Who’s Buying? Who’s Selling?
George Gillett’s Booth Creek Ski Group was the successful bidder on the high-volume, profitable Seven Springs Resort in western Pennsylvania. Sadly, this grand old operation came on the market when irreconcilable fault lines developed in the complex family ownership. This superbly managed, year-round family resort should have required Gillett to reach deep. And probably did.
Also, there is the recent sale of Mt. Abram, the proud midget down the road from mighty Sunday River. Others? Round up the usual rumors. Tire-kickers in the Squaw Valley parking lot? Give us a break. Crested Butte? Duh. Sun Valley? Yeah, right.
Canadian Resorts Revel in Dollar Gap
“So I gave her a twenty. She gave me two beers, a twenty and change. Man, I love this country.” This teaser from a Lake Louise ad in Skiing hits on the fallout of the sagging Canadian dollar—down to .65 against the U.S. dollar. Blue Mountain in Ontario, soon to conclude a major real estate deal with Intrawest, reported U.S. reservations running 11 percent ahead. Right across the country it’s the same thing. The flip is also a reality: look for more Canadian skiers to stay home this winter.
Choppy Seas on Equipment Side
What is behind all the churning around on the snowsports equipment side of the industry? Consider a few pieces of evidence: Shifts at the highest level of management of ski market leaders like Marker, Raichle Molitor USA and Addidas/Salomon. Same thing at snowboarding companies like Morrow and Ride.
Each situation, of course, has its unique background, but collectively they all probably reflect the continuing need to suck up the profligacy and recklessly extravagant sales assumptions (and production!) of the past. “The problem,” as put succinctly by a wise observer, “would appear to be a contracting market.”
In the case of Marker International, the world marketshare leader in ski bindings, Hank Tauber, 57, of U.S. Ski Team memory, was abruptly unseated at the top in mid-July and replaced on an interim basis by John G. McMillian, 72, who had engineered the purchase of Marker from its founder, Hannes Marker, back in 1982. At the same time, Robert Sind, a professional corporate fixer-upper of problem companies, was brought on board as interim COO to “assist the company in developing and implementing a restructuring plan.” The persistent buzz is that Marker, which went public in early 1995 at $6.50, will be taken private again. While the stock has traded as high as $12, at presstime it was a little over $1, having hit a low of $.37.
Marker’s troubles included a badly-timed snowboarding investment that was also tainted by legal complications. But the troubles should be also viewed in the context of the southbound trends in much of snow sports equipment. Even the consistent, modest profitability of K2 does not seem to prevent a long, gradual slide in its stock price.
Drop in Alpine Equipment Orders
Pre-season orders of alpine ski equipment had been expected to be down by 10 percent or more. As quoted in Wintersport Business, Dynastar’s Charlie Adams called the trend “alarming.” At presstime, the numbers did look to be down, but more in a “troublesome” range of seven to eight percent. Also, perhaps the drop is the good news of a return to rationality. A wry comment, also quoted in Wintersport Business, has Head’s Carl Helmetag saying, “Some companies have downsized so much they can actually make some money.”
What Is Stephen Feinberg Up To?
At presstime, Stephen Feinberg owned 3.23 million shares of American Skiing Company’s common stock, or 18.3 percent. Insider trade filings show a number of substantial purchases by Feinberg in July. Who is he and what is he up to? Feinberg is a principal in the investment firm of Cerberus Partners, the firm that provided ASC’s financing for the purchase of The Canyons. At that time, 2.1 million shares of preferred stock were allocated among the various portfolios held by C.P. What does it all mean? Wait and see.
Option Opulence at Vail
Traditionally, working in the ski area trenches was supposed to be largely its own reward: you didn’t do it to get rich. But a surf through insider trades on the Internet shows there are at least some who don’t have to worry about the high cost of employee housing. Chris Ryman, for instance, who recently left Vail to join Gillett’s Booth Creek operations, exercised a bunch of $6.85 options on Vail stock, selling them at $27.75 for a $2.2 million net. And Andy Daly has been taking some seven-digit dips into his option pool. There may be executive stress running a big resort, but at least there’s enough reward to keep the Zantac flowing.
Snowblast and Sno-Core to Roll
First, let’s get the spelling straight: Snoblast or Snowblast. Answer: either. By the time NSAA’s new Website, SNOWBLAST.com launches in October, the search engines will recognize both.
NSAA’s marketer, Rob Linde, says the 1998-99 program will continue to urge the targeted 10 to 23-year-old market to try skiing and riding. The basic mechanism will be a voucher program involving a national “Bring-a-Friend” offer. And doesn’t that have a nice golden oldie ring to it for the many in the industry who would welcome a return to something they say actually works. NSAA wants a hipper label, however: the target audience will be exhorted to “Recruit a Rookie—Ski for Free!”
The basic vehicle will be NSAA’s sponsorship of the Sno-Core Concert Tour that will rock west-to-east across the country between February 3 and March 9. At each venue NSAA will have about 1,500 sq. ft. in which to stage Snowblast Winter Sports Expo. This will be a traveling, self-contained, custom display, augmented by participation of local and regional ski areas, retailers and manufacturers’ reps. At the five resort locations, an on-snow tent will be constructed for the concert and expo. The concert tour itself will typically have a four-band line-up of a main headliner, second and third spots and a local spot.
Rounding out the Snowblast agenda, there will be print advertising on a traded basis. Much of this is scheduled in Transworld (Times Mirror) publications like Freeze, Transworld Snowboarding, Ride, etc. The amount of radio advertising will depend on final sponsorship success. At presstime it looked like strong buys (450 gross rating points) in 10 top metro markets—four in the East and three each in the West and Midwest.
How much is it all costing? With sponsorship dollars still being negotiated, it can’t be tied down. But $800K is probably in the ballpark. SIA is participating at the $150K level.
An important part of NSAA’s commitment will be to the Snowblast Website where bring-a-friend offers can be downloaded and registration can take place for win-a-trip and other giveaways. It also includes tour information; an event calendar where areas can post events; resort run-down where areas can post information; beginner basics with information on learning to ski/snowboard and hot links to resort homepages. NSAA is spending some $70K to redesign a really cool, interactive SNOWBLAST.com. The souped-up site replaces last year’s 800 number.
Look Who’s Strutting Detachables
It used to be that detachable quads were for the giants, but keep your eyes on the Southeast and Midwest. Snowshoe, W.V. is installing its second—a Garaventa/CTEC, trumpeting it as “the largest lift in the history of Mid-Atlantic and Southeastern winter sports.” And in the Midwest, Alpine Valley, Wisc., and Crystal Mountain, Mich. are installing Poma D4s, while Cascade, Wisc. gets a Doppelmayr. Ain’t success grand!
Killington/Pico Interconnect to Begin
As far as the state of Vermont is concerned, Killington can (finally!) start work on the interconnect with Pico. The last hurdle, an appeal on a pipeline permit, evaporated in mid-August, and work on trails and liftlines will begin as soon as frost is in the ground. Official opening will be for 1999-2000 season, but don’t be surprised if some skiers and riders test the new terrain this winter.
