Big Burke announcement

[AdironRider]

Just remember it isn't just that double the skier visits that is going to cover the cost of the new lodges because right now no money is made via those lodges because they don't exist. The lodges will pay for themselves and the market includes any current Burke skiers. That would get slopeside lodging if it existed. Also keep in mind that doubling the skier visits doesn't mean doubling the number of people that ski Burke. Part of it is just getting existing Burke skiers to the mountain more often... that new snowmaking would get me there more often and if Burke consistently operated Thanksgiving-April with a quality product very early and late, I wouldn't be passing on a Jay-Burke pass. Now I gotta think about that one next season...

Right now Burke isn't making a lodging dime on them for any of their current 75k/year business. I don't know what Burke gets for condo rentals or sales but essentially Burke has no bed base and is missing out on a big chuck of change on lodging. The lack of on mountain lodging is probably keeping a good portion of that double number away from the mountain. That would leave the extra ticket revenue to cover the extra snow.

But let's play out your perspective: that it isn't sustainable. If that is the case, then just like Ginn, the mountain see's improvements (or you might see them as "improvements" in quotes) and then gets sold at fire sale prices to the next dupe. Cool, as long as the lifts keep turning and the season gets longer on both ends, what does it matter?

I ain't heard of west bowl either but don't need to post a picture to prove my lack of knowledge. :lol:

Theres a big difference between putting people in lodges and them being profitable. 1250 beds is the goal. That takes serious capital just to run effectively, let alone maintain.

Trust me on this one, Ive paid the bills for hotels for years now. You dont run a hotel to get rich, they mostly break even, its real estate value.

Which leads me to believe Burke is not a long term proposition for them. Sounds to me like they want to build em using free EB-5 money, they try and flip the resort. Not a great situation.

 

[thetrailboss]

Theres a big difference between putting people in lodges and them being profitable. 1250 beds is the goal. That takes serious capital just to run effectively, let alone maintain.

Trust me on this one, Ive paid the bills for hotels for years now. You dont run a hotel to get rich, they mostly break even, its real estate value.

Which leads me to believe Burke is not a long term proposition for them. Sounds to me like they want to build em using free EB-5 money, they try and flip the resort. Not a great situation.

I don't doubt the revenue issue, but Bill Stenger has been adamant in public that they are at Burke for the long term. So it seems to me that he must think there is some additional market out there that they can bring to Burke to justify the investment.

 

[from_the_NEK]

Where you put the 2 lower buildings they had originally slotted for the new barn like houses they were selling last year. Not sure if they sold the lots in that area or not. They had actually built some decks so people could see what the view from their deck would be.

You can actually see one of the decks in the picture.
I think they had sold some lots (4 or 5) but I'm sure there was some loophole in there that voided the deal if the resort was sold. All info on the "Camber Heights" development has disappeared from all Burke real estate literature that I've seen. Really it wasn't a good idea to build those in the first place. Especially given the way they were laid out.

 

[thetrailboss]

...and I am still surprised that you see little or no cross-marketing. There is no mention or link to Burke on Jay's site.

 

[AdironRider]

...and I am still surprised that you see little or no cross-marketing. There is no mention or link to Burke on Jay's site.

Another reason why I cant see this as a long term deal. Ive been a huge proponent of Stenger and Jay's development in previous threads, but this whole thing just doesnt add up.

How many other companies have kicked ass then gotten delusional? Dont think Stenger cant succumb to that either.

 

[Masskier]

You can actually see one of the decks in the picture.
I think they had sold some lots (4 or 5) but I'm sure there was some loophole in there that voided the deal if the resort was sold. All info on the "Camber Heights" development has disappeared from all Burke real estate literature that I've seen. Really it wasn't a good idea to build those in the first place. Especially given the way they were laid out.

They did have several people that were interested in buying at Camber Heights, However there were not any sales that were completed, because of the change in plans.

 

[Masskier]

One thing is clear, because of the millions of dollars that have been invested in Burke from 2005 onward, the highest and best use is now a ski resort. Prior to 2005 Burke could of had a number of different uses.

 

[Boardguy]

I always felt that the Camber Heights project was a poor use of that piece real estate. The proposed hotels would be a better use of that area IMO.

 

[Masskier]

Theres a big difference between putting people in lodges and them being profitable. 1250 beds is the goal. That takes serious capital just to run effectively, let alone maintain.

Trust me on this one, Ive paid the bills for hotels for years now. You dont run a hotel to get rich, they mostly break even, its real estate value.

Which leads me to believe Burke is not a long term proposition for them. Sounds to me like they want to build em using free EB-5 money, they try and flip the resort. Not a great situation.

Why do you say that the EB-5 money is free?

