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Originally Posted by m_d
Thank you. Where ya been? lol. This is the standard Gibson bashing complaint. Price. I have heard this since the 1970s when I bought my first.
I'm sorry but I can't agree. Back in the 70s Guild had some comparable models to the L5 and Johnny Smith and they too were expensive although a tad cheaper. But......... nah. And since then? Many small builders have emerged. Most of them toil in obscurity and that doesn't support a lucrative pricing policy.
Rather, I think that there are very few instances of builders charging "a lot less", or even less than Gibson for a "comparable product". Campellone is one. (And remember, we don't pay MSRP for Gibbies).
Like Campellone, Buscarino and Benedetto are comparable product to a Gibson. They are actually a bit better in most people's opinion. But they cost more, not less. There is a thread that was opened here a couple of days ago about a small builder's guitar - Ziedler was it? They cost about twice as much as a L5 and look kind of funny. The guy tried so hard to make something that looked different that it wound up looking funny, at least IMO. I'm confident that it was a fine guitar though, as he was well admired by his peers.
I don't get your point about the used market. Are you complaining that manufacturers new products cost more than used? Of course not, that would be asinine. You're complaining about what you want to pay. That's a different topic.Last edited by Jazzstdnt; 05-03-2018 at 09:46 AM.
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05-03-2018 09:06 AM
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Jim Triggs is another who knows very well how to build a carved Gibson archtop - because that's what he did when he was in the Gibson custom shop in the 1980s. Speaking of laminated archtops, one could mention Steve Holst and (when he was still active) Tom Painter. But there surely are more out there that I don't know about or have forgotten while writing. They all do/did charge reasonable prices. Originally Posted by Jazzstdnt
Luthier prices is usually a matter of what the market will bear. The better known the Luthier is, the more he can charge. Bob Benedetto is a great luthier - but he (with his wife Cindy) is also a very talented business man. He did himself and his reputation a tremendous favor when he published his textbook on how he built his guitars back in the beginning of the 1990s. First, he estabished himself as the foremost builder (after Jimmy D'Aquisto had died) - one who was able to teach others how to do their business. Second, with his book, he started off a whole generation of builders who made guitars patterned after his instruments, often mimicing them. Instead of being harmed by the competition, he actually thrived from their succes, because people knew very well that there were the genuine Benedetto guitars and then there were the "Benedetto light" clones.Last edited by oldane; 05-03-2018 at 09:45 AM.
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Not to say I told you so, but this reported reorg. is in line with what was talked about a few months ago, here.
Complete wipeout of the equity: This means Henry J's 36% share became zero...nada...zilch. He can take a tax loss on it. Same deal with Berryman who I didn't realize had such a large equity stake.
Funded debt creditors took over, it looks like. Their willingness to put in new money for financing shows both weakness and strength....they drove a harder deal with the old equity, likely, to make it happen, and so a wipeout was the price. Surprising though that a DIP financer couldn't be found...oh well.
So....why keep Henry J. around ?! They need to sell off companies....they need to pass the baton....he's smart enough not to badmouth what he spent the last 32 yr. of his life doing. Besides, he has some warrants to end up with 2.5% in the new company....which is not nothing, but it's not much....more of a token to ensure he digs in and does the best job he can of repositioning, and working with new mgmt., after his one yr. contract expires.
Why pay him at all, as CEO? Well....his warrants may be worthless in a year, about as valuable as Greenstamps from the Swinging Sixties....so, he's not stupid and requires something ($3 M) to show up and pass the baton, and continue to work on asset sales for the new owners.
So...hindsight is 20/20. In a way, it was obvious that the US guitar market was in a demographic time bomb. After the Beatles, US guitar production and sales exploded and continued up for a while....the Baby Boomer crest of people buying the Gibson they couldn't afford when they were kids drove them for a while, but Henry's J's plan to buy other consumer goods music companies wasn't crazy (except in retrospect), but just poorly executed.
