Re-introducing: SPEAKING OUT
That section of SAM called “Speaking Out” has been provocative, constructive and well read over the years. We plan to build on this. In addition to our own opinions (which we are not shy about voicing) we want to emulate the brilliantly edited “Op-Ed” page of the New York Times. There, the broadest possible spectrum of opinion is represented in short, pithy statements of position. We invite contributions from SAM’s readership. There is plenty to debate, and from this sort of crucible for the exchange of opinions and ideas can come consensus for the future. We urge your participation.
One Permittee’s Opinion of the GRFS
I am writing this on the assumption that the readers of this editorial understand the basic principles of the Graduated Rate Fee System and will attempt to present an objective analysis of the system as applied to ski areas.
The basic flaw in relating the rent charged a lessor to his capital investment is that, in an older area just coming under the system, there is no truly accurate, uniform, or fair way of computing the area’s gross fixed assets. Many items, which at the time they were built were expensed, may be included in the GFA computation. Just how many and how much depends to a large degree upon the area operator’s persuasive abilities and the mood of the particular Forest Service official charged with administering the GRFS in that district. For a new area it is fairly simple to compute GFA, but, because of the more capital assets an area has the less rent it will pay on the same amount of income, the Forest Service is subsidizing and encouraging inefficiency. In addition, the using of linear feet of a lift on the forest versus the linear feet on private land to determine the relative proportion of the government’s share could encourage a planner to place more lifts on private land to the ultimate detriment of the area’s operation.
Other criticisms of the GRFS include: A) The Forest Service has used its power to create a fee structure wherein it shares at an increased rate in the increased revenues (not necessarily related to profits) of ski areas. However, it assumes no risks whatsoever and makes no active contribution to the success of the ski area. B) The GRFS discriminates against older ski areas by failing to consider the effects of inflation in its determination of the cost of fixed assets. C) The skiing industry pays income taxes like any other industry, usually about 50 per cent of net income. The imposition of the United States Forest Service fee of up to 5 per cent on gross revenues represents, in this writer’s opinion, an unfair taxation by the Federal Government of the skiing industry. D) The Graduated Rate Fee System is, in our opinion, statistically unsound. It fails to recognize the fact that 62 per cent of all United States ski areas (as per U.S. Forest Service statistics) are unprofitable and its assumption regarding fixed to variable cost ratios cannot be applied universally on an equitable basis. E) Ski areas are totally unlike any other Forest Service tenant (e.g. gas stations and restaurants) which operate as local monopolies. Most skiing areas operate in a highly competitive free enterprise environment. The concept of profit control (while often valid when applied to service station and restaurant concessions) should not be applied to ski areas because they are not monopolies.
As older area permits have come up for renegotiation, due every five years, the Forest Service has forced them to accept the Graduated Rate Fee System by making the alternative, a flat percentage rental, so high that the operator has to accept the GRFS. A good many of the smaller operators, whose profit margins are small, have found that the application of the GRFS has decreased their payment to the Forest Service. These people should be aware, however, that if their revenues go up, their percentage payments will increase substantially and further, that at the next renegotiation period, they may find themselves in a whole new ball game.
Criticism, without offering constructive alternatives, is a waste of time. So in conclusion, I would like to suggest a simple straight percentage of gross as a substitute for the GRFS. The average payment to the Forest Service under their existing permit structure is 1.95 per cent. I would be glad to pay 3 per cent to be rid of the cumbersome and unequitable system that is now being implemented. A straight percentage system has the following advantages. It is simple to administer, it is non-discriminatory, it is palatable to investors and bankers, and it is a sound business practice.
I can’t help but feel that this guest editorial is an exercise in futility and that the ski area operator’s only hope lies in the enactment by the Congress of a directive to the Forest Service which would require them to structure a fee system such as a straight percentage rental which is simple, easy to administer and which will fulfill the present statutory requirement of “requiring the payment of a fee or charge commensurate with the value of the use authorized by the permit”.
D. R. C. Brown, Pres.,
Aspen Skiing Corp.
What is “Safe”
In day-to-day activities connected with the design, construction, and operation of aerial tramways, reference is constantly made to safety—Tramway Safety Boards, safety regulations, safe design, safety devices, safety of passengers, and so on. But what is really meant by “safety”: Can it be measured? Is it an absolute, or only a relative concept?
