Balsams Grand Resort teams up with ski industry legend Les Otten

[MEtoVTSkier]

I wonder how long, on average, it takes to carve out a ski trail? Not just clearing trees, but digging up and removing stumps. Seems like a monumental amount of work.

How much work was done at Mittersill this year in a short amount of time?

 

[Puck it]

How much work was done at Mittersill this year in a short amount of time?

It was trail wideing on one trail. It was done in 2-3 months.

 

[EPB]

And I can point to many where the developer took on added costs they wanted a municipality to pay for. So what?

I think the state is involved enough financially in our tourism industry. I'd rather see that money directed at already viable state parks.

If Otten can't pay for it, tuff luck. Call CNL or Vail. Maybe they'll take the action if it's got potential. I doubt he's exhausted all options.

I doubt anyone would be interested. It would be cheaper to just buy an existing resort than build from the ground up in Dixville Notch. This reminds me of Curt Schilling in Rhode Island. When the capital markets know not to find you, see if the government is dumb enough to loan you the money in the name of job creation/economic development.

 

[deadheadskier]

So neither of us truly know if Otten is bluffing, that's what.

Do you not play cards? You don't know if someone is bluffing unless you call it.

What I'm saying is at minimum the state should say "No" and see what happens. I highly doubt Les just says, "okay, I give up" and moves on from a project of this scale. He'll likely reevaluate and absorb more of the risk away from the state than what he's currently asking.

If not, oh well. No Balsams. Hopefully somebody else comes along with deeper pockets.

 

[EPB]

Do you not play cards? You don't know if someone is bluffing unless you call it.

What I'm saying is at minimum the state should say "No" and see what happens. I highly doubt Les just says, "okay, I give up" and moves on from a project of this scale. He'll likely reevaluate and absorb more of the risk away from the state than what he's currently asking.

If not, oh well. No Balsams. Hopefully somebody else comes along with deeper pockets.

There's probably no-one else. He and the state both are likely well aware of that too. He probably needs financial leverage from somewhere to justify the returns he's modelling for investors. Remember he has less than 1% of the equity in the deal and that he's only going to get through phase one with the $143 million. Playing hardball isn't a terrible idea to talk him down/ gut check him a bit, but there's a real possibility that his group represents the last hope for the Balsams as we know it.

 

[VTKilarney]

Do you not play cards? You don't know if someone is bluffing unless you call it.

Respectfully, this is not a card game. This is a complex business transaction. I agree that the state should protect its money to the extent possible and obtain quite a bit of information before committing to anything. If the economic model doesn't warrant state investment, they should walk away. But it's not as simple an affair as you make it out to be - and treating entrepreneurs as poker opponents is not the best economic development model. I find that respectful dialogue is a much better model.

 

[deadheadskier]

Did I say that? I said find a partner with deeper pockets like CNL or Vail

 

[VTKilarney]

Did I say that? I said find a partner with deeper pockets like CNL or Vail

You assume that this is a viable option.

 

[deadheadskier]

If it's not, then no deal.

I think I've been clear about that.

 

[VTKilarney]

That's pretty rough for an area that's as economically depressed as the Colebrook area. I guess I would want to see some numbers before making a decision.

Keep in mind that if the ski area breaks even, the state will still receive significant tax revenues from rooms and meals taxes. (If the ski area can't break even, then it's much riskier to invest in it.) I'm not sure if those revenues justify the requested outlay, but I'd sure want to know before forming a final opinion on the matter.

And as a skier... I'm always happy to see a new ski area crop up.

 

[from_the_NEK]

Keep in mind that if the ski area breaks even, the state will still receive significant tax revenues from rooms and meals taxes.

And how much of that is simply poached from existing NH ski areas? Therefore not really increasing incoming tax flow.

 

[VTKilarney]

And how much of that is simply poached from existing NH ski areas? Therefore not really increasing incoming tax flow.

That is a good point. My guess is that there will be quite a few Canadians who would not have skied in New Hampshire otherwise. But that should definitely be researched.

 

[freeski]

Most ski areas are built facing north. I think the original mountain is north, so there are many slopes facing south. It will be kind of hard to hold snow. Maybe they're planning to make up for it by making a ton of snow with a new efficient system.

 

[EPB]

Did I say that? I said find a partner with deeper pockets like CNL or Vail

Vail would never take this project on. Buying a feeder hill like Wawa or just buying all of peak resorts (their maker value today is about $102 million today per their website) would make way more strategic sense for them. Vail's two Midwest hills are about 30 and 60 mins from Minneapolis-St. Paul and Detroit, respectively. They are not resorts. The whole point is to get people to buy the epic pass for their family and have them spend the big money out west at Vail's western resorts. Building the Balsams would compete with its western resorts.