He is the face of the company, and rightly or wrongly, they need him for the short term. I have 2 recent vintage Gibsons, a 2003 L4-CES, and a 2013 Memphis 339....both superb, pro-quality instruments that play and sound great, and which are far, far more than I deserve.
I hope they sort through this mess, and can continue. "US Made, World Played" is, I think, still a viable strategy for their flagship brand.
"Where have you gone Joe DiMaggio ?" Life goes on.
Seems like a lot of parallels between Selmer saxophones and Gibson guitars...both expensive....but with iconic status and a certain cachet that their adherents love, and foibles (sometimes) that they put up with up.
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Well people mostly complain about the prices for the coveted carved tops. Originally Posted by oldane
You mention/speculate that there are other builders who charge less but you don't know or can't remember their names.
Thank you for making my point about obscurity and it's relationship to price.
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I don't think you can compare Gibson of today to Gibson of the 70s, and I don't think the complaints of today were common back then. I was around then, too, and Gibson did not position themselves as a luxury, premium product to nearly the same extent that they do now. Back then, a new Les Paul Standard was maybe 20% more expensive than a new Strat. Today (granted, harder to compare because the product lines have gotten so complicated in both companies), it's more like double (street price, not MSRP). ES 175's were basic, working players' tools, not super fancy $3500 jewels. L5's, Super 400s, and Johnny Smiths were premium, but then as now archtops were not a big part of sales and Guild was really the only competitor, but it didn't matter since nobody bought either's archtops. At that point, the boutique luthier scene was just getting started, and hadn't really gotten to archtops yet. Originally Posted by Jazzstdnt
In 1978, there was no internet where conversations like this could even take place, so we have to rely on what we remember kvetching about in high school, but I do not remember people taking offense at their pricing, or flaunting their ability to afford them, as definitely occurs now. They were just guitars. The only ones that were truly holy-shit expensive were original sunburst Les Pauls (I remember seeing one on the wall at We Buy on 48th Street for $20,000 ca. 80, and had to keep counting the zeros because I could't believe me eyes). The only guitars that I remember people really thinking of as premium then were Martins. I went to college with some very wealthy people who couldn't really play, and that's what they had. When they wanted to show off with electrics, they bought pre-CBS Fenders, not new Gibsons.
Thinking of Gibsons as a market segment almost unto themselves as they are now, that change is due to Henry J.'s strategy. Again, I'm not bashing. I am completely agnostic as to whether that is good or bad. The market is what it is, and it does seem like that approach was working for the better part of his tenure. There's a huge amount of choice in the guitar market today, and I have no trouble finding instruments that I like at a price I can afford. If someone else is happy with a different guitar, FSM bless. But where Gibson is in the market today is not where they were in the 70s.
From what I can discern, the recent product-line chaos and the quality issues I've encountered directly in Gibsons hanging on the walls in stores are driven by the financial chaos engendered by the non-guitar business moves. So I do think it's plausible that if the company can shed that debt, that luxury-positioning can still be a viable strategy. But I think one has to recognize that's what it is. These are not reasonable markups above reasonable production costs for proportionate improvements in functionality or quality. This is selling prestige for prestige sake to customers who want that, like selling Rolexes or Rolls Royces (neither of which gives any practical utility above a Swatch or a Toyota). My only caveat would be that the quality has to be improved. I've encountered brand new, >=$4k guitars that are literally unplayable and unfixable. If that is due to financial distress that can be lifted, I think the brand can thrive. But it has to be addressed, and the person who drove the company into the hole it's in now doesn't seem like the right person to do that to me (at least not anymore, recognizing that he did it once before).
John
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Of course no company ignores market share, but some like Ford decide to pursue a strategy which results in losing market share in order to improve profit margins. Originally Posted by Jazzstdnt
Ford Will Drop Focus and Fusion Sedans in North America - The New York Times
I agree no one pays MRSP, which are much more out of line with market prices than other products, BUT the cheapest Gibson archtop on Guitar Center website was a 330 at $3300. For that I could get 2 Godin Premieres.
