Park City/Talisker-Vail Lawsuit

Highway Star · Aug 25, 2014

mbedle said:
The land is pretty much useless without access to it. There are hundred of mountains in Utah with just as good, if not better fall lines and steeps than PCMR terrain. The problem is access, without it, you can't have a resort. You are correct that PCMR made money off of the land they leased. But Talisker isn't going to make crap off the land with out the base area and other items/rights that PCMR owns. Its a simple fact that they both need each other to function as a business and make money. Look at it this way, if Talisker is so sure that they don't need the base area, they would have let the eviction go forward, screwed mediation and just let Vail pay them rent for the land. I can only guess that Vail has an agreement with Talisker that states specifically we are not leasing that land without the base area and rights.

I'm not a lawyer, but I was able to read this filing and largely understand it. Are you a lawyer? It seemed like they made some pretty solid and well referenced arguements about valuation. Page 18:

First, the damages are restitution for GPCC/GPI’s wrongful use of the property and
therefore must focus on the value that GPCC/GPI derived from the property.

Second, the value that GPCC/GPI received stems from the use that they made from Talisker’s property and not what other uses might be made of that property by someone else in a different circumstance. Determining the value GPCC/GPI derived from the use of the property is not a hypothetical exercise. Talisker’s property was used as a vital asset in an integrated resort, and the value GPCC/GPI received from that property is reflected in GPCC’s audited financial statements.

Third , “the assets of a company are of value chiefly because of their earning capacity.”

Fact is, this is NOT some random mountain, and that's why it's valued as such.

Highway Star · Aug 25, 2014

I think they'll have this settled by September 3th. But it isn't going to be pretty.

thetrailboss · Aug 25, 2014

So I selfishly hope that POWDR lasts one more season because I'd like to use my three Wasatch Benefit days there on my Alta/Snowbird Pass. But other than that, everything I've seen just shows that POWDR really blew it and blew it big time. That doesn't justify Vail looking to kick a man while he's down, but as Talisker's new tenant and assignee of the lawsuit, they are entitled to get what they are legally entitled to have and that's the leased land that POWDR failed to renew.

marcski · Aug 25, 2014

Robert Katz and Vail are quite business saavy. Why do you think they came in with such a high lease for the canyons? IMHO, it was with this entire scenario as it is playing out in mind.

AdironRider · Aug 25, 2014

HS, you keep talking in absolutes that do not currently exist.

steamboat1 · Aug 25, 2014

Take a look at any lift in North America. The lifts & towers are not affixed to the land. Nuts & bolts.

marcski · Aug 26, 2014

I would think that the lifts will be taken into consideration by the Judge in his/her decision regarding the FMV of the leasehold. The added value of the lifts, after depreciation, would most likely be deducted from the FMV of the leasehold since it expired in 2011. After all said and done, the long term value of the leasehold interest on that land is worth more than the lifts especially after depreciation. (How new are PCMR's lifts anyway? I haven't skied there in about 15 years.).

Highway Star · Aug 26, 2014

marcski said:
I would think that the lifts will be taken into consideration by the Judge in his/her decision regarding the FMV of the leasehold. The added value of the lifts, after depreciation, would most likely be deducted from the FMV of the leasehold since it expired in 2011. After all said and done, the long term value of the leasehold interest on that land is worth more than the lifts especially after depreciation. (How new are PCMR's lifts anyway? I haven't skied there in about 15 years.).

The lifts are owned by Talisker, period.

jaytrem · Aug 26, 2014

marcski said:
How new are PCMR's lifts anyway? I haven't skied there in about 15 years.

The 4 6-packs were installed between 1996 and 1998. The Crescent HSQ a couple years ago. Those would be the most valuable lift on the disputed land. The rest of them are a lot older. I don't think the beginner HSQ makes it onto Talisker land.

marcski · Aug 26, 2014

Highway Star said:
The lifts are owned by Talisker, period.

Regardless, of what the self appointed god says, Powdr will get some credit for those lifts in the valuation of the land. Period.

Highway Star · Aug 26, 2014

marcski said:
Regardless, of what the self appointed god says, Powdr will get some credit for those lifts in the valuation of the land. Period.

Have you read the terms of the original lease? From what understand, any permanent structures (aka Ski Lifts) are property of the landowner. It's pure fanasty on POWDR's part to think they will be able to pick them up and take them.

drjeff · Aug 26, 2014

marcski said:
Regardless, of what the self appointed god says, Powdr will get some credit for those lifts in the valuation of the land. Period.