CNL is a REIT. I doubt they would have any interest in building a resort out. They are in the business of buying existing properties and leading them back to opetators.

 

[deadheadskier]

That's rough? Me being a taxpayer and not wanting my state to assume a financial risk in a property that's got a LONG history of never making money.
OK

 

[deadheadskier]

Vail would never take this project on. Buying a feeder hill like Wawa or just buying all of peak resorts (their maker value today is about $102 million today per their website) would make way more strategic sense for them. Vail's two Midwest hills are about 30 and 60 mins from Minneapolis-St. Paul and Detroit, respectively. They are not resorts. The whole point is to get people to buy the epic pass for their family and have them spend the big money out west at Vail's western resorts. Building the Balsams would compete with its western resorts.

CNL is a REIT. I doubt they would have any interest in building a resort out. They are in the business of buying existing properties and leading them back to opetators.

Find a partner "like".....meaning private money. Maybe Boyne, maybe venture capital.

There have been other minimally developed and tired resorts that have been bought by venture capitalists in recent years. Powder Mountain, Utah and Taos, New Mexico. Did those states step in and offer to assume some financial risk?

 

[Jully]

Most ski areas are built facing north. I think the original mountain is north, so there are many slopes facing south. It will be kind of hard to hold snow. Maybe they're planning to make up for it by making a ton of snow with a new efficient system.

That would be an easy way for the state to insure their $25 million, just force them to buy it in snowmaking. That's infrastructure that holds it's value well. Probably going to be a HSQ or two as well besides the gondola so there's a good chance the state would be able to get it's money out.

Besides it's not simply the state getting itself involved in investing, they're not looking to turn the biggest profit with their bonds, they are trying to revitalize a really dead area. If this project is successful it would completely change the face of northern NH.

With a reasonably secure way to get their money out if it fails unless it REALLY fails which I don't think it will, and a chance to do some much needed economic assistance to a region with very little to offer otherwise, I don't think it's a stupid idea. I definitely understand why lawmakers would support it.

 

[Jully]

And how much of that is simply poached from existing NH ski areas? Therefore not really increasing incoming tax flow.

The amount of real estate that will be sold will provide a pretty unique revenue stream. Otten seems to be pushing a lot of the resort as very upscale and that'll be a different sort of tax stream than any other NH resort offers right now except maybe Loon. The Balsams is not going to be a day tripper kind of place.

 

[EPB]

Find a partner "like".....meaning private money. Maybe Boyne, maybe venture capital.

There have been other minimally developed and tired resorts that have been bought by venture capitalists in recent years. Powder Mountain, Utah and Taos, New Mexico. Did those states step in and offer to assume some financial risk?

I understand that you weren't necessarily suggesting that Vail or CNL would be interested in developing the Balsams. I do find it illustrative just how bad a strategic fit the Balsams would be for Vail because I don't think that the development is a good idea for anyone to spend their money on (Leslie and the boys included) with cheaper options to buy outright as I mentioned previously. The fact that phase 1 would cost more than what Peak Resorts is worth is pretty ridiculous.

The Taos situation is actually more egregious than The Balsams' ask - a quick google search yielded this nugget: http://www.taosnews.com/news/article_67a93718-bfae-11e4-9502-ab9d12e957d5.html. I'd say this is worse for a couple reasons: 1) if the owner is truly a billionaire, he could theoretically fund the $300 investment plan a minimum of 3 and change times over. I doubt the same can be true for Les (or that anyone would disagree); and 2) Their bond deal is for $44 million which is a good 50% over the Balsams team's initial ask of $28 million. In full disclosure, I'm not well versed on the TIDD program, or if it's being considered for the Balsams.

I couldn't find anything on Powder Mountain in Utah. I would note, however that Powder Mountain was acquired for $40 million, so I presume that they would be able to secure bank financing without any difficulty. I didn't find a quick number for the Taos Ski Valley sale, but the family that owned it previously did have debt outstanding, so municipal bonds weren't the only option like is the case is in Dixville.

I don't think that the state has much in terms of negotiating power besides the "we can't offer that much money" defense because nobody is likely to ever consider injecting over $100 million into the area again. I'm the guy who doesn't think that Cannon should be run by the state because operating a ski area is way beyond the scope of what state governments are designed to do, so obviously I'm not one to get excited over the idea of the state trying to act as a loan insurer for a ski development. My point is Otten knows that this is the opportunity of a lifetime for Dixville Notch and perhaps the Hotel's last real hope. He's the one with the leverage because the is the ONLY option.

 

[MadMadWorld]

What is the terrain like? I've never been but heard there was some decent stuff.