 

[BenedictGomez]

I still cant get over putting 108 million into a mountain like Burke. You are never going to see that money back.

I'm extremely skeptical of this as well, and here again is EB-5 rearing its' head. Economically speaking, people tend to only look on the positive impacts of large inflows of money because that's what's intellectually (and literally) easy to see.

But what they do not think about is the unintended consequences of "free" government money (which isnt free). Especially when one company is getting SO much money. It's artificially monkeying with the efficiency of the market, to the point where Jay Peak enjoys a substantial competitive advantage over competitors that weren't handed tens-of-millions of such "free" dollars in EB-5. To put it succinctly, Jay Peak isnt growing organically, so much as through direct capital investment from an outside program for which it incurs virtually no risk compared with the normal risks a company always assumes when taking money from capital markets.

How'd you like to be Smuggler's Notch competing with Jay Peak now? Do you think the water park and ice hockey venue etc, are going to make it any easier for Smuggs to survive by carving out their Family niche now? Of course not. Unintended consequences.....

Which leads me to believe Burke is not a long term proposition for them. Sounds to me like they want to build em using free EB-5 money, they try and flip the resort. Not a great situation.

Another excellent point. Complete speculation on your part, and perhaps entirely inaccurate, yet also entirely plausible. And if so, another unintended consequence of such a massive infusion of $$$$ artificially inserted in the marketplace.

 

[thetrailboss]

Hold on folks...EB-5 money is not from the government nor is it free. It is private capital from foreign investors who are investing their money like any other investment and are going to be paid back. The idea tha this is free money demonstrates that some folks are naive about how it works.

The EB-5 program essentially connects foreign investors with domestic projects, in eligible areas with high unemployment and a low income demographic, and if the investor does invest their own money into the eligible project, then they may qualify for a green card. It is still private capital but it is foreign capital. There is nothing stopping other areas from using it...and many do. To be fair Sugarbush, Mount Snow, Ragged, and Saddleback are other areas that I know to be using an EB-5 program.

So the idea that this is stimulus money or free money is bogus.

 

[AdironRider]

Hold on folks...EB-5 money is not from the government nor is it free. It is private capital from foreign investors who are investing their money like any other investment and are going to be paid back. The idea tha this is free money demonstrates that some folks are naive about how it works.

The EB-5 program essentially connects foreign investors with domestic projects, in eligible areas with high unemployment and a low income demographic, and if the investor does invest their own money into the eligible project, then they may qualify for a green card. It is still private capital but it is foreign capital. There is nothing stopping other areas from using it...and many do. To be fair Sugarbush, Mount Snow, Ragged, and Saddleback are other areas that I know to be using an EB-5 program.

So the idea that this is stimulus money or free money is bogus.

Jeez, I make one tongue in cheek statement and everyone toes the line. Ive already gone over EB-5 enough in this thread to know its not free.

 

[AdironRider]

I'm extremely skeptical of this as well, and here again is EB-5 rearing its' head. Economically speaking, people tend to only look on the positive impacts of large inflows of money because that's what's intellectually (and literally) easy to see.

But what they do not think about is the unintended consequences of "free" government money (which isnt free). Especially when one company is getting SO much money. It's artificially monkeying with the efficiency of the market, to the point where Jay Peak enjoys a substantial competitive advantage over competitors that weren't handed tens-of-millions of such "free" dollars in EB-5. To put it succinctly, Jay Peak isnt growing organically, so much as through direct capital investment from an outside program for which it incurs virtually no risk compared with the normal risks a company always assumes when taking money from capital markets.

How'd you like to be Smuggler's Notch competing with Jay Peak now? Do you think the water park and ice hockey venue etc, are going to make it any easier for Smuggs to survive by carving out their Family niche now? Of course not. Unintended consequences.....



Another excellent point. Complete speculation on your part, and perhaps entirely inaccurate, yet also entirely plausible. And if so, another unintended consequence of such a massive infusion of $$$$ artificially inserted in the marketplace.

I hear you on both points.

While this money is available to all, there are definitely certain barriers to entry. Despite Sugarbush and the others using it, theres a reason Jay is getting a metric shitton of it, and my guess is they have a good sales team.

I realize Im speculating on my thoughts within this thread, but the money mind in me see no other option than an eventual flip at a loss, seems like par for the course with Burke.

It would be one thing for a lodge, some snowmaking, then build it up, but they seem to want to go right for the jugular a bit to fast with this one.

 

[thetrailboss]

Jeez, I make one tongue in cheek statement and everyone toes the line. Ive already gone over EB-5 enough in this thread to know its not free.

It was not you that got it wrong. I was responding to Benedict's comments.

