What Happened to the Vail sale?
Almost as quickly as news spread that Vail Resorts was seeking a buyer, word came that all bets were off. (Since none of the parties involved ever acknowledged a start or end to the process, all news and words are speculation.) Near as we can figure, in early July, as many as six potential suitors had checked out the resort, and within a few weeks, two had prepared bids. But KKR (headed by Henry Kravis, who has a home in Vail) withdrew its bid, and the bid from Texas Pacific Group came in well below Vail’s asking price, according to a variety of sources.
Why was VR for sale in the first place? Nobody knows for sure. But Apollo Advisors, headed by Leon Black, controls the board of directors, and no sale would proceed without Apollo’s blessing. Some sources also suggest that Ralcorp, which sold Keystone to Vail Associates nearly a decade ago, wants out. No one is suggesting that VR’s other major investor, Ron Baron, was behind the sale effort.
One sticking point is that it’s not easy to value the resort. Various investment firms value VR at between $1.2 and $1.4 billion. But using the calculus that VR used in valuing Heavenly in 2002—six times EBITDA—and assuming VR’s EBITDA for 2004 comes in at $140 million, as is widely expected—VR’s value would be about $840 million. At seven times EBITDA, VR would be worth $980 million. And who wants to overpay for a ski area, even a gem like VR?
Building Ski Domes in the Swamp
Given the vaporous history of such projects, we wouldn’t name our proposed indoor ski dome Xanadu, after Kubla Khan’s imaginary pleasure dome. Nonetheless, Xanadu, a $1.3 billion sport/leisure/entertainment complex, is set to break ground by Oct. 1 in the New Jersey Meadowlands and include what would be the first indoor ski dome in the U.S. If all goes as planned, the ski dome could be completed during 2006.
On the surface, this project seems on more solid ground than some earlier indoor skiing dreams. It’s planned to sprout at the Meadowlands Sports Complex, home of Continental Arena and the Nets basketball team. And it’s being done in cooperation with the New Jersey Sports and Exposition Authority, which hopes the project will help create one of the country’s premier sports and entertainment destinations.
The complex will include an extreme sports park, baseball stadium, mini-Formula One track, indoor wave pool, and skating rink, a total of 4.76 million square feet of fun and accommodations. One of the main partners, Kan Am Realty, has pledged $250 million in equity, and has raised half that already. Major sponsors and tenants are rumored to be clamoring for a piece of the action.
Still, we wonder: how many companies are prepared to sink $1.3 billion into New Jersey swampland? Plus, one of the bidders who lost to Xanadu has been suing to overturn the Sports and Exposition Authority’s decision. We’re not holding our breath.
A Few Silly Millimeters Taller
Slide Mountain, home to Mt. Rose ski area, grew taller by 8 millimeters in the past year. Magma moving deep below Lake Tahoe apparently triggered an unprecedented swarm of 1,600 tiny earthquakes between summer 2003 and February 2004, pushing the mountain up. Experts say there’s no cause for alarm because there are no signs of an imminent eruption. Still, they point out that what really makes the Sierras rattle is the uplifting of the earth’s tectonic plates. With the Sierras migrating northwest at 12 to 14 millimeters a year, they are “essentially popping up like a cork,” said one researcher. That’s a comforting thought. If the Sierra resorts survive the migration and the popping of the next couple million years, they could be towering, Andes-like, above Whistler/Blackcomb.
What, a Gated Community Isn’t Enough?
Ah, Canada’s National Parks. Wide-open vistas, magnificent mountains, and–electric fences to separate the wildlife from the humans? Perhaps. Parks Canada is proposing to string a six-mile-long electric fence around Lake Louise ski area, to keep grizzly bears out and away from the tourists (don’t some of them come to see the bears?). If the idea goes ahead, Lake Louise would become the first fenced community in North America. Understandably, many locals oppose the plan, as it would also keep out elk and coyotes and other popular local fauna. Fortunately, other, less shocking measures are also being considered.
