article in Times Argus about the Bush

[ski_resort_observer]

Article about the new LP developement in the Times Argus yesterday....check it out. Also a very interesting article about ASC but we don't really care about that...do we?

http://www.timesargus.com/apps/pbcs..../1006/BUSINESS

[Mike_451]

Seems strange that they (ASC) would be paying their CEO nearly $500,000.00, while more than 500,000,000.00 in debt...... If they payed him a still whoping 250,000.00 they could reduce their debt by an additional million dolars every 4 years, or pay out a biger dividend to their SHAREHOLDERS who have had to SUFFER ASC'S LOUSY PREFORMANCE!

Well at least SV has some financial sense in them, afterall look at Wins bakground......

[ski_resort_observer]

Most CEO's of publicaly traded companies get paid way more than $500,000 when you add in bonuses and the other perks. BTW ASC does not pay dividends to their stockholders. In business even a small company like ASC, $250,000 is chump change. If you consider CEO pay as part of the operating costs which are around 275m, is $250,000 really going make much of a diference? They have much bigger problems to worry about.

Taking preferred stock out of the equation their debt is now around 191m. Selling Heavenly, Haystack and the Bush plus selling all the developement rights to the base of kmart has helped. Don't get me wrong, they still face a huge uphill battle for profitability. Interestingly the company has never made a dime of profit since the day the company was formed. If your interested in the facts you can go to www.peaks.com, click on Invester Relations. Those who bought stock, it IPO'd at 18 bucks, I'm not sure if I feel sorry for them or not. Buying stock is risky business, some days I feel even riskier that betting on the horses at the track.

One last factoid to totally bore the snot out of you, two other publicly traded ski resort companies have done quite well. Vail Resorts(much more than just Vail) stock has gone up over 40% in the last year or so and Intrawest, before it was bought, and returned back to private had similar numbers. You good write a book why ASC has done so poorly and the others have done so well.

Probably the best that could happen for them is to have a great snow year in the east. Not exactly working out so far.

lol...I just now read the article, basically all old news but the comparisons in the last part are way off base. Comparing ASC to the Russell 2000 makes no sense, Intrawest does exist anymore and Six Flags is in great financial stress. Last I heard they were selling several theme parks to improve things. Funny how the staff writer didn't mention that.

[random_ski_guy]

At 500k, by today's standards, BJ Fair is doing this job for love of sport, not money. Thats based on the presumption that he's of true CEO fortune 1000 caliber. That he's capable of moving on to a company that is actually capitalized to make money instead of be enslaved to junk debt.

If BJ had a compensation package that gave him $5M+ a year, I'd say your on to something.

Don't read this like I think its small change, its not to me, but it is for those at that level.

[HowieT2]

I'm not familiar with the fundamentals but it seems to me that a difference between ASC and Vail/Intrawest is that the latter two are ultra luxury destinations.

[ski_resort_observer]

The short answer is the debt, that's the diference. The moment was when Les Otten bought a much larger company, SKI ltd, and he somehow convinced some silly fool at Fleet Bank(now Bank of America) to loan him 400m to pull it off. It was all downhill from there. In hindsight everthing is 20/20 so I have alot of respect for him for what he accomplished.

[Mike_451]

It seems to me though, that because they are in debt, they should be doing every thing they can to pay it off, the less debt they are in, the less chance they are of getting screwd over by a lousy year and lousy profit margin, and as a result their ability to meet payments etc... Look, if they payed their execs less, and had an aditional 500 thousand dollars cash, they could use it to upgrade infrastructure at resorts, yes 500,000 isn't a ton of money these days, but if the Infastructure at resorts like K-Mart is supposedly in need, than anything could make a difference, and could help out with Killingtons Profitibility. That 500 thousand multiplied over two years could bring food services to the base lodge at Mount Snow, just endless possibilities.

How about acutaly paying a dividend to Stock Holders, this with beter Fedeuciary Resoncibilty from ASC, Consistant Debt Payments, A Strong Buisness Plan for Growth, could actualy make ASC'S Stock Appealing, and could spur investment in ASC, leading to MORE CASH TO PAY OF DEBT, OR UPGRADE INFRASTRUCTURE, AND DEVELOP RESORTS.