Speaking of Godin, I never said they were exactly identical to Gibson's higher end offerings, just that they offered a broad range of products made in North America to appeal to a wider variety of customers...quality at a reasonable price. If Gibson were to base their business model on the market for larger-bodied, carved instruments, well, good luck with that.
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I agree with you about the market. I bought a 175 in the early 80's for $900, and recent prices have been much higher than can be counted for by inflation alone. Everybody wanted Les Pauls, no one outside of country music wanted Teles. Strats were on the back burner until Stevie Ray Vaughn came along. One could get older guitars for a lot less $$ too. Different world, not many competitors in the archtop world. Originally Posted by John A.
Now Gibson has morphed into a lifestyle brand like Harley-Davidson--understandable, but perhaps in the long run not sustainable, as they are so many more alternatives especially in the archtop realm, both carved and laminated.
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By all reports, the guitar division is not the problem. It's the debt load taken in the failed attempt to diversify. Originally Posted by m_d
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I think you are assuming way too much with no real facts yet in place. You may be right or you may be wrong but the truth is that at this point no one knows what will happen to Gibson moving forward. Originally Posted by wolflen
Last edited by Jim Soloway; 05-03-2018 at 12:24 PM.
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There won't be any "paydown" of the debt. It goes "poof" and disappears....cancelled....the old bonds go up in smoke, so to speak. Originally Posted by wolflen
The bondholders, or institutional lenders (not sure of the details) receive all the equity....Henry J. and other shareholders are wiped out. (It was closely held, so there were probably not many.)
There are no "collective" creditors....the senior creditors (usually secured) will receive priority, on the basis of their standing under the bankruptcy law, and other junior creditors (of lesser, equal standing) will usually receive nominal payouts. Trade creditors (suppliers, usually) know of their junior standing in a bankruptcy, and charge higher rates, as a result....it's not like this is something unknown in the business.
Employees get paid going forward, if they're held on. Usually, their past due wages (a couple of weeks worth, at most, typically) get paid.
In a nutshell: the old Gibson couldn't possibly generate enough cash flow to service all of its debt...can't get blood from a stone...so reorg. takes a big, conceptual eraser to the right-hand balance sheet and usually "erases" some old debt, and re-jiggers the equity...so here the old funded debt will become the new owners, and Henry J. becomes a hired hand, so to speak....this all makes sense as the old debt (and some creditors) receive more from a reorganized, new company than in a liquidation scenario where you can be talking 20 cents on the dollar.
New relationships with suppliers will take place.
Complicated process....probably pre-planning for it started last Aug. (?) when they were looking at a default on their debt, and couldn't get refinancing.
And Jim Soloway is quite right...no one knows the exact details of their guitar operations going forward. Probably stabilizing the perception is what I would do....focus on their strengths and let people know they'll continue to do what they're known for.
PS: A complete wipeout of the old equity doesn't ALWAYS happen in a reorg. ...but acc'd to the press release in an earlier post, it is what was agreed to here. In the public company reorg I worked on, thousands of public shareholders got wiped out....bitter pill for them...but senior debt took 30 cents on the dollar when their debt was cancelled, so there was no equity...nothing left for the shareholders....same deal here with a much smaller number of shareholders. (Henry J. and the other fellow accounted for 85%, and there were probably some key employees/investors for the other 15%.)
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I imagine that Henry J. and Dave B. were facing an involuntary BK and accepted this deal as 6 million bucks is better than nothing. There is a high probability that the Courts will OK this plan with 69 percent of the creditors in favor.
Henry J. and Dave B. are doing much better here than the Epiphone owners did when they sold out to Gibson in the 50's.
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I appreciate the input from you people with knowledge of bankruptcy law and finance. It helps put it in perspective.
The questions I have for you guys is...assuming Gibson does have a healthy guitar business, how can that be separated out? Will there be any financial obligations that will hang over that part of the business? (Kind of like credit card debt persisting after a personal bankruptcy...I realize a business Chapter 11 is different, just not sure of the details.)
