BOYNE USA: AZ Challenge 2009 Response/Feedback Thread

[Tin Woodsman]

Sorry for missing that question regarding Saddleback:

The question was: What have we learned from our neighbor to the north?

That certainly new facilities do attract trial and that they are doing a nice job of producing a ski product. They have hired a great leader in Warren Cook and seen some moderate growth in skier visits.

We have learned that Warren is indeed savy at PR and in operations and is putting in place many of the tactics he used against Les Otten many years ago to try to get his resort to profitability.

We have also learned that the Berry family has substantially cut off funding to Saddleback and given Warren the ultimatium to make money or else.

We have learned that Saddleback's 1.5m cash flow (EBITDA) loss is unstustainable for any resort and that they need to do something significant to the operations to make it sustainable. aka raise prices, cut costs or try to steal marketshare.

We have learned that they owe the ski industy over 400k in past due payments on capital expenses and upgrades that they purchased in 2008 (over 12 months in arrears) and are currently seeking a government backed (FAM) loan of 3m to fund past due bills and fund operations this winter.

The jury is out on the long term viability of Saddleback without subsidies from current/future owners or government.

For our part, we intend to continue to meet the competition with improvements to facilities, cost structure and service. However, we are not expecting to get Government handouts to make that happen.

Skiers should consider these realities at Saddleback along with the pretty picture currently being portrayed in press releases on on the blogs.

Respectfully,
SK

Wow.

With all due respect, those realities have zero to do with the quality of the product, which is clearly improving dramatically. Should I shy away from Snowbird b/c Dick Bass comes from oil money? How about Stowe with their AIG ownership? What about Jay Peak and Sugarbush using special visa programs to fund their new base area expansions? Ultimately, it's about the skiing, and the inside poker stuff is just fun to talk about. If I shied away from every company who is in arrears to their vendors or is receiving government help, I'd have to live off the land somewhere in the woods.

Quite frankly, you would have been better served saying that it's your understanding that Saddleback is far from profitable and that, even with the growth in skier visits, they are known to be experiencing financial issues with vendors and others in the industry. Therefore, they may not be a model that you seek to emulate. The high road always works better.

Sorry - that's poor form, SK.

 

[Skimaine]

I guess that response takes care of the crickets.

I think SK responded in the spirit of the question and answered back with brutal honesty. Ultimately, he did not spin, dodge or duck the question.

I would love to have this guy as my governor. Probably not going to happen, but those of us living in the great state of Maine can only hope.

 

[tipsdown]

Wow, talk about airing out some dirty laundry. I wasn't expecting that out of SK. I thought he'd take the high road and talk about some of the nice things they've done…Definitely a couple of low blows. As for the EBITDA, it comes with the territory of engaging in a start up 10 year plan….Inevitably, they need to gain more market share to become sustainable and they're off to a pretty good start from what I can tell. If they're doing that in years 8,9, or 10, than there may be some cause for concern….As for the past due payments, that didn't happen on Cook's watch and that's part of the reason he's there. And what's wrong with a loan? Ultimately it will help create jobs and expand operations...
In short, no surprises other than the tone of SK's response.
And by the way, SK's "neighbor" is to the South (SW). I don't know how much of a pulse this guy has on Saddleback….

 

[AndyEich]

Saddleback is north of Sunday River.
________
properties for sale Pattaya

 

[Newpylong]

Huh? Why all the crying? That response is brutally honest.... Why sugarcoat anything?

 

[Tin Woodsman]

Huh? Why all the crying? That response is brutally honest.... Why sugarcoat anything?

Really? Some random message board guy asks a question in a slightly snarky answer and you think it's appropriate for the owner of a ski resort to shit all over another and go out of his way to disparage their reputation? That's sweet. Come on. Behind all the niceties, Kircher basically said "Don't ski at Saddleback b/c they are a bunch of scumbags who are cheating everyone in the industry and taking government handouts"

What did Saddleback do to deserve that sort of response? They didn't ask the question.

Completely inappropriate, regardless of the veracity.

 

[Skimaine]

SK said that Saddleback does not have a sustainable business model and backed with key bits of information. He also had high praise for Warren Cook. Good healthy competition. If you are considering investing in real estate at any resort you must consider the long-term prospects of the operation. Anyone who does not sense some risk at Saddleback (and to a lesser extend SL) is fooling themselves.

