Vail Resorts to Operate Canyons

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Publish Date

05/29/2013

SAM Magazine--May 29, 2013--Vail Resorts (VR) announced today that it has entered into a long-term lease with affiliate companies of Talisker Corporation for Canyons Resort in Park City, Utah. Vail's history with Canyons has been an interesting one. VR attempted to purchase the area in 2007, but abandoned the effort in 2009 after much legal wrangling. Under this lease, VR has assumed all of the resort operations while Talisker has retained its development rights for four million square feet of real estate at the resort.


The transaction also incorporates the potential for the lease, without additional consideration, to include the land under the ski terrain of Park City Mountain Resort that is adjacent to Canyons and is currently owned by Talisker and is subject to pending litigation. "We look forward to the litigation being resolved and hope that Vail Resorts can play a constructive role in helping to arrive at a solution that offers the best outcome for guests of both resorts," said VR CEO Rob Katz. For more on this, read http://www.saminfo.com/news/park-city-season-not-doubt-talisker.

With Vail's first foray into the Utah market will come new season pass products. The Company  announced that purchasers of the Epic Pass for the 2013-2014 winter season will receive unlimited and unrestricted access to Canyons, as well as to Vail, Beaver Creek, Breckenridge, Keystone, Northstar, Heavenly and Kirkwood. The 2013-2014 Epic Pass is on sale at $689 for adults, compared to the season pass price of $849 at Canyons this past year.

The lease has an initial term of 50 years with six 50-year renewal options. The lease provides for $25 million in annual fixed payments, which increase each year by an inflation linked index of CPI less one percent, with a floor of two percent per annum. In addition, the lease includes participating contingent payments to Talisker of 42 percent of the amount by which EBITDA for the resort operations, as calculated under the lease, exceeds approximately $35 million, with such threshold amount increased by an inflation linked index and a 10-percent adjustment for any capital improvements or investments made under the lease by Vail Resorts. The Company will be finalizing the accounting for the lease in the coming months but expects to record an obligation on the balance sheet of approximately $305 million in long-term debt (including capital lease obligations). The Company expects incremental annual Resort EBITDA from Canyons of approximately $15 million in fiscal year 2014 (excluding transition and integration costs) increasing to approximately $25 million in fiscal year 2017, not including any potential benefit the Company may receive from the Park City Mountain Resort land which is subject to ongoing litigation.

Comments

Canyons

Tallisker sucks

Amazing deal

So the $25M per year minimum equals $62 per skier day off the top---wow! More than most places yield before paying any expenses. Wouldn't want to be on Canyon's payroll now---there will have to be a lot of squeezing ahead. And this sure won't help keep skiing affordable for the 99%. Vail must be feeling pretty solid about wringing a lot out of the Park City legal mess. Not so sure that I'd want to bet on that renewal in 50 years (or 100...) either. Vail must not have seen the climate forecast that Park City commissioned a few years back---it's right on PCMR's website. Where can I buy some of that popcorn?

Forget the Popcorn

Never mind the popcorn it's soon gonna be time to grab some body bags !

Popcorn, indeed!

This is great news for Utah skiing and Park City, in particular. As for the litigation with PCMR, that's gone dark for a while but having Vail as a "partner" beats Talisker, any day. 2 observations: 1) That Talisker was able to wrest Canyons out of the ASC debacle back in 2009 was akin to Vail and - Griswold?? - snatching defeat from the jaws of victory. For Talisker to now be able to lease the resort assets to Vail a few years at these rates is a home run for them, and brings in the best possible resort marketer/operator - Vail. Everybody wins, apparently. 2) Gotta luv the new "50 year lease, 6 50-year options" lease model. Talk about basically an ownership deal... Bet the lease renews AUTOMATICALLY unless there's express notice to the contrary, too! Take note, PCMR. The popcorn is popping.

Great News

I have had several opportunities to ski the Cannon's as a Technical Liaison between SKI/ ASC resorts and the Cannons have always represented a special place in my heart and offers some fantastic skiing and riding. This opportunity should serve the Cannons well. On another note, Consolidation is good for resorts in different markets, but operating to many businesses in the same market doesn't ad customers...it cannibalizes them and allows for unhealthy price fixing. Yes, that was meant for Mitt.

great news

This is great news as consolidation (monopolization) has always been good for skiers. I'm sure that Vail Resorts will go out of their way to settle with Park City... I made the same move with several companies myself.

Grab some popcorn. This

Grab some popcorn. This could get interesting.

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