A few days after Christmas, Chuck Brennan sits in a near-empty Dollar Loan Center building on 41st Street and ponders his future.
His white Yukon Denali sits in the parking lot, not far from a digital sign announcing to passing motorists that the property, once symbolic of a thriving short-term loan industry in Sioux Falls, is for sale.
That’s a common thread with most of Brennan’s Dollar Loan Center and Badlands Entertainment holdings in South Dakota, where his company has serviced more than 57,000 loans since arriving in 2002. All 11 of Dollar Loan Center’s outlets in this state are going out of business.
The upheaval began Nov. 8, when voters overwhelmingly passed a ballot initiative capping interest rates for payday lenders at 36 percent, crippling the controversial industry in South Dakota.
Brennan announced weeks later that he plans to sell Badlands Speedway, the former Huset’s track near Brandon that he renovated for $10 million and operated last summer. Soon after came news that the Brennan Rock and Roll Academy, a free music education program for children he founded in 2013, is shutting down.
Today, Brennan is closing Badlands Pawn, the sprawling entertainment complex near the Denny Sanford Premier Center that he built last year for nearly $20 million, predicting that it would “beat everything but Mount Rushmore” for South Dakota tourist attention.
The 60,000 square foot facility opened to great fanfare on Thanksgiving Day of 2015, with city planners hailing it as a boost to the otherwise stagnant sports and entertainment district surrounding the Premier Center.
The facility’s gun range will remain open, as will the KBAD-FM radio operation, relocating to the former law office building next door. But the main Russell Street structure, which housed the pawn shop and hosted weekly rock concerts from KISS to Loverboy, had its last day of operation Saturday.
More than anything else, the closing of Badlands Pawn illustrates how Brennan’s grand vision in his hometown has been laid low by the success of Initiated Measure 21, which he believed would be rejected right up until election night, when it won with a landslide vote of 76 percent.
“I didn’t see this coming, and I blame myself a bit for that,” says the 48-year-old Washington High School graduate in an exclusive interview with Argus Leader Media. “We were blindsided because we really didn’t think we had anything to worry about, but we’ve reacted as quickly as we could. The plain fact is that our main source of revenue in South Dakota is gone.”
Brennan is seated in a corner cubicle at the 41st Street office, where two employees sit behind computers in an otherwise empty space, closing out accounts and fending off loan-seekers. It’s a striking difference from the frenetic business model Brennan mastered, using inviting offices and fancy jingles to earn a share of the $46 billion national industry.
The industry is under fire for offering high-interest loans to low-income customers, with recent statistics showing that nearly 11 million Americans use payday loans each year and spend an average of more than $500 in fees. Those concerns sparked a South Dakota petition drive and a successful campaign against the nearly 140 licensed payday lenders in the state.
Brennan disputes the assertion that he is trying to punish voters by closing down community-based investments, several of them near the north-end neighborhood where he grew up. But he admits to feelings of personal rejection and bitterness that accompany any level of attainment that is forcibly taken away.
“Of course I’m let down that the initiative passed, but in many ways I think the voters were duped,” he says. “We still have new loan customers calling every hour and they don’t understand that they can’t get a loan. They thought they would just get a better rate.
“The way it worked was that people would borrow 100 dollars and basically owe us seven dollars at the end of a week. Under the new rate, they would owe us 69 cents, and that’s an industry killer when you factor in staff, rent, processing and everything else. No one is going to stick around and keep lending at 36 percent. There are banks and credit unions on every corner, and that’s what they do.”
Change of pace
Brennan flew from Las Vegas into Sioux Falls on Christmas Day with his wife, Mary, and son, Jett, to see friends and visit Chuck’s mother. It’s an annual holiday visit, but this year it involved more business than usual.
During a casual dinner at Crawford’s downtown, he was asked by an acquaintance, “So, what are you going to do now?” The question rubbed him the wrong way.
Brennan, who started Dollar Loan Center in Las Vegas in 1998, still has 75 stores with about 500 staff members in Nevada, California and Utah, in addition to a Nevada-based collections agency. He estimates that South Dakota accounted for less than 10 percent of his total business, but he brought as much work as possible here and threw himself into side projects such as the pawn shop and speedway.
