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May 2010

Industry Reports :: May 2010


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After missing a $524 million loan payment in December and while working with lenders to refinance the $1.4 billion loan behind it, Intrawest has been busy selling assets. In December, Copper Mountain went to Powdr Corp. In January, Intrawest shed Panorama Resort and The Village at Squaw, followed in February by the Sandestin golf resort in Florida. Other deals are rumored to be in the works as Intrawest seeks to hold onto its prized assets—Whistler/Blackcomb, Steamboat, and Tremblant among them.

It’s all part of the daily game of Wall St.: high-stakes poker. The banks are likely pressuring Intrawest to refinance the debt and pay down a portion of it, which is why they threatened a Feb. 19 debt auction. The debt itself was selling for about 90 cents on a dollar a few days ahead of the auction, which suggests that lenders weren’t overly concerned about Intrawest’s ability to pay. They simply want Intrawest to show them (some of) the money.

Wouldn’t it be nice if it really did snow just a little bit more on weekends? A study by Dartmouth economists notes that, despite resort snow reports that amount to an extra .3 inch of snow on weekend days, meteorological records suggest that snow falls equally during all seven days of the week.

While the researchers were hoping to prove that resorts lie about weekend snow to boost visits, they mostly made a mountain out of a molehill. The instant-on, available-everywhere nature of information long ago taught businesses of all types that deceptive reports can be exposed and punished almost immediately, as the researchers themselves noted. We prefer to believe the weekend anomaly is largely a matter of rounding error.

Yes, the global warming debate will last for another century. Or so it seems after listening to the comments following the record snowfalls in the Washington, D.C., area. On one side: Fox News and its minions, who all proclaimed that a few megastorms in the nation’s capital prove that global warming is, as Fox has long claimed, an evil Al Gore hoax. On the other: the National Wildlife Federation (NWF), which points to more severe storms and wider swings in the weather as a sign that the globe’s climate is warming. “While it’s too early to determine what role global warming is playing, the record-setting snowfall in the Mid-Atlantic this winter is generally consistent with how global warming could contribute to heavier snowfalls,” the NWF said in a statement.

Regardless, the conflict between economics and science remains. In Utah, some members of the state legislature have argued that proposals to regulate carbon dioxide emissions are based on "questionable" science and could hurt the economy. "If we're going to take Draconian measures to implement these policies, we better make sure the science is correct," said Utah House member Mike Noel. Scientists from the University of Utah and Brigham Young University (BYU) affirmed that it is. Fifteen BYU scientists replied via a statement, writing, "Sound scientific investigation, over many years and by many scientists, strongly supports the idea that emitting large amounts of greenhouse gases into the atmosphere poses considerable risk to humans and their environment. And even if all the political solutions are flawed, this does not justify politicians in attacking the science that indicates there is almost certainly a serious problem.”

Hey, science guys: stop waffling and whining. You just gave the politicians all the wiggle room they need.

Used to be that only fashion models got to sport those itsy bitsy teeny weeny bikinis in the Sports Illustrated swimsuit issue. But this year, U.S. Olympic stars Lindsey Vonn and Hannah Teter, as well as aerialist Lacy Schnoor and snowboarder Claire Bidez, appeared in the pages and videos that have made the swimsuit issue a sensation. Vonn’s video clip drew more than 5,000 views on YouTube in its first two days, and discussion during her Olympic interviews on NBC.

Not everyone is comfortable with skiers and riders sporting bikinis. That includes Lindsey Jacobellis, who explained to People magazine why she wouldn’t do it, if asked: "I get way too many little girls who are crazy about snowboarding coming up to me, asking for autographs and advice, and I want to stay a strong role model for them."

The mobile web is growing rapidly and demands attention. But let’s not get ahead of ourselves, as some media have lately. One recent headline declared “Mobile to Overtake Desktop Web by 2013.” Wow, we thought, that’s faster than we expected.

And it’s surely faster than will actually happen. The researchers at Gartner, on whose data the headlines were based, were a bit more careful in their statements. They merely projected that the installed base of mobile-enabled phones would exceed the number of PCs worldwide, 1.82 billion to 1.78 billion. But that doesn’t mean that all mobile phones will connect to the web, or that mobile will be the major access route for most mobile owners--many of whom also own highly web-capable PCs. We expect the majority of web use to come via desktops for some time yet, while acknowledging that the mobile web is becoming too big to ignore.

Of course, touch tablets could accelerate the change. Keep a weather eye out, mateys.

Owners of spectacular trophy homes at four mostly-luxury resort developments, including The Yellowstone Club and Tamarack Resort, are seeking $24 billion in damages from Credit Suisse (CS). The homeowners allege that CS wrote predatory loans aimed at gaining control of the resorts themselves, and in the process of bankrupting the developers, destroyed the value of the homeowners’ trophies.

In a remarkable irony, the lawsuit was initiated by Beau Blixseth, whose mom and dad, Tim and Edra, founded The Yellowstone Club and engaged in one of the allegedly predatory loans. They also made off with more than $200 million, which contributed to the club’s bankruptcy. More irony: the lead attorney for the homeowners, Michael Flynn, is also Tim Blixseth’s attorney, and represents Tim in a separate lawsuit with CS over the loan.

Does the suit have merit? Well, the judge in the case that awarded Yellowstone to CrossHarbor Capital termed the CS loan “predatory” and said the agreement “shocked the conscience of the court.” The loans were based on “total net value” appraisals that U.S. banks are barred from using; CS set up a shell entity in the Cayman Islands to get around that hitch.

So far, CS has not borne the cost of its failed loans. After earning multi-million-dollar commissions, CS sold the debt to institutional investors, who have lost at least 70 percent, and in some cases nearly 100 percent, of their investments.

While $24 billion sounds like a lot, even in this post-TARP world, the lawsuit tally could go higher: CS wrote more than a dozen “equity recapitalization loans” for resorts across the West. If more of them join the suit, the damage claim will surely go higher.

Charlie Toups lives to ski. The 63-year-old has spent the past 33 years living out of his car, skiing 120 days a year, doing odd jobs to pay for meals and lift tickets--the quintessential ski bum. But last fall, his hippie ways caught up with him. He had (as he had at other times in the past) parked his car on Forest Service land, where residential camping is forbidden. On Nov. 14, he was arrested for this and other crimes—assaulting an officer and possession of marijuana—and he was held for 61 days.

Incarceration made him a cause célèbre. A Facebook page devoted to his release drew hundreds of friends. Newspapers recounted his tale. And in the end, in return for admitting he had resisted arrest and agreeing to follow Forest Service rules, prosecutors dropped the charges against him.

Worst thing of all? For the first time in 30+ years, Toups missed half of the ski season.

Times of reckoning: as SAM went to press, the Tamarack bankruptcy trial was about to begin; this could determine the fate of the shuttered resort...a Forest Service response to Crested Butte’s appeal of the Snodgrass decision was expected by Feb. 18 ... Free speech in Aspen: folksinger Dan Sheridan was fired from his weekly gig at Snowmass Village for singing about the loss of Aspen’s freespirited lifestyle and the rise of trophy homes and people, then rehired after the resort reconsidered--and reestablished at least a bit of its old self.