Alaskans Barney Gottstein and the late Larry Carr built an empire by being hard-driving and capable businessmen.
Now one of the heirs to that dynasty is in court duking it out with Gottstein over how the companies remaining assets should be divided. It is a sadly inevitable turn of events.
Empires are hard to maintain, and Carr-Gottstein once had one hell of an empire.
Back in the day, the company owned the Anchorage grocery market. There were Carrs Quality Centers, and there was everyone else.
Safeway, a nationally dominant player, thought it could open a model superstore on Dimond Boulevard near Jewel Lake in 1987 about a block away from a nearby Carrs.
“It has all the bells and whistles we believe consumers want to have,” Safeway spokeswoman Cherie Myers told the Anchorage Daily News when the store closed a year later. “If we could have not made this decision, we would have not made it.”
Safeway pitched the Dimond superstore as its model for the future. Its model failed miserably in Anchorage.
“Every single month it gets more and more and more nonprofitable,” Myers confessed. Safeway blamed the slumping Alaska economy. But the real reason was that consumers were voting with their feet.
Belden Associates, a Texas marketing firm, was doing to a lot of research in Alaska at the time, in part because the Anchorage Daily News was a client. It was then battling one of the country’s last great newspaper wars against The Anchorage Times, the dominate newspaper, and wanted all the data it could get.
It got a lot with the Belden surveys tracking the Alaska economy. Those surveys showed Carrs to be a marketing powerhouse. It attracted about twice as many customers as Safeway in 1985, and Safeway was by the far Carr’s closest competitor.
Time would change everything. Aging warriors Carr and Gottstein in 1990 transferred control of the company to John Cairns and Mark Williams in a leveraged buyout estimated to be worth $250 to $300 million. Cairn was at the time general manager of Carrs-Gottstein and Williams the company’s vice president for operations.
The Cairns-Williams enterprise struggled in the mid-1990s as Fred Meyer, K-Mart and Walmart charged into the Anchorage market. K-Mart would eventually abandon, but the other two major national chains stuck.
In 1998, Carrs sold out to Safeway, then the nation’s second largest grocery chain. But the Carrs brand was so strong that Safeway left many of the company’s 49 Alaska stores under the Carrs name. Carrs stores remain to this day in Anchorage and Wasilla, although most of the rest of the former stores have been converted to Safeway outlets.
Carr and Gottstein stepped out of the limelight in the 1990s with the transfer of their company, but they didn’t exactly go away. Carrs-Gottstein hung onto about 1 million square feet of retail, office and commercial space in Alaska’s major cities. A good bit of it was and is in prime locations.
Death in the family
Larry Carr died five years ago at the age of 81. He left behind his wife, a son, a daughter and a bunch of grand children and great grandchildren. The Carrs and Gottsteins have since struggled over how to divide the assets of the partnership, and it has obviously not been easy as evidenced by lawsuit filed this week in Anchorage Superior Court by Jacqueline Carr, Larry’s daughter.
She is the co-manager of Carr-Gottstein GP, a limited liability company Barney and Larry set up in 1999 to run Carr-Gottstein Properties.
“Laurence Carr and Defendant Gottstein also established a number of LLCs (limited liability corporations) to own their joint real estate investments,” the suit says. The ownership interests in the properties were to be split in equal proportions between the Carr and Gottstein families.
“These real estate holdings currently have a market value in excess of $100 million dollars,” the suit says.
Each family, however, owns only a 49.5 percent interest with the remaining 1 percent in the control of the GP, which consists of Jacqueline “Jacqui” Carr and Barney jointly acting as “the general partner.”
Unfortunately, the suit indicates, this hasn’t worked out so well.
“In 2016, defendant Gottstein announced his desire to dissolve the business relationships between the Gottstein family and the Carr family,” the suit says, “with the intention that each family would have its own set of properties to own, manage and operate, and that the joint ownership of properties, partnerships, limited liability companies or corporations would cease.
“Defendant Gottstein also indicated that he had the authority and power to divide the assets between the two families without plaintiff Carr’s consent or participation and could avoid problems surrounding loans held by third party lenders by allocating only debt-free property to the Carr family and all properties encumbered by debt to the Gottstein family. The result of the allocation would have been that the Gottstein family would receive properties with an aggregate value roughly twice the aggregate value that would be assigned to the Carr family.”
The Carr family didn’t like it. The suit calls the split “patently unfair.”
The Carrs suggested a 50-50 division “that would have equally divided the aggregate market value of the properties and the aggregate debt against the properties.”
Gottstein said no. He argued he was not bound by any agreement with Jacqui. He claimed, according to the suit, to have sole and solo authority to decide how the properties were split.
“Despite plaintiff Carr’s repeated requests, defendant Gottstein has steadfastly refused to provide a list reflecting how he intends to allocate the LLCs or LLC properties between the Carr family and Gottstein damily. Defendant Gottstein also has refused to negotiate with, or even to discuss with, plaintiff Carr how he would like to allocate the LLCs or LLC properties.”
The suit makes an effort to chill any Carr-Gottstein property dealings in the near term by warning “that any transfers of LLCs or LLC properties taken to implement defendant Gottstein’s unilateral intentions are invalid, and are not effective to transfer legal title.”
Jacqui has asked for a declarative judgment ordering Gottstein to negotiate with her. It’s a sad end to one of the 49th state’s greatest business empires.
Categories: News, Uncategorized
The information about the Dimond Center Safeway is inaccurate. It opened before the Mall’s grand opening in 1977, and was closed by court order AFTER Safeway bought the Carrs across the street 10 years later. There was a court ruling upon the purchase that Safeway could only have so many stores within a radius. They chose to keep the Carrs store.
Laura – you’re confusing the “Dimond Center Safeway” in the Dimond Center with the model store Safeway later opened farther to the west at 3740 West Dimond Boulevard. that store was just east of the still existing Carrs store in what is now called the Jewel Lake West Shopping Center. the 3740 Safeway didn’t last long as the story notes. the building was later bought by the Municipality of Anchorage. i’m not sure what’s in the building now, though. it used to be the city data center. it might still be.
Let’s not forget that Carr-Gottstein, and especially the Gottstein side, were, are, major players in Democrat politics, and Safeway spent much of the Seventies and early ‘Eighties in a pitched battle with organized labor, especially the Teamsters and HERE. For many years if you wanted to go to a Safeway, you had to go through a picket line; it made a difference.
A friendly tip: The word is “dominant.” 🙂
thanks Pat. crowd source editing always appreciated!
Back when it was Carrs vs Safeway, not only did Alaskans vote for AK businesses over “outsiders”, but the Cars stores were FAR MORE inviting. They had better parking lot lighting, the in-store lighting was pleasant vs the cold blue fluorescent lighting and clammy overall atmosphere of Safeway at the time. I remember the striking difference in ambiance of the two companies.