VAIL GOES ALL IN AT CANYONS
In late May, Vail Resorts (VR) and Talisker shook the resort world by announcing that VR had leased Talisker-owned Canyons for $25 million a year (minimum, with escalator clauses) for 50 years, with the option to renew the lease six times.

The deal itself was not a complete surprise; Vail had sought Canyons for years. VR tried to purchase the area in 2007, when Talisker won a bidding war for the resort. Vail challenged its loss in court before abandoning the effort in 2009. Under the new lease, VR has now assumed all of the resort operations while Talisker has retained its development rights for four million square feet of real estate at the resort.

There are, though, two shockers in this deal: first, the price; and second, the inclusion of the land that Park City leases (or has in the past leased) from Talisker.

Let’s talk price first. On the surface, this looks like a terrible deal for Vail. The lease cost is equal to about $60 for every resort visit Canyons recorded last season (roughly 450,000). For 2013-14, VR expects Canyons to earn $15 million or so in earnings before interest, taxes, depreciation, and amortization (EBITDA)—and before it makes its annual lease payment of $25 million. Vail projects it will continue to increase Canyons’ annual visits at a fast pace, as Talisker has, and achieve $25 million in EBITDA by 2017.

Still, that’s just break-even, and that is based on some optimistic assumptions about increasing sales of Epic Passes and continued visitor growth. So what else is there?

For one thing, greater penetration into the southern California and Utah markets, which have been among VR’s weakest. If Canyons is the entry point for many thousands of new Epic Pass sales, and that leads to increased business for other VR resorts, then this deal could bring in calculable revenues. In addition, as Talisker develops its four million square feet of real estate at Canyons, the resulting visits could swell the VR coffers, too.

Then there’s all that disputed land under Park City Mountain Resort (PCMR). Most of PCMR’s downhill terrain is on land that was originally leased from United Park City Mines (UPCM). But Talisker bought UPCM a decade ago, and when the lease was up for renewal in 2011—well, that’s where it gets interesting. The courts will determine if the lease was renewed. PCMR claims it took the necessary steps to renew; Talisker says no.

And now, as part of its lease, VR has inherited Talisker’s stake in this dispute. To quote from the official press release, because it’s too difficult to parse this: “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.” If Park City’s lease wasn’t renewed, what happens then?

That’s the $25,000,000 question. In a conference call with stock analysts in late May, VR CEO Rob Katz said that the potential value of the UPCM land was a key part of the deal. He was vague and evasive (even by the standards of analyst calls) as to what that value might be, except to hint that it might be significant enough to make an otherwise crazy-looking deal seem really smart. Even if it did carry risk of returning next to nothing.

Katz was a bit more straightforward in the official press release, where he said, “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.” Will VR be able to strike a deal with PCMR, where Talisker couldn’t?

GOING WILD AT LAKE LOUISE
Wildlife rules! Or at least they did at Lake Louise this past season. At one point, a lynx and her kitten temporarily occupied a portion of the area, forcing the closure of some ski runs. At another, a coyote began to beg food from skiers. Then, on closing day, a grizzly bear showed up on the backside terrain, leading to the evacuation of the area around the Temple Lodge, and closing the backside a few hours earlier than planned.

FOREST SERVICE WINDFALL IN ASPEN
Like countless other entrepreneurs in Aspen, the U.S. Forest Service hopes to make a killing in real estate. The agency plans to auction five lots in Aspen’s West End to pay for redevelopment of its facilities.

The Forest Service owns nearly an entire block in Aspen's West End—it purchased the land in the 1930s for $300. The agency would retain two acres, and use the sale proceeds to build a new administrative building, warehouse, bunkhouse for 16 to 24 people, and a triplex apartment building. The cost of all this is estimated at $9 million to $10 million.

Since vacant lots in the West End have recently sold for $2 million or more, the five lots slated for auction should pay for the redevelopment. The existing Ranger Station was originally built nearly 70 years ago as a commercial garage and shop, and later converted into an administrative office building.

This being Aspen, not everyone loves the plan. A local property owner (and land planner) with a nearby 18,000-square-foot empty lot and a 5,200-square-foot home has appealed the plan—to the Forest Service, of course. Regardless, the local forest supervisor expects to hold the online auction toward the end of summer. (Perhaps he doesn’t know how the review process can bog down.)


Snow Summit Explores Possible Sale
It’s not often than a highly successful winter resort goes on the market, let alone two. But it’s true: the Snow Summit Ski Corporation is exploring the sale of Snow Summit and Bear Mountain. The corporation has retained international investment banking firm Houlihan Lokey to market the company.

Interest could be high. The press release announcing the sale mentioned “a number of interested parties,” both inside and out of the winter resort business. What interests them is that Snow Summit and Bear combine for an average of more than 700,000 visits annually, and the resorts’ proximity to the SoCal market. Could they become another pair of feeder areas for the ballooning Vail Resorts empire, for example? Or fit the model for CNL?

Whoever the suitors are, the process is likely to take several months. It’s also possible no sale will occur. But for all the reasons above, we expect news sooner rather than later.

CANADIAN CONS
Perhaps, given the focus on ski area development in Canada, winter sports devotees are more susceptible to swindles. Two recent cons have hit the unwary recently.

The biggest involves a proposed Bigfoot Resort. Self-proclaimed developer Ron McHaffie raised more than $640,000 from investors for his proposed resort, but the B.C. Securities Commission says he spent the money on himself. The commission also said no prospectus has been filed, and that McHaffie is not registered to sell securities. It is investigating whether McHaffie committed fraud. CNBC News discovered that the province had rejected plans for the ski resort back in 2010.

Tracked down in a trailer park north of Vancouver, McHaffie said he had spent all the money on the project, and that he was recovering from an illness. He added that he planned to renew his quest to build the resort as soon as he could. “I’m going to need more investors,” he told CNBC news.

On a smaller scale, outside of Saskatoon, Saskatchewan, developer Torey Spink said he planned to revive a small area called Blackstrap. He claimed to have millions to invest and raised about $25,000 locally through the sale of season’s passes and logo apparel. But then he withdrew his plan and investors have heard little from him since.

SHORTSWINGS
Schweitzer Mountain Resort has sued David Markwardt, alleging he has slashed 62 chairlift seat cushions over the past two seasons. Markwardt countersued, accusing resort officials of retribution after he filed complaints (deemed unfounded by agents of HUD) against the resort for violating the Americans with Disabilities Act. Schweitzer is seeking a permanent injunction and compensatory damages, plus punitive damages for outrageous conduct and attorney fees...The Climate Declaration, issued by a coalition of leading U.S. companies called BICEP (Business for Innovative Climate and Energy Policy) and including 115 winter resorts, urges federal policymakers to act on climate change, calling this one of the greatest economic opportunities of the 21st century...Immigration reform currently in Congress would place foreign ski instructors in the existing P (for professional) visa class, sidestepping the limitations of the H-2B visa program that currently applies to instructors, and has drastically cut the number of foreign teachers at U.S. resorts.