“We have more on-the-street loans in California, but we’re a very small fish in that pond,” he says. “In South Dakota, we’re part of the fabric of the community. Everybody can sing the jingle, everybody knows someone who’s gotten a loan from us. We invested in areas that needed to be built up, which I can’t recall any of the other lending companies doing. Maybe they sponsored a softball team or something, but we gave back. We gave back until it hurt.”
Such efforts failed to impress critics of the industry, who pointed to the financial and societal cost of payday lending.
Former Sioux Falls pastor and state legislator Steve Hickey, who teamed with political consultant Steve Hildebrand to get Initiated Measure 21 on the ballot, called Brennan the “poster child for the poverty industry, making millions of dollars off people who are barely surviving on the fringes of the economy.”
Local business owner Hildebrand added that payday lenders “wake up and look for new ways to screw low-income families, because that is their business model.”
While Brennan remained largely silent during the petition process, industry titan Rod Aycox of Atlanta-based Select Management Resources spent heavily in an effort to thwart the South Dakota measure, including using paid protestors to disrupt Hildebrand’s downtown coffeehouse, where petitions were being signed.
Brennan insists he had no role in those efforts and that he has never met or spoken with Aycox, whose 660 title lending stores in 21 states include North American Title Loans and LoanMax in South Dakota.
But the Dollar Loan Center founder calls Hickey and Hildebrand “false prophets” and “consumer do-gooder wannabes” for their role in pushing the initiative. He claims that people in a financial pinch will still need money but will be forced to seek unregulated and more expensive options such as offshore or tribal lending services.
“I have way more ill will against Hickey and Hildebrand than voters who stood at the voting booth not totally understanding the language of what was taking place,” says Brennan. “They thought they were protecting people, but what about people who still need money for unexpected car repairs or their power bill or rent or mortgage? Are those guys going to lend it to them?
“Some people think I’m pulling out of South Dakota because I’m upset or want to hurt people, but this isn’t about sour grapes. The people of South Dakota voted out the product that helped finance our endeavors and as a result there are hard choices that need to be made.”
Vision falls short
If there was anything that screamed to the world that Brennan felt good about his future in Sioux Falls, it was Badlands Pawn.
With friends and associates handling construction and management, Brennan surrounded the pawn operation with a shooting range, concert stage, gold foundry, deli and TV studio to create what he called “the Disneyland of pawn shops.”
“A lot of my favorite moments were before we opened,” says Brennan of the frenzied push to beat his self-imposed deadline. “When things started to come together and the roof got on the place and we ran 24-hour shifts with a couple hundred people, it was invigorating. I love that process. The toughest day was opening up because I knew it wasn’t perfect. Nothing kills me more than opening up a project when it’s not totally ready to go.”
Badlands Pawn never made quite the splash that Brennan envisioned, though the Thursday night concerts were well-received and featured numerous sellouts. The actual pawn shop was not as popular as the $4 million gun range, which offers a variety of shooting options and will stay open while the rest of the facility awaits a possible buyer.
“I have every faith that the people of South Dakota will fight any initiative that limits their use of gun shops and gun ranges,” says Brennan.
The Badlands Pawn site could draw interest as a concert venue or possibly a sports restaurant/bar, highlighted by a Daktronics video board that measures 14 feet high by 24 feet wide. Another possibility would be a Cabela’s-type outdoors emporium that would make use of the gun range.
“It’s one of the coolest buildings in the state of South Dakota, and I’m kind of excited to see what the next chapter is,” says Brennan. “I’m open to working with someone to make it an awesome facility.”
He remains a devoted fan of the KBAD radio station, which features the “Morning Crash” show and combines Brennan’s affinity for marketing and hard-rocking hair bands.
“I was listening on the way over here,” he says, sitting up excitedly at the DLC office. “From my house to here I think I heard Slave Raider, Megadeth, April Wine and Ratt, and I was like, ‘This is the best station ever, dude!’”
For every burst of pride there is concern for employees who will be seeking jobs in 2017, including Dollar Loan Center store managers who have been with Brennan since the beginning. He finds it ironic that South Dakota, which owes much of its largest city’s growth to relaxed usury laws and the arrival of Citibank, is capping interest rates to solve society’s ills.
“They gave those companies a lot of freedom in which to operate, and we just followed suit on that,” says Brennan, who flew back to Las Vegas after his Sioux Falls visit. “I have nothing against Sioux Falls and am proud to call this place home. I wish things had gone differently, but my goal now is to find great new owners for all these awesome projects that we started and hope that they carry on. The remarkable journey continues.”