able” without buying a “license’ through the non-profit Napa COPIA.

1. One can get and buy wine wholesale from the wineries
2. One can open a tasting bar and sell wine retail
3. One can establish an Internet Web site to sell retail wines
4. One can make DVD’s on wine tasting, food recipes and wine/food parings
5. One can conduct wine country tours

And, each of the above must be done after securing appropriate city, county, and/or state licensing all of which must be done separate from a COPIA “franchise license.”

Normally, when a group wishes to buy a “franchise license” of a on-going business, that business is a proven success. COPIA is a far cry from such a business! I reiterate, Mr. McGuire is not the person who should be left to try to “reorganize COPIA.”