It isn't that easy to make money on a ski area

[Danzilla]

Article from NBC Sports regarding the impending foreclosure and auction of Whistler - site of this year's Olympics

http://nbcsports.msnbc.com/id/349613...lympic_sports/

It sounds like Intrawest was saddled with a ton of debt by its private equity firm, but this goes to show how difficult it can be to run an area - even with all of the real estate that usually goes along with it.

Gore does have a ton of advantages being a state owned area, property tax exemptions, income tax exemptions, etc. etc. BUT they have to make ALL of their money on operations only.

I am not making any excuses for ops this year or past, or parking or anything else. Just making the point that most ski area operators make a ton of money off real estate. Some areas are loss leaders in operations, but they make money off of real estate (private development, time shares, hotels and commercial business leases). Even with those advantages some of them still can't make it work. ASC is another example although I think they didn't make much off real estate if I remember correctly.

I for one am extremely glad that we don't have a Stratton like artificial village with condos everywhere. Even if the ski bowl village gets built out it won't approach that scale and I hope North Creek will always have a local vibe even as it grows.

[TomCat]

I agree that it's a difficult business. A lot of assets sitting idle most of the year. But I think this is more of a problem with the use of private equity. They like to take out a lot of cash for themselves and leave the operating company with a ton of debt. Stick the bondholders if thigs get rough. In my opinion, Intrawest was a fairly well run company before they got bought and they consistently made money.

ASC also had bid debt problems, in part due to rapid overdevelopment.

tom

[mattchuck2]

But I think this is more of a problem with the use of private equity. They like to take out a lot of cash for themselves and leave the operating company with a ton of debt. Stick the bondholders if thigs get rough

Right. This has happened to so many good, American companies, it's disgraceful that they're allowed to get away with it. What happened to Simmons mattress company was horrible:

http://www.nytimes.com/2009/10/05/bu...05simmons.html

[Danzilla]

Agreed. Same thing with Linens and Things. Private equity is in many ways akin to the junk bond days of the 80s.

Just making the point that it isn't always easy to make money just off operations and that private areas usually have multiple other revenue streams available to them.

[Harvey44]

That Simmons story is mind blowing. Unchecked capitalism can be nasty.

Danno ..thanks for the article. I've been very interested in this issue. Because of discussions we've had here, I've looked (googled mostly) for some idea about how much of a mountain's revenue comes from real estate. But I've never been able to find an answer.

I do remember when Kmart was sold a few years ago it went for somewhere around a billion (?) I think. What I read indicated that a big part of the value came from the real estate. But not sure how much.

If the ski bowl development meets it's full potential, it will help NC and Gore, but since it's not owned by Gore it won't be the same kind of thing.

I know that the info on Gore's annual revenue is public and somebody more motivated than I could dig it up. What I've heard (not from official sources) was that annual revenue doesn't actually fluctuate all that much and that financial success is more about the cost side.

While I don't KNOW that to be true, it sorta makes sense. So much of revenue comes from the big holiday weeks and they tend to be planned well in advance. I know I'll be at Gore next Christmas, regardless of the weather, or other factors.

If that's true then cooperation from mother nature may be the crucial factor in keeping cost down. While we haven't had much r**n this year, I bet you can chalk up Monday as a big one in the expense column.

I'm with ya on the Stratton thing. With all the "advantages" Stratton has, I'd take Gore over Stratton everytime.

[x10003q]

Gore revenue was about $8.7 million in the last reported year. It is in the ORDA financials on the Gore web site.

[ka2kci]

When Whistler/Blackcomb annouced that they were installing the "Peak 2 Peak" Gondola at a cost of $50 Million (US) and added no additional skiing terrain, I was appalled. It was an incredibly stupid idea and it is no wonder that they are now bankrupt. If Gore decides to go through with their "Gondola to Nowhere" project linking North Creek to the Base Lodge, I'm afraid Gore will experience a similar fate. Taking the shuttle from North Creek is a viable option and really doesn't take that long. I always wonder who comes up with these expensive, lame-brained ideas that do not add any additional ski terrain.

[Harvey44]

When Whistler/Blackcomb annouced that they were installing the "Peak 2 Peak" Gondola at a cost of $50 Million (US) and added no additional skiing terrain, I was appalled. It was an incredibly stupid idea and it is no wonder that they are now bankrupt. If Gore decides to go through with their "Gondola to Nowhere" project linking North Creek to the Base Lodge, I'm afraid Gore will experience a similar fate. Taking the shuttle from North Creek is a viable option and really doesn't take that long. I always wonder who comes up with these expensive, lame-brained ideas that do not add any additional ski terrain.

I was surprised that Mike Pratt felt the same way about Lift 14 (Gondi to Nowhere) as he did about the transfer lift from NC to the Skibowl.

Seems to me that the lift from town to the Bowl would cost a lot less, and would basically make every room in town ski in/ski out. Like Matt, I have a hard time with the cost benefit analysis on Lift 14.

One thing I did learn in talking to Mike, there's a lot more to almost everything at Gore, than meets the eye.

[nyspnypd]

The bank is taking advantage of the situation. Convenient they decide to auction it off in the middle of the Olympics? The bank is looking to make more money on the Mt. than they would without the Olympics. But dont get me wrong yeah if you do not pay the mortgage then you will lose your property just a bit convenient in my eyes.