Originally Posted by Tin Woodsman  They don't need to touch the other 2000 acres to get them well over $50MM in value. they can only sell the condos once, but they enjoy revenue streams from the exclusive rental/management arrangements for those condos indefinitely. The hotel is clearly going to generate revenues into the future, as is the golf course. These are not "one and done" investments. Developable land is only valuable if people want to buy/build there. As you well know, K-Mart real estate is not exactly a hot commodity right now, and it's not just the current marketplace. In short, there is a lot of developable land in the backwoods of Maine too, but it's not worth much.
Now look at the skiing side of things. K-Mart does not have 3x the skier visits of Stowe, it's barely 2x and possibly less now depending on how much POWDR fudges the numbers this year. Second, look at the net realization for those skier visits. Given the disparity in day ticket pricing and season pass pricing, along with the substantial difference in the demographics of the two resorts, it's likely that the pure ticket revenue from Stowe is a LOT closer than the 2:1 disparity in skier visits would have you believe.
Now let's look at the expense side of things. K-Mart has 6 discreet entry points (Pico, K-1, Snowshed, RH, Bear, Skyeship) comprising at least 14 lifts (not including Magic Carpets and stuff that doesn't get you anywhere) accessible by just parking in a lot. All of those entry points and lifts require extra security and ticket checkers so that you can't sneak by and stay on the unmonitored upper mountain lifts. Stowe has three (Toll Rd., Manny, Spruce) entry points comprising 7 lifts accessible from the parking lots. K-Mart has 7 lodges spread around its system that it must staff and maintain. Stowe has 3, once of which is brand new. Stowe receives and retains snow better than K-Mart, and is philosophically inclined to make less snow as well, leading to significantly lower costs in that department. In sum, K-Mart costs a LOT more to run on a day to day basis than Stowe, so it's not apples to apples.
Finally, let's look at capital. Surely the good folks at POWDR priced the value of deferred maintenance into their bid for the resort. As you are painfully aware, very little in the way of capital has been injected into the physical plant for about a decade now. The base facilities and lifts are run down. The back-office systems are known to be a mess. Should we even discuss the amount of capital that will be needed to upgrade what has long been the world's most expansive snowmaking system (lots of underground pipes etc..)? Stowe has a new, massive source of water right at the base. It is pumping everything relatively close by instead of from miles away (and 1000' lower in elevation) at the Woodward reservoir. It also has an entirely new, computerized snowmaking system covering most of Spruce.
It also has am important intangible asset in the form of the Stowe brand, which means something in most of the skiing world. In sum, were Stowe to be sold today, I'd bet just about anything that it would fetch well north of what K-Mart did. |