SOME being the key word. Based on standard business accounting depreciation schedules, the "value" of a lift that is 15 to 20 years old, isn't nearly what the current day replacement costs would be. It's often the same case with "goodwill" valuation determination - just because the current owner thinks that something, that realistically is intangible (such as annual skier visits, or annual rental income, etc), doesn't mean anything going forward

Then there's that whole issue of the eviction order with essentially a "everything that's on the land in question STAYS on that land" part of the judge's ruling that may very well make any valuation issues a moot point

skiNEwhere · Aug 26, 2014

I wouldn't be surprised if the removal of some of the older lifts costs more than the cost of the lift itself.

Those lifting helicopters ain't cheap

jaytrem · Aug 26, 2014

skiNEwhere said:
I wouldn't be surprised if the removal of some of the older lifts costs more than the cost of the lift itself.

Those lifting helicopters ain't cheap

Yeah, they would be doing Vail a favor if they removed some of those lifts. Please, feel free take Pioneer and the Town lift.

thetrailboss · Aug 26, 2014

skiNEwhere said:
I wouldn't be surprised if the removal of some of the older lifts costs more than the cost of the lift itself.

Those lifting helicopters ain't cheap

Some of the older lifts are Yans with towers set into poured-in concrete so they ain't coming out.

Domeskier · Aug 26, 2014

drjeff said:
SOME being the key word. Based on standard business accounting depreciation schedules, the "value" of a lift that is 15 to 20 years old, isn't nearly what the current day replacement costs would be. It's often the same case with "goodwill" valuation determination - just because the current owner thinks that something, that realistically is intangible (such as annual skier visits, or annual rental income, etc), doesn't mean anything going forward

Then there's that whole issue of the eviction order with essentially a "everything that's on the land in question STAYS on that land" part of the judge's ruling that may very well make any valuation issues a moot point

I wouldn't think that the depreciation value of the equipment could reasonably be used as a proxy for its market value, especially since Talisker would presumably be entitled to a stepped-up basis equal to whatever value is ultimately attributed to the lifts. I also wouldn't think that the fact that everything stays with the land means that Talisker would not be required to reimburse Powdr for the value of the improvements. That would seem to be a classic example of unjust enrichment. If the result were otherwise, I can't imagine why any tenant would voluntarily improve a lessor's land. Unless the theory is that they recovered the cost in depreciation deductions (which might or might not be the case depending on when the lease ends). I guess maybe these issues are (or should be) addressed in the lease, but a default rule that says the lessor gets the full value of all leasehold improvements without just compensation seems a bit draconian.

Highway Star · Aug 26, 2014

Domeskier said:
I wouldn't think that the depreciation value of the equipment could reasonably be used as a proxy for its market value, especially since Talisker would presumably be entitled to a stepped-up basis equal to whatever value is ultimately attributed to the lifts. I also wouldn't think that the fact that everything stays with the land means that Talisker would not be required to reimburse Powdr for the value of the improvements. That would seem to be a classic example of unjust enrichment. If the result were otherwise, I can't imagine why any tenant would voluntarily improve a lessor's land. Unless the theory is that they recovered the cost in depreciation deductions (which might or might not be the case depending on when the lease ends). I guess maybe these issues are (or should be) addressed in the lease, but a default rule that says the lessor gets the full value of all leasehold improvements without just compensation seems a bit draconian.

For example, Killington lease with the state, declares all improvements to be owned by the state, but they would be compensated for them, the depreciation is 2% per year from the date of install. Thus a $3m lift installed 20 years ago would be worth $2m today.

VTKilarney · Aug 26, 2014

Highway Star said:
Thus a $3m lift installed 20 years ago would be worth $2m today.

That seems to be pretty generous for Killington. 20 years is pretty old for a ski lift.

Highway Star · Aug 26, 2014

VTKilarney said:
That seems to be pretty generous for Killington. 20 years is pretty old for a ski lift.

The rams head and needles eye quads are both from 1996, and are in fine shape.

skiNEwhere · Aug 26, 2014

The key is to prevent or at least slow down rust. If the towers are never repainted, this seems to happen a lot quicker. Also, the concrete footings seem to start breaking down after a few decades, this is irrelevant though if the lift is being sold.

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