 

[deadheadskier]

SK said that Saddleback does not have a sustainable business model and backed with key bits of information. He also had high praise for Warren Cook. Good healthy competition. If you are considering investing in real estate at any resort you must consider the long-term prospects of the operation. Anyone who does not sense some risk at Saddleback (and to a lesser extend SL) is fooling themselves.

very true with any ski area

I would think with the amount of quality improvements that have occurred at Saddleback that it is no longer a threat to join NELSAP like it once was. It has a lot of things going for it, especially the lake to attract people looking for a four season destination.

That said, I've only been there once when I used to live in Portland. I found the drive there far more taxing than the drive to Sugarloaf. Is Route 4 the major road over? Whatever it was is in major need of an upgrade. That would help SB as much as anything.

 

[Tin Woodsman]

SK said that Saddleback does not have a sustainable business model and backed with key bits of information. He also had high praise for Warren Cook. Good healthy competition. If you are considering investing in real estate at any resort you must consider the long-term prospects of the operation. Anyone who does not sense some risk at Saddleback (and to a lesser extend SL) is fooling themselves.

The question wasn't about real-estate, so I'm not sure what you're getting at - why raise this strawman? Moreover, he could have easily accomplished his objective to illustrate it's not a model worth emulating by stopping at the $1.5MM EBITDA loss figure. The question was:

"Saddleback has gotten nice reviews and has been noticed since the Berry family launched their upgrades. As your nearest geographic competitor what notes have you taken on their activity?"

On second look, that doesn't even sound snarky to me, so I'm not sure why it engendered such an under-handed response. And if you think that SK's post was innocuous, I urge you to re-read these three lines, which people are apparently ignoring:

We have learned that they owe the ski industy over 400k in past due payments on capital expenses and upgrades that they purchased in 2008 (over 12 months in arrears) and are currently seeking a government backed (FAM) loan of 3m to fund past due bills and fund operations this winter.

For our part, we intend to continue to meet the competition with improvements to facilities, cost structure and service. However, we are not expecting to get Government handouts to make that happen.

Skiers should consider these realities at Saddleback along with the pretty picture currently being portrayed in press releases on on the blogs.

I've participated in many skiing related forums with varying levels of ownership/mgmt participation. I have long been an avid observer of the industry as a whole. I have never seen the owner of a ski area publicly disparage a competitor like this. I have no idea why you think it's appropriate for SK to bring up Saddleback's financial relationship with its vendors or the govt as a basis for making a determination whether you would want to ski there. That's just a low blow - plain and simple. It's stunning to me that you were fooled by the banal platitudes about SL's former employee Warren Cook who is now running their top local competitor. He might as well have said "Warren's nice but he is cheating everyone in the industry and stealing your hard-earned taxpayer dollars so don't ski there." If you look at his post for more than 2 seconds, that's essentially what he's saying.

 

[Edd]

I must say my jaw dropped when I read SKs response to the Saddleback question. I watched the videos posted recently from the Sugarloaf meeting where he spoke. He came off as tactful with measured responses.

Hopefully the words sounded better in his head than they came off to readers. He did say that Saddleback is presenting a fine ski product which is more generous than some in his position would be. Following that up with stating that Sugarloaf is more than up to the challenge (which it is) to hold on to a healthy market share would have been good.

Either way I'll be skiing both mountains this year.

 

[SLyardsale]

Since I asked the initial question, I'd like to respond too..

This is a business, as long as what SK is saying is true - and knowing him he has checked facts thouroughly - I for one am glad he is getting this info out. I love both Mt's, but SL offers the overall package that wins me over, despite some recent mis steps. Saddleback has been shtting ice cream recently - lots of great PR - all to their credit.

When you act responsibly, quitely, fiscally sound, etc, you don't often grab headlines. I'll admit, I've been aiming constructive criticism at SL et al. But I've seen a couple of things recently - an admission by J Diller (SL Gen Man) at the Carrabasset town meeting with SK - that he needs to communicate better with the SL community, and SK's comments/commitments to SL (also at that meeting) on both ski and golf operations.

Having both MT's in a close radius is great. Lets all hope the competition remains healthy for both operations.

Thanks SK for the follow up. I think I owe you a Pick Pole at the Bag this winter.

 

[Tin Woodsman]

Since I asked the initial question, I'd like to respond too..

This is a business, as long as what SK is saying is true - and knowing him he has checked facts thouroughly - I for one am glad he is getting this info out.