A reveiw of the preambles and declarations of policy of the various Tramway Safety Acts reveals that there is a general unanimity in the purpose of safety: “ . . . to protect its citizens and visitors from unnecessary mechanical hazards in the design, construction and operation of passenger tramways . . . ” But there is no similar unanimity of the definition of safety.
For example, the most respected guide on passenger tramway safety, the American National Standards Institute’s ANSI B77.1-1970 code, defines its intent “ . . . to establish practical factors of safety and adequate safety features for the design, construction, operation and maintenance of aerial passenger tramways.” Here safety is not only not defined, it is qualified by such terms as “practical factors” and “adequate”, implying that safety is relative, not absolute. An even clearer insight into the concept is given in a document of the U.S. Forest Service explaining the purpose of inspections. To the question “What is ‘safe’?” the answer is given:
“The term (safe) is somewhat nebulous and may be misleading. It implies freedom from risk of damage, danger or injury . . . Safety is associated with the fact that a basic design, the components and the methods of operation are in compliance with a standard which has been accepted as having those requirements which will assure safety. Stating that a facility is ‘safe’ for public operation then more correctly is stating that the installation is in substantial conformance with a particular standard.”
These statements narrow the concept of safety to conformity with practical, adequate, and accepted standards. In other words, safety has been defined by some presumably knowledgeable persons, and all that is needed is to conform.
Conformity, however, is not a simple matter. A study of industry standards reveals that while many aspects of design, construction, and operation are precisely defined, there is an abundance of criteria defined only by such ambiguous adjectives as: appropriate, to suit, high enough, suitable, allowable, sufficient, excessive, or most adverse. Even when precise numerical definitions are made, these often differ from one authority to the next! Who is qualified to say what is appropriate or suitable? Which of several numerical definitions is most correct?
The deeper one probes, the more questions arise. Thus, for instance, ANSI B77.1-1970, sophisticated as it is in many respects, throws the door wide open to questionable safety in installations existing at the time the standard was enforced, by a statement that “safety record shall be given consideration.” In other words, as long as there has been no injury, such installations are exempt from the standard. To put it bluntly, learning “by accident” is acceptable.
Obviously where definitions are left vague, there are reasons. And in an age when technology can land men on the moon, the reasons are not technological but economic. Thus if certain standards could cause economic hardship in some segment of the industry, perhaps an influential segment, it may be judicious to include some ambiguities. But does this really fulfill the will of the populace whose representatives enacted the Tramway Safety Acts?
To be sure, tramway safety has come a long way. Ski lifts, chairlifts, and tramways are now safer than ever before. But if we tread lightly whenever economic considerations are involved, the cause of safety is not served. Clearly, a great deal still remains to be done. After all, your life, my life, the life of a friend, a loved one, or a customer may be at stake.
J. Edward Immergluck,
Ski-Lift Sales Manager, Thiokol
(Reprinted from “New Tracks”
For a supplier voice
Most trade shows and trade fairs are run by the people who have goods to sell. They get together and attract buyers. Thus, Ski Industries America is an association of vendors—manufacturers and importers of ski clothing and equipment. And SIA exists largely to stage its big and successful trade shows in Las Vegas and New York. As such, the vendors create and control the market place: its location, its hours, its duration, its atmosphere, its clientele. They do everything to maximize sales. And, of course, part of this is making it as attractive as possible for the buyers, their customers.
As it evolved on our side of the ski industry, we have the unusual, though not unique, situation of the buyer association (NSAA) staging the show for the vendors. Though there is nothing unworkable about this, the unnaturalness of it does require extra care, sensitivity and awareness on the part of those who control the show. This has not always been the case with NSAA, and we hope and expect there will be a change.
Suppliers should have a stronger voice—or at least their voice should be heard more clearly and listened to more attentively. The cost of belonging to NSAA and exhibiting at the trade show is very substantial indeed, especially as the transportation of heavy equipment is often involved. The market place that is created must be right if these costs are to be justified. And if the costs cannot be justified, then exhibitors will choose to market differently, and that would be a loss to all, especially to area operators who go to the expense of attending the shows expecting to find the broadest possible display of equipment and services.