My counterpoint to the idea that Gibson Guitars is healthy is that Henry and his partners have been concerned about the guitar business for years--after all, that's why they diversified, why they introduced technological innovations and why they've made certain decisions about which guitars to focus on.
There was that (in)famous Billboard interview where Henry J complained about guitar stores and the guitar-buying public in general:
Gibson CEO Henry Juszkiewicz Talks Challenges Facing Guitar Retail Industry: 'These Are Troubled Times' | Billboard
So there's still a big challenge going forward, it would seem to me.
As always, clever commentary and speculation even without all the facts is appreciated... ;-)
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The girl who was the top singer in my HS, and got ALL the lead parts, was 1/2 Italian and 1/2 Greek. (She went on to study opera for a while at Manhattan Sch. of Music.) Originally Posted by Stringswinger
Anyway, the Greek side was the Stathopouolus (sp. ?) family, and they were the Epiphone people with Epi Stathopoulos, the old patriarch. When I ran into her about ten yr.'s ago, I mentioned guitars, and she mentioned Epiphone, and we got to talking...STILL a lot of bad blood about what went on....I think there were family squabbles.
I think Epiphone was a smallish mfg. in high-priced real estate...Small family businesses are notorious for not handling succession/transition issues well. When they got into trouble, I think Gibson picked them up on the cheap.
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Gibson's non-guitar assets can all just be dumped into new subsidiaries, and sold off...sale of a new sub might carry with it liabilities, and these could be theoretically dealt with in a large all-entities bankruptcy...but I don't think that's what happened.
Probably....they will just transfer assets to new entities, and do some upstream mergers of old ones into the reorganized entity....with the net result being to allow clean asset sales to purchasers...they would insist on not buying anything with claims against it.
(This is all very general....everything depends on the corporate setups now, and what the financing documents say....unlikely that trade creditors have any contractual restrictions/covenants that would prevent this...so basically, having all the funded debt on-board in the reorg. means this all can happen without objection, from the funded debt, who after all, are going to be the new owners.)
The kind of fun part of corporate lawyering is figuring out to do things given the various constraints, you are presented with....kind of like looking at a standard major 2-5-1 chord progression, and saying how about reharmonizing this way or that way....a diminished slide here, a tri-tone sub here, a secondary dominant here....and then trying out different soloing approaches. (I wasn't surprised when I read that Herbie Hancock had studied electrical engineering, or that Duke Ellington had received scholarships for art (but not music).....it's all a question of relationships, and composition.)
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Back when I handled consumer bankruptcy cases, credit card debt was always wiped out. In a Chapter 7 all debts were wiped out (outside of taxes, Student loans and some child support/alimony debts). Even under Chapter 13 plans (the consumer version of a Chapter 11), I was always able to get the Trustee to go along with me and give tax and student loan debts a "preference", thereby wiping out all credit card debt. The banks got tired of consumers walking away from all of that lucrative debt and won some Court battles about chapter 13 preferences and even got Congress to make bankruptcy less lucrative for consumers. Originally Posted by Doctor Jeff
As Goldenwave has correctly pointed out, we have no idea how things are structured within the Gibson organizations (as is almost always the case with a closely held corporation), and so we have no idea who wins if this plan is approved and who gets screwed (it always pays to be a "secured" creditor, I suspect that the unsecured creditors will get pennies on the dollar, if anything).
I think the guitar manufacturing part of Gibson, while shrinking, will still be a profitable business for some time to come and will be sold to the highest bidder up the road. Any debt that makes that business unsustainable needs to be wiped out or converted in this Chapter 11 before any real change happens.
Perhaps Elon Musk will buy Gibson as he seems to be able to keep a business going that always loses money. Just think self tuning guitars that run off solar power.
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I think a big problem for Gibson's current pricing is that they are competing with their own used market. By and large, Gibson makes great guitars that weather the passage of time fine -- nitro-checking is the biggest exception coming to mind right now. And that is actually sought-after by many vintage collectors. But with modern Gibbys, if the seller has cared well for his instrument, he can score close to -- but only very rarely above -- the new purchase price. Originally Posted by Jazzstdnt
Because of that, many folks wanting to add (another) Gibson to their collection will shop used. I know I have. And that is, like it or not, a source of competition for new Gibsons.