So you're glad that the info about Saddleback being late on its payments and asking for a govt loan is out there? That really has some sort of impact on how you think about the place? You think it's appropriate for a competitor to leak this information to the public in what constitutes a highly unusual move?

Did SK have all his facts straights when he banned that guy from skiing on his mtn due to disparaging comments made on the SL board? You guys must thin his shit tastes like rhubarb pie.

 

[Vortex]

Sk comes out and answers the question good or bad and stands up. I think we got a response.

It was Yardsales question and he is satisfied with the Answer. This is business, and being aggressive is not an issue with me.

As far As sk role in the previous board issue banning. He stepped up to try and settle the issue. As I remember all parties excepted the end result. I think you have the chronological order backwards here.

I am a happy bonye pass holder and property owner.

 

[Rogman]

An unusual and unwise move. SK's initial response was the correct one, ignore the question. Why talk about a competitor on a public forum? Doesn't matter what you say, you're still giving them free press. There's obviously some bad blood there, and what goes around comes around. As the saying goes, you won't know where, you won't know when, but you will know why.

For me, it backfired. I spend a week at the 'loaf every year. Keep meaning to get over to Saddleback, but have never made the effort. SK's response made me realize there's a lot going on there. This year, I'll make the drive. No animosity, he simply piqued my curiosity.

 

[SLyardsale]

So you're glad that the info about Saddleback being late on its payments and asking for a govt loan is out there? That really has some sort of impact on how you think about the place? You think it's appropriate for a competitor to leak this information to the public in what constitutes a highly unusual move?

Did SK have all his facts straights when he banned that guy from skiing on his mtn due to disparaging comments made on the SL board? You guys must thin his shit tastes like rhubarb pie.

You missed the next sentence...

I love both Mt's, but SL offers the overall package that wins me over, despite some recent mis steps. Saddleback has been shtting ice cream recently - lots of great PR - all to their credit.

There had been speculation that SB's model (aggressive expansion & cheap lift tickets) could not be sustained. Your take is that SK leaked the information. Mine is that he is a business man getting out facts about his closest competitor. Is that really that unusual - I guess it is only unusual in the ski industry

 

[tipsdown]

An unusual and unwise move. SK's initial response was the correct one, ignore the question. Why talk about a competitor on a public forum? Doesn't matter what you say, you're still giving them free press. There's obviously some bad blood there, and what goes around comes around. As the saying goes, you won't know where, you won't know when, but you will know why.

For me, it backfired. I spend a week at the 'loaf every year. Keep meaning to get over to Saddleback, but have never made the effort. SK's response made me realize there's a lot going on there. This year, I'll make the drive. No animosity, he simply piqued my curiosity.

Rogman, I'm with you here. His response screams "Saddleback is a serious threat to my mountain." And it only lends more credibility the fact that he sees them as a major player in the East. The problem I had with his response was it wasn't very telling…He positions his dig on their financial model as if it were year 10 (as opposed to year 2) of their 10 year plan. And since he's provided a nice little tell-all on Saddleback, I'd like to hear how things are going at SL behind the scenes. Maybe he could shed some more light on that. My understanding is that SL was cash flow negative by $1 mil in 2008. To me, that's much more of a concern for a resort that has been operating for years and has more or less maximized their potential..It's clear to me that his intent was to paint the bleakest picture posssible about his biggest competitor. If you're just calling a spade a spade..than why not talk about how Saddleback sold $4 and a half million in real estate last year. SL was no where near that…Take the high road next time...

 

[deadheadskier]

You missed the next sentence...



There had been speculation that SB's model (aggressive expansion & cheap lift tickets) could not be sustained. Your take is that SK leaked the information. Mine is that he is a business man getting out facts about his closest competitor. Is that really that unusual - I guess it is only unusual in the ski industry

good point

In my line of work, I play fair most of the time, but I certainly don't root for my competitors. The moment one of them plays dirty, I will take the gloves off.

In the ski business, especially in the current economy, I think many people (myself included) are sensitive to one particular business throwing another business under the bus. It would appear that SK was doing that with Saddleback. That might not be his intent, but I could see it being perceived that way.

If someone makes comments that take skiers away from one ski area in favor of their own, it maybe good for their organization, but bad for skiers who favor choice and want to see every area succeed. I fall in that category and feel the entire industry needs growth and that key industry people should be rooting for everyone.

I get what your saying though. It's easy to sit here