NSAA certainly was on the right track with the over-snow vehicle presentations at the Snowbird mid-Winter meeting. Dick Garis did an outstanding job of tailoring the events to the recommendations of the suppliers. The format of the May Convention is different, but the principle is the same: if the trade show is to be useful and worthwhile for the area operators and their personnel, then the exhibitors must be given every opportunity to put their best foot forward.
To this end we think it might be very useful if there were an association of ski area suppliers who could give NSAA and its show managers the input necessary for the planning of successful trade shows. There would no doubt be other areas for discussion by such an association (code of ethics, standardization of parts, regional trade shows etc.), but initially its greatest service would be to help NSAA in every way possible to put on the annual trade show in a way that really maximizes its value for area managers and new key personnel.
A SAM Editorial
Your stake in the NSAA Economic Study Program
This year will see the third annual Economic Analysis of North American Ski Areas sponsored jointly by NSAA (through its Economic Study Committee) and the United Bank of Denver. It is also the final year of that bank’s commitment to underwrite the costs of the study, which each year run between $5,000 and $10,000.
Following the completion of this year’s study, the bank will be reassessing its continued support of this effort. Frankly, both the UBD and the Economic Study Committee were greatly disappointed in the membership’s response to last year’s study. Last year only 83 of the 435 member areas responded to the study questionnaire. This response represented less than 20 per cent of the NSAA membership and is, in all candor, inadequate for the development of meaningful study results. In all probability, a similar response this year will result in a discontinuation of the UBD support of the study, and, therefore, the study itself.
The current version of the study was established two years ago with the following purposes in mind:
To improve understanding of ski area economics throughout the financial community, most particularly ski area lenders and investors.
To develop useful economic data on industry economics which would provide a historic perspective on the ski industry’s development.
To develop useful guidelines on industry economics for area operators in evaluating their own profitability and efficiency.
Finally, to provide a vehicle for accumulating additional industry information on an annual basis for the purpose of providing information on specific areas of interest such as marketing techniques or personnel policies.
While the current version of the study may not be achieving all of these purposes, I believe it comes close to getting the job done. What is needed now is a strong show of support for the study objectives in the form of substantially increased participation by the NSAA membership.
In an effort to encourage this participation and generate more operator interest in this study, this year’s study will reflect the following changes in emphasis and approach:
- More emphasis will be placed on analysis by region and area size.
- Study results will be presented in summary form with detailed support available upon request.
- The study time frames will be compressed to allow for greater operator response while providing for more immediate feedback on study results. The questionnaire deadline will be August 15, with publication of the study slated for December 1.
- Finally, we will be using regional coordinators to answer questions regarding the study questionnaire and to improve regional participation.
It is important to understand that this study is for the benefit of the operators, not the NSAA. We believe that the study has progressed to the point of providing useful information to the participants. This is predicated, however, upon active participation by the operators and without this involvement, the study will be discontinued. Based upon the operators strong show of interest in response to the postcards which were mailed to each member this spring, I am optimistic for this year’s survey. Let me close by saying that I shall be at the NSAA’s spring convention in Great Gorge to answer any specific questions that the members might have.
James R. Bartlett, Chairman
NSAA Economic Study Committee
For NSAA — A new direction?
Let’s face it, there are all sorts of trade associations. There are tens of thousands of them. The one thing that is common to all of them is the perfectly proper concept of mutual self-interest. High ideals may be expressed in the papers of incorporation, but the very premise of a trade association—any trade association—is, “Let us, association members, band together within the law and try to get what is good for us, and jointly fight what ‘they’, whoever ‘they’ are, want to do to us.”
Trouble is that all sorts of things can go wonky, dippy, walkabout and otherwise askew when priorities are being set and common cause is being determined by association hierarchies. We speak in generalities, because we point this out as a general failing of many trade associations, not as a specific one of NSAA.
But let us focus on our industry. If the stability of the insurance market were the only achievement of NSAA, the association could still have folded its tents with the knowledge and satisfaction that a great industry service had been performed. (We hope there are those around who still remember the chaotic free-for-all that existed before Rufus Barringer and NSAA moved into the picture.) Much the same point could be made for the new and still-evolving relationships with the U.S. Forest Service. A strongly-led area association eventually impressed itself on upper bureaucratic echelons, and there is now a new and very welcome determination at top Forest Service levels to impose a cooperative, rather than an adversary, relationship between the ski area industry and every level of government. This constructive leadership by NSAA is something we can all be proud of.
