The announcement that American Skiing Co. is selling the Steamboat Ski Area has created a buzz in the community.
That's as it should be -- the ski area is arguably our most important asset. It employs more than 250 people year-round and upward of 2,000 people during peak season. It handles 1 million skiers a year, is our signature tourism draw and, quite frankly, put Steamboat Springs on the map. So, yes, ownership of the ski area is critical.
But it would be wrong to assume that a new owner will change things overnight for the better. As a community, we must temper our expectations of what a sale means.
ASC has made mistakes. The company over-invested in real estate and accumulated debt that has affected its ability to invest in its assets. The lack of major capital improvements has led to a perception of Steamboat as a great mountain with great snow but facilities that aren't up to par with top ski resorts. There also are concerns about employee pay and benefits.
But Steamboat is coming off a great year, and ASC's motivation for selling is very different than the last time it tried to market Steamboat in 2001.
In 2001, ASC's financial condition was such that it was trying to unload the ski area to relieve debt pressures. The company made a deal to sell the ski area for $91.4 million to a group of investors led by Tim and Diane Mueller. But on the day the papers consummating the sale were to be signed, ASC pulled the plug and instead sold Heavenly Mountain Resort in California to Vail Resorts. That move contributed to ill will toward ASC.
This time around, ASC CEO B.J. Fair says, his company doesn't have to sell. Rather, it put the Steamboat Ski Area on the market because the company believes the time is right to get top dollar for the resort. That makes sense -- Steamboat is coming off a tremendous snow year and there is significant momentum at the ski area base with the Urban Renewal Authority and developments such as One Steamboat Place. ASC is replacing Steamboat's weakest chairlift, Sunshine. And Steamboat's real estate market remains hot -- and a bargain when compared to resorts such as Aspen, Vail and Telluride.
ASC is not going to make a bargain-basement deal this time. Using last year's $365 million sale of a majority interest in Mammoth Mountain Ski Area as a benchmark, our guess is that ASC is seeking $275 million to $375 million for Steamboat. Those are big numbers.
The worst-case scenario? An under-capitalized company overpays for the ski area and finds itself saddled with debt worse than ASC's. The best? A company with deep pockets and a proven track record in the ski industry is the buyer. The truth is there isn't any way to predict such things.
There is the chance no one will meet ASC's asking price. If a deal hasn't been struck by ski season, the ski area probably won't be sold. There is the possibility that the community's relationship with ASC will continue.
We should all remember that no matter who owns the ski area, the people who work for Steamboat Ski & Resort Corp. aren't likely to change. Many have been through ownership changes before, and it is their lives that will be affected most by an ownership change in the future.
Ski Corp. has been one of Steamboat's biggest benefactors, and its employees are more a reflection of the community than a reflection of ASC or any other owner. Fortunately, history shows that isn't likely to change, no matter who buys the ski area.