We’re All In This Together (Almost)
Sometimes the only way to make your marketing message heard is to magnify it. And increasingly, resorts are doing this by casting their marketing voices in unison. Case in point: To make more ski/ride travelers aware of the proximity of Salt Lake’s airport and the nearby ski areas, Park City, Deer Valley and The Canyons jointly promote the Quick Start offer. Air travelers get their first day of skiing free by showing their boarding pass at the ticket window. Last season, 15,000 people did so, nearly half of whom had never visited the resorts. Mission accomplished. Another case in point: Indianhead, Big Powderhorn and Blackjack in Michigan’s Upper Peninsula offer discounted two-, three-, and four-day Hill Hopper tickets, which can be used interchangeably at the three resorts. The group, through its Big Snow Country mini-association, has also published 75,000 coffee-table-style magazine/brochures touting the resorts and the surrounding attractions. The aim: to encourage skiers and riders to drive the extra few hours past competitors Spirit Mountain and Granite Peak, Wisc.
Such unity is not easy to come by. The Park City deal was initially proposed for the entire state by Ski Utah chief Kip Pitou; when the necessary unanimity failed to materialize, the Park City areas did it on their own. And Big Snow Country used to include four areas; Whitecap Mountains has dropped out.
Getting The VERB Right
VERB, a program of the Centers for Disease Control, encourages kids 9 to 13 to become more active. It’s backed by a big multi-million-dollar advertising and promotion campaign, and it has a broad reach: more than 70 percent of tweens are aware of the program, and they are more active than kids who aren’t. The ski industry, through the separate efforts of SIA and Snow Monsters, is vying to get its fair share.
SIA is trying to arrange a marriage of the VERB program and the ski/snowboard industry. VERB’s promotions rely heavily on sports heroes, such as Venus Williams, to send the message, and it changes celebrities every month. For December and January, USSA ski and snowboard athletes are expected to be the marquee figures and will appear in print and TV ads and on the VERB website. SIA is also organizing a national winter sports day for Dec. 4, with promotions and giveaways in retail shops nationwide, to tie into VERB’s winter sports theme.
Snow Monsters, too, has made overtures to VERB, seeking VERB sponsorship for its established kids’ programs. With a growing list of participating resorts, approaching 100 across the country, and its signature Next Snow Search event, Snow Monsters is already a presence at areas.
An active VERB can only help both programs grow.
The Band’s on Board at Mount Baldy
Diversity is a hot topic these days. And no resort is showing more cultural sensitivity than Mount Baldy, a formerly homeowner-owned resort in southern B.C. The new owners, Winter Recreation ULC, have sold a five percent stake to the First Nation’s Osoyoos Indian Band, which has embraced the tourism business. The resort has agreed to respect the Band’s traditional values and the “sanctity of the land,” while in return the OIB supports an orderly completion of the resort’s master plan. The resort plans to upgrade base facilities with a new day lodge, hotel, and core village that will reflect the traditional architectural and cultural themes of the South Okanagan.
With the Band’s support, as well as that of the B.C. government, Mount Baldy could be on a fast track for expansion. Over the next five years, Winter Recreation plans to more than double the skiable acreage, to 1,100, and extend the vertical from 1,460 feet to more than 2,000. This would also open up two previously unaccessed backcountry bowls.
Yellowstone Club to become greener
Areas often debate the costs of being environmentally as pure as possible. But one recently learned the cost of being otherwise. The Yellowstone Club in Montana will pay $1.8 million in penalties and complete a string of environmental restoration projects to settle government complaints that it violated the federal Clean Water Act. The Club, owned by Tim Blixseth, was accused in 2001 of dumping dredge and fill material from a construction site into waterways and federally protected wetlands. The club does not admit wrongdoing, but has agreed to pay the penalty, pending approval by a federal judge. The fine is believed to be the largest ever for a wetlands case.