It seems to me that ASC is trying hard, but isn't doing everthing they could do, as they have at least a moral responsibility to their Shareholders and Investors to do, Their customers who forked over for All for One Passes, and to their Employees who need job security, NOT TO MENTION THEIR CREDITORS, WHO I AM SURE WOULD LIKE TO GET PAYED BACK, after they earn some interest

Anyway strangly this seems more like a topic for Alpinezone, now back to the artical on Sugarbush
I really like the comment on how Win would like to bring Mountain Biking back to the Hill seems like this would be something rather nice.....

[random_ski_guy]

SRO, who owned SKI Ltd anyway? They really hit a home run selling out to Les.

[BushMogulMaster]

SRO, who owned SKI Ltd anyway? They really hit a home run selling out to Les.

I'm not SRO, but I can answer your question. Pres Smith was founder and CEO of SKI Ltd.

[random_ski_guy]

So he owned 100% of SKI Ltd? No investors?

[BushMogulMaster]

So he owned 100% of SKI Ltd? No investors?

I'm not certain about that. I only know he founded it and served as CEO and Chairman Of Executive Committee. J.D. Sargent was the Chairman of the board, and Hank Lunde (now of Stowe) was the President.

[ski_resort_observer]

SRO, who owned SKI Ltd anyway? They really hit a home run selling out to Les.

Don't know if they hit a home run or not. Interestingly, soon after, the courts ruled that Otten had to sell off some resorts, think one of them was Cranmore.

If you have any interest in ASC history check out the 2006 Annual Report. Before all the boring endless numbers there is info about the ski business in general and the ASC resorts in particular. As you can tell I have a passion for the ski resort business, that's why I am the Ski Resort Observer.... I was working for ASC, at the Bush, of course, when it went public and I have been following it closely ever since.

About the comment that Vail/Intrawest are ultra luxury isn't totally true. They both do have some in that catagory. Vail actually owns an upscale hotel at the base of Jackson Hole as well as the largest summer resort in Jackson Hole(the valley, not the resort). Jackson Hole's busy season is actually the summer not the winter. Again, Jackson Hole the valley not the ski resort. The former company Intrawest owns Mountain Creek, a smart move but an ultra luxury resort it is not.

[random_ski_guy]

I've always been of the opinion that Les overpaid, by a ridiculous sum, for SKI Ltd's assets (Killington, Mount Snow, etc) and Victoria's Assets (Steamboat and Heavenly). Thats why, as you have acknowledged, they are drowning in debt and have been since going public. Yes there are alot of details between those purchases and now, but the overpayment for these mtns is the sigular largest cause for ASC's wallowing. I would chalk up a lousy timeshare product and execution as the second reason, but thats well behind the overpayment.

I presume (and it is indeed a presumption since i have no idea what SKI ltd's books looked like) that SKI came out well ahead in their sale to Les.

[ski_resort_observer]

Interesting theory.....could you check and see if you can find out what they paid and how much they overpaid? They say "something is worth what someone is willing to pay for it". Another big factor, of course are all those bad snow years.

[Tin Woodsman]

Interesting theory.....could you check and see if you can find out what they paid and how much they overpaid? They say "something is worth what someone is willing to pay for it". Another big factor, of course are all those bad snow years.

Whether they overpaid or not is, IMHO, not the issue. It was an overambitious and poorly capitalized expand-at-all-costs mentality that sunk Les and ASC. Was it ego? I'm no shrink, so I'll bow out of answering that question. Regardless, the smart thing to do after taking on all that debt to buy SKI Ltd. would have been to pay it down by going for an IPO and then by exploiting operating synergies to increase cash flow. Instead, ASC went and took that IPO money and gave it to Victoria to diversify their footprint (smart, but too late) and never did get a handle on how to manage such a large conglomerate. Throw in a few bad snow years in the East and then piss poor real estate execution - those guys had no clue what they were doing - and you have a recipe for a disaster.

In retrospect, the first mistake was buying SKI Ltd. Made them far to concentrated in the Northeast and brought on too much debt.