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[QUOTE=Thumpalumpacus;868552]I think a big problem for Gibson's current pricing is that they are competing with their own used market. By and large, Gibson makes great guitars that weather the passage of time fine -- nitro-checking is the biggest exception coming to mind right now. And that is actually sought-after by many vintage collectors. But with modern Gibbys, if the seller has cared well for his instrument, he can score close to -- but only very rarely above -- the new purchase price.
I'm not sure I understand your post. Are you saying that Gibson is competing with itself because new and used are priced closely? Or that well preserved used ones are much cheaper?
If we are talking about the carved tops I don't see used ones priced very close to new. Do you have an example?
Let's say a 5-year old: Wes, L5CES, LeGrand, Super 400, Lee Rit, Citation.
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Except for a couple of serious jazz students, almost everyone else I know that has a Gibson bought it used, and thinks a new Gibson is not worth the money asked for (I don't always agree with the later, but it's a common viewpoint).
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I understand. They aren't cheap, but neither is a Steinway. Originally Posted by Alter
My first one was used, and it was the best guitar on the block so to speak. None of the other kids had anything close. But then I paid for it with my own money, most kids didn't work like I did.
All the rest have been new, and I earned every penny that paid for them. People have different values. I think that a lot of people who say that they're too expensive could stretch to get one if it really mattered to them.
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[QUOTE=Jazzstdnt;868607]
Bloody hell I’ve been saying that for ages and was poo-poo’d Originally Posted by Thumpalumpacus
Obviously not a consideration for the baby boomer’s favourite models, but the prices for vintage arch tops aren’t that huge compared to new models either. That 50’s 175 that Jonathon put up for instance... same price as some new 175s iirc. I know what I’d rather have.
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[QUOTE=christianm77;868636]
Also nitrochecking is HOT Originally Posted by Jazzstdnt
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Probably so, but why? I prefer used guitars, if in a good condition they play better, sound better, look cooler and cost less. Of course they don't have the "new" thing if someone is into that, and you have to be able to identify and avoid problems. I've only bought new guitars on account of being lefty, or when ordering a custom instrumentI think that a lot of people who say that they're too expensive could stretch to get one if it really mattered to them.
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I also think the biggest competitor to a new Gibson is the used market; lets be honest, the name is built on its glorious past not their recent achievements...
I consider myself a Gibson fan at heart, but not a helpful one as I think about my wallet first.
I would never buy a brand new Gibson like I would never buy a brand new car, because the premium for shiny new thing collides with my voluntary simplicity personality.
I want as much value for my money and keep things as long as possible before changing.
On that principle I developed a taste for older instruments that have set in and made with properly seasoned wood.
On the other hand, I wish Gibson stays in business (in USA) and keeps doing what it does best; for my part I will still look for good used Gibson if I am ever in the market again, the used market is full of gems and it will keep increasing as the boomers go
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When you are rich you want to buy expensive things. You actually want to overpay to buy something normal people cannot afford.
Brand names like Gibson, Mercedes, Steinway; those are priceless. You don't handle such a brand name by moving production to China and trying to compete with Ibanez or Yamaha. You will destroy the brand name.
So this whole 'produced Gibson for the masses of poor musicians'-line is bogus.
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I have five Gibson’s - a Les Paul and an ES137 that I bought new and three archtops that I bought used. The new ones I got for reasonable prices that were in the ballpark of what competitors charge for comparable instruments. The used ones were very much cheaper than their typical store prices - I‘d also say reasonable. Used or not is not a ‚carved in stone‘ thing for me. If the instrument speaks to me and the prize is right, I just do itv(if I can swing it at that moment of course). I have never and never will buy something with resale value being a dominant argument in the decision - I like to believe that I buy things that I want to hold on to (don‘t ask me if I always do :-)).
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