Has the Les Otten Saga Ended?
The press release, dated March 28, was short and business-like. The board of American Skiing Company (ASC) had met that day and, following the resignation of Leslie B. Otten as chairman and CEO, had appointed B.J. Fair, until then the COO, to “assume the chief executive duties, effective today.” The Otten meteor, that had lighted the industry sky for five years, fell back to earth with barely a spark to light its passage.
The news played out against the backdrop of a cancelled merger between ASC and MeriStar, a publicly traded company with extensive hotel holdings and operations. But most analysts feel there was virtually no connection between Otten’s departure and the failed merger. The former is seen as a move that was inevitable from the moment last year when the Bass family got the right to appoint a majority of the ASC board; the merger collapse is seen as a technical adjustment made by the Bass family (which essentially controls both companies), necessitated by the fast-changing general market conditions.
The epitaphs for Les Otten are many and varied. At the risk of over-simplification, perhaps Irv Naylor, himself a bold acquirer of ski areas, put it best in SAM after Otten bought S-K-I in 1996. “Otten is a driven man with a lot of debt; if he can service it, he’ll be a genius; if he can’t, he’ll be just another Pac-Man that bit off more snow than he can ski.”
Otten bears himself well in what must be a bitter blow to his considerable pride. True, he points to two bad snow years more than he acknowledges any judgmental missteps, but he doesn’t belabor the point. No one, after all, who makes a career in a weather-dependent business can whine to his banker about bad luck. But, as part of the post mortem, it is true the cards he was dealt by Mother Nature were not good ones when it most counted, and this past season’s snow bounty came much too late to save him.
Interestingly, the news of Otten’s fall was met with widespread empathy in the industry. For one who bestrode that industry with what many saw as arrogance, one might have expected some dancing on his grave. It has not happened, probably because this was no flashy outsider who fell on his face, but a fellow mountain professional who knew every facet of running a ski area from the ground up. You didn’t have to love him or even like him, but it was hard not to respect him and, especially, his accomplishments.
Although each of the major conglomerates (ASC, Booth Creek, Boyne USA, Intrawest, Powdr, Resorts of the Canadian Rockies, Vail Resorts) has its own game plan and must be viewed singly, it is also important to understand (or at least try to) what dynamic they jointly impose on our industry. One of the promises of consolidation was, as we put it in November 1996 SAM, “that the big players are going to reenergize the sport—’fevering it up,’ to use Otten’s favorite expression.” The promise was that all the new energy and promotional clout, brought to bear with the help of strategic partnerships and lucrative sponsorships, would give a lift to the whole sport that had not previously been possible. But, the simple fact is, this has not happened. The market has remained flat and most of the promotional stimulus has been directed to market-share warfare. The priorities have also focused on real estate sales and on caging the largest possible share of the skier/boarder dollar. Commitment to market growth seems barely visible on the radar screen, notwithstanding NSAA’s thoughtful growth model.
What lies ahead on the consolidation front? The public utterances are in the “We see no reason to make any changes” mode, but reason and rumor suggest otherwise. The downturn in the economy, whether steep or not, will energize the bottom-feeders and there could well be good reason for some of the conglomerates to lop off the non-performing assets in their portfolios. Most observers predict ASC to shed some assets. Booth Creek has been trying to sell its Bear Mountain to Snow Summit but that seems to be going nowhere. It remains to be seen if Booth Creek’s joint venture with East-West Partners in daveloping recreational real estate in California will be blunted by the economy.
Will KSL dip into the ski resort goody bag? This highly successful, deep-pocketed company is a high-stakes player in recreational real estate. The La Quinta Resort, in Palm Springs, where NSAA is holding this year’s convention, is just one of their many golf-oriented holdings. The question is raised because of the backgrounds of Mike Shannon and Larry Lichleiter, the S and L of KSL. They know the ski business intimately, having run Vail for George Gillett. KSL is not a bottom-feeder and if they were to make a move into ski resorts, Vail Resorts would be the sort of acquisition they would consider. So, it is not unusual that the rumor mills currently have this move in play. What a scenario, to announce it at the NSAA convention at La Quinta!
Elsewhere, Powdr seems to have the edge in the battle between two stockholder groups to own Mt. Bachelor in Oregon. The lack of real estate potential does not deter this operations-oriented player. They also are kicking tires at Winter Park, Colo. The City of Denver, which owns the resort, is trying to make up its mind what to do with it. They like the revenue, but it’s tough politically to come up with money for badly needed upgrades. Intrawest would be interested for the synergy it would lend their Copper Mountain operation, which otherwise sits like a turd in the Vail Resorts punchbowl.
What will happen to Charlie Locke’s Canadian holdings, Resorts of the Canadian Rockies, was anyone’s guess at presstime. He was operating under the Canadian equivalent of Chapter 11 protection—his troubles presumably the result of a disappointing snow year.
Vancouver’s Bid for 2010 Olympics
Right after the site for the 2008 Summer Games is decided in June (the one the Chinese are trying so hard to get), it becomes open season on the Winter Games of 2010 and there are several sites gearing up to bid, including repeaters Sarajevo and Calgary; also Christ Church, New Zealand, South Korea and a strong entry from Vancouver, teamed with Whistler. (The latter will aim for the 2014 games instead if Toronto wins its long-shot bid for the summer games in 2008.)
Forest Service Insider Named Chief
Dale Bosworth was named as the new Chief of the U.S. Forest Service. The appointment surprised many, but pleased most. The surprise stems in part because Bosworth, most recently head of Region 1, has been a strong supporter of Clinton’s Roadless Initiative, teaming up with Mike Dombek, his predecessor, to give it effect. It is going to be interesting to watch how this position can square with the Bush Administration’s opposition to the initiative.
Newest Enviro Thing: “Programmatic EIS”
The enviro opposition seems exasperated these days by the expansion of ski facilities at a time when participation is flat. Their villain is the Forest Service, whose current approach, they say, ignores requirements of NEPA for federal agencies to consider environmental, economic and social impacts before taking significant actions. Their solution: a “Programmatic EIS,” which in our case would generate “a comprehensive study about how ski area expansions affect the national forest system,” according to an article in the Denver Post. So far, the approach lacks traction and is going nowhere. In fact, a U.S. court in Utah has already turned down a request for a statewide programmatic EIS, to say nothing of a national one.
Bass Starts Training for Everest (Again)
On April 18, Dick Bass, climbed 3,000 vertical feet at his Utah resort, Snowbird. It was, he told SAM, the start of his training for climbing Mt. Everest again in 2003, when he will be 73. He was 55 when he scaled Everest in 1985, then the oldest to summit. He plans to do the climb with Yuichiro Miura, the Japanese speed-skier, who skied more than 4,500 vertical feet from the 26,516-foot. level on Everest. Miura will then be a mere 70.
Insurance Coverage for Ski Injuries at Risk
Proposed new regulations by the feds would provide a loophole giving insurance companies a green light to deny coverage for injuries sustained when skiing, horseback riding and other similar activities. As written, the law prohibits insurers from denying coverage to individuals based on their recreational pursuits, but allows for case-by-case exclusions of benefits. The proposed regulations could take effect May 9 and could have extremely serious impacts on our sport. Indeed it is surprising that something this threatening has not precipitated the sort of forceful letter-writing campaign that was launched in the equine industry.
Snowbird Socks It to S.O.C
Snowbird Resort won big in U.S. District Court when Judge Dee Benson denied the request of Save Our Canyons to force the Forest Service to reconsider its approval of the resort’s expansion plans and the 50,000 square-foot structure on Hidden Peak.