 

[thetrailboss]

I hear you on both points.

While this money is available to all, there are definitely certain barriers to entry. Despite Sugarbush and the others using it, theres a reason Jay is getting a metric shitton of it, and my guess is they have a good sales team.

I realize Im speculating on my thoughts within this thread, but the money mind in me see no other option than an eventual flip at a loss, seems like par for the course with Burke.

It would be one thing for a lodge, some snowmaking, then build it up, but they seem to want to go right for the jugular a bit to fast with this one.

Re: JPR. Bill Stenger and company were really the first in VT to develop an EB-5 program because they were having a hard time getting capital. Their office, and their attorney who does EB-5 work exclusively, have really been aggressive and have had a lot of success in getting capital. It is not as if it was given to them--they went out and got it.

Burke: I think their goal is to get more beds to get more overnight visits and to get more revenue. As a day area it is not making it. I still don't think they are going to flip it because, as we have seen ad nauseum, there is nobody out there who wants it!

 

[kingdom-tele]

I still don't think they are going to flip it because, as we have seen ad nauseum, there is nobody out there who wants it!

you mean nobody trying to get rich off of it right TB.

 

[AdironRider]

Re: JPR. Bill Stenger and company were really the first in VT to develop an EB-5 program because they were having a hard time getting capital. Their office, and their attorney who does EB-5 work exclusively, have really been aggressive and have had a lot of success in getting capital. It is not as if it was given to them--they went out and got it.

Burke: I think their goal is to get more beds to get more overnight visits and to get more revenue. As a day area it is not making it. I still don't think they are going to flip it because, as we have seen ad nauseum, there is nobody out there who wants it!

I hope your right, but there have been enough buyers in the last few years to prove your last statement wrong. Arent they on their third owner since the mid 00's?

 

[thetrailboss]

I hope your right, but there have been enough buyers in the last few years to prove your last statement wrong. Arent they on their third owner since the mid 00's?

No, the second. And I would go so far as to say that Ginn did not count.

The last owner, independent of BMA and its related folks, was from 1995-2000 and that was Northern Star. They were foreclosed in 2000 and at the auction by the creditor there was one buyer for the resort, but the creditor exercised the option to try to sell the resort piecemeal in order to get more money. When that round happened, the only bidder for the ski area was a scrap dealer.

A prominent "friend of BMA" stepped into the scene and bought the area from this guy. Hence, Burke 2000 LLC.

Now in 2005 the same prominent "friend of BMA" convinced Bobby Ginn, a friend of his, to take over. "Friend of BMA" got some other folks together and formed an REIT that owned the resort while Ginn was to develop it.

Ginn was shown the door in 2009; Crave was brought in to run it. REIT got out of it in 2012.

So the only owners for the past 12 years were BMA related folks and I would not count them as being a potential buyer because they just got out of it and don't want to run a resort anymore.

 

[riverc0il]

But what they do not think about is the unintended consequences of "free" government money (which isnt free). Especially when one company is getting SO much money. It's artificially monkeying with the efficiency of the market, to the point where Jay Peak enjoys a substantial competitive advantage over competitors that weren't handed tens-of-millions of such "free" dollars in EB-5. To put it succinctly, Jay Peak isnt growing organically, so much as through direct capital investment from an outside program for which it incurs virtually no risk compared with the normal risks a company always assumes when taking money from capital markets.

You are arguing for a 100% completely free and open market without interference. But the government has stepped in to a lot of businesses and greased the wheels of development, innovation, and local investment over the years. I would argue that if certain programs did not exist, our country and the world would not be nearly as technologically advanced as we are now nor economically so well off. Other resorts could try for EB5 money, Jay is not getting it within a vacuum. And I suspect that the advancements they are making have substantially improved the job market in the NEK. EB5 money isn't about perfect competition among businesses in a single market... it is about creating significant economic development in areas that could use more/better jobs. That in turn could actually help improve prospects for other resorts if more residents have more disposable income that gets recycled into the local economy.

Of course, as TTB notes below, EB5 money isn't government money nor free, it is a government created economic development program for foreign investors. You really need to look at this as investments that carry risk. If Jay Peak fails, then the EB5 folks don't get their Visas or their money. They buy into the program because they have evaluated Jay's business plan and think it is a sound investment.

 

[kingdom-tele]

so does anyone know what the recourse is in 3-5 years when/if 10,000 jobs can't/aren't filled. A foreign investor loses a chunk of change, thats it? The infrastructure they are scrambling to erect isn't going anywhere. Seems pretty win/win. Curious what the down side is not attaining their job criteria.

Ginn doesn't count? Didn't they redo the base lodge, Tamarack, yurt, etc?