After these two, which are NSAA’s triumphs of yesterday and today, we still have to look down the road to tomorrow. Our cover art suggests Pete Seibert taking over the NSAA reins in a period of calm, and our interview with Pete confirms this. That the affairs of NSAA are in such good order is in large measure due to Dick Garis and outgoing President, Frank Synder. But we don’t think that good order is sufficient. As of right now, we think that the time is right for a fundamental—though perhaps not wholly visible—shift in emphasis for NSAA. Seibert says he wants to get more areas involved in NSAA activities. We sort of agree, because it would be nice if they did. But realistically, it isn’t going to work that way. Other than the annual trade show/convention—and to a lesser extent, the mid-winter meeting—NSAA does not have the sort of programs that invite broad participation by the general membership. This is an observation, not a criticism.
It is also our observation that the most fruitful joint activities for ski areas are at the regional and local level. For instance, the most pressing concern for the ski area industry as a whole is in the field of environmental confrontation. It is especially here that the regional and state ski area operators’ associations come into their own. Except for the broad national umbrella of NEPA (National Environmental Policy Act), the action is going to be in the commissions and legislative bodies of the towns, countries and states.
What we would like to see, then, is active encouragement by NSAA of the regional and state ski area associations. Some are very active and very effective. The Vermont group, for instance, puts out frequent bulletins that keep the membership intimately informed on legislation affecting area operations. There are other area groupings that should be, and could be, more cohesive and more effective. NSAA might well consider adopting the Nixonian philosophy of funneling aid and energies back through the local associations. Does NSAA really need at the national level all the funds it raises from suppliers through the trade show and through high associate membership dues? Might not some of this be better used at regional and state levels?
We sense that an increasingly powerful and centralized NSAA might increasingly serve the interests of the large and powerful areas. This is reality, not criticism. There just is not that much that a powerful and centralized NSAA can do for its smaller members—much as it would like to. The answer, then, is to redirect some of this power back to the regional and state associations where the smaller area can, and will, get involved, and where the smaller area can, and will, get direct benefits. In such a new order Dick Garis’ office would still play a vital role in administering those programs that are truly national in scope, and by providing much-needed liaison and support for these various regional associations.
We hope the smaller and medium-size areas will start pushing in these directions. We think it is in their best interests to do so.
A SAM Editorial
NSAA and the U.S. Ski Team
A motivated, high performance U.S. Ski Team would not only be a refreshing change and a source of pride: it would, let’s face it, be good for the whole ski sport and for the ski industry at large. To date this has been, at best, a devout hope; today, however, NSAA faces a welcome challenge to help bring results.
It has been a tempestuous year for the U.S. Ski Association and for the U.S. Ski Team. The final shape of things to come will be determined at the USSA convention in May, and the expectation is that the funding and administration of the ski team will be under an autonomous U.S. Ski Educational Foundation. This is something that many concerned individuals have sought for some time (see interview with Pete Seibert in this issue). It assures that money raised for the team will indeed be used for that purpose, and that the team will be sheltered from the Byzantine politics hitherto associated with USSA.
One of the key moves was the reconstitution of the USSEF Board of Trustees. Among those elected were our industry’s own Tom Corcoran of Waterville Valley, Gus Raaum of Big Sky, and Pete Seibert of Vail. This suggests a strong leadership role for NSAA and our industry in the future operations and well-being of the U.S. Ski Team. We feel that NSAA should structure an industry-wide fund-raising mechanism and really go to town with it. The past is littered with well-meaning programs like “Nickel-a-Ticket” and U.S. Ski Team Day that were devised by outsiders and that depended on the cooperation of ski areas. They were ineffectual, and understandably received only token support from our industry. Now, it seems to us, we should take the initiative and put together a program that will really raise some money. It should be entirely possible for our industry to raise $100,000 or more the first year with the commitment only of the organizational energies of NSAA and the follow-through personnel commitment by individual areas. The public would provide the money. A five-year program would guarantee half a million dollars from our industry and would provide welcome stability for the team.
We urge such a program on NSAA, and pledge our Support for it.
—A SAM Editorial
