Mammoth sale set standard

Prospective buyers may or may not have ties to ski industry

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The eventual purchasers of ski areas aren't always the likeliest suspects.

"The whole purpose of the process we've entered is to find that unlikely prospect," Steamboat Ski and Resort Corp. President Chris Diamond said Friday.

Jan. 25, 2006 -- Peek'n Peak Resort announced the sale of its western New York ski area to Kiebler Recreation, LLC, a real estate development and management company. Peek'n Peak has been owned by brothers Eugene and Norbert Cross since the mid-'80s. The purchase price was not disclosed.

Dec. 22, 2005 -- Mammoth Mountain, Calif., founder and controlling shareholder Dave McCoy announced the sale of Mammoth Mountain Ski Area to an affiliate of Starwood Capital Group Global, LLC for $365 million.

Nov. 29, 2005 -- Sale of Burke Mountain in Vermont to the Ginn Company was completed. The purchase price was not disclosed. The Ginn Company, which is known for its high-end golf communities, also owns land in the Vail suburb of Minturn. The company is proposing to build a private ski area and golf course on the land, which will include 1,400 homes.

Nov. 14, 2005 -- Boyne USA announces the sale of Cypress Mountain, British Columbia, and the scenic Gatlinburg Sky Lift in Tennessee to CNL Income Properties Inc., a real estate investment trust, for $47.5 million.

Oct. 24, 2005 -- Snow Time, Inc., owner of Ski Roundtop, Liberty Mountain Resort and Whitetail Mountain Resort in Pennsylvania, sells Windham Mountain in New York to a group of local investors. Terms of the deal were not disclosed.

July 14, 2005 -- Mountain High Resort in Southern California was bought by Valor Equity Partners and former GM Karl Kapuscinski and key members of his management team. Valor is a Chicago-based private equity investment fund and licensed Small Business Investment Company.

June 16, 2005 -- Camelback Ski Corporation, in Pennsylvania's Poconos Mountains, was sold to a local entrepreneur, Arthur B. Berry III.

March 31, 2005 -- American Skiing Company subsidiary Mount Snow announced the sale of the Haystack Ski Resort to Tyringham Ridge, Inc. for $5 million.

March 2, 2004 -- Crested Butte Ski Resort in Colorado is sold to Tim and Diane Mueller, who in March 2002 tried to purchase the Steamboat Ski Area. The Muellers, who own Okemo Mountain Resort in Vermont and run Mount Sunapee, N.H., purchased the resort from the Callaway and Walton families. The sale price was undisclosed but estimated at about $50 million.

March 2002 -- Vail Resorts buys Heavenly Ski Resort in California from American Skiing Company for $102 million. ASC made the deal shortly after backing out of the sale of the Steamboat Ski Area to an investment group led by Tim and Diane Mueller.

-- Courtesy of SAM (Ski Area Management) Magazine

American Skiing Company, Steamboat's parent, announced Friday it had retained investment advisers to help them test the ski area's worth in the market.

The last time Steamboat was for sale in 2001, one of the serious suitors was a Minnesota-based holding company with no apparent ties to the ski industry.

It's tempting to look at large ski area operators and assume they would love to gobble up Steamboat's million-plus annual skier visits and its profit margins.

Former Vail Resorts President Andy Daly said he hasn't noticed any signs that Vail or Canadian-based Intrawest, owner of Copper Mountain, are on the prowl.

In fact, Intrawest previously had announced it would undergo the same process ASC has just taken with Steamboat.

Former longtime president of Vail Resorts, Andy Daly, said Friday that the December 2005 sale of a majority interest in Mammoth Mountain, Calif., for $365 million probably got the attention of more than one ski area operator. He said it created a strong incentive for ski area operators to take action and determine whether they could increase shareholder value by pursuing a sale.

"That's probably one of the reasons American Skiing retained Bear Stearns to test the market," Daly said.

B.J. Fair, chief executive officer of ASC, agreed that the Mammoth transaction certainly made an impact on other ski area operators. But in this case, it's more about the unusually strong market for mergers and acquisitions across industries. He said the trend is being fueled by creative financing mechanisms that are making it easier to access capital to fund these acquisitions.

Daly is no longer connected with Vail Resorts but is involved in developing a luxury home subdivision, Alpine Mountain Ranch, just outside Steamboat. His real estate interests here may have mistakenly fueled speculation that Vail was attempting to purchase Steamboat.

Vail's options in acquiring more Colorado ski areas are somewhat limited by a federal ruling that came out after Vail Resorts acquired Keystone and Breckenridge a decade ago. The feds said the giant ski area operator couldn't pick up more market share in the "Front Range destination" segment of the industry.

Steamboat Ski and Resort Corp. officials spent much of the spring denying the ski area was for sale. Ski Area Marketing Vice President Andy Wirth said Friday that Steamboat's plans to replace the Sunshine Chairlift, the resort's highest marks ever on its "intent to return survey," increased airline seats for the coming winter, and the fallout from last winter's 430-inch snowfall are all adding to Steamboat's curb appeal.

Daly said the basis for determining the sale price of ski areas is typically a multiple of cash flow. For large ski resorts, the multiple can range as high as eight or nine times cash flow. The multiple for Mammoth may have been as high as 9.5 percent or more, he added.

The sale price commonly varies with the available developed and undeveloped real estate.

Steamboat has almost no undeveloped real estate among its assets.

However, Daly said the current strength of the Steamboat real estate market reflects well on the ski area.

"It certainly says Steamboat is attracting a lot of attention," Daly said.

However, in terms of actually offering value to a new ski area operator, it is a specific category within the overall market that means the most. New, multi-family condominium and townhome projects mean a good deal more than large, single-family homes, he said.

Pending projects at Steamboat's base such as Wildhorse Mea--dows, One Steamboat Place and the Highmark all represent projects that present the possibility of increasing skier visits through an expanded bed base.

Daly sounded a cautionary note. The fact that American Skiing Company is inviting suitors for Steamboat doesn't mean there will be a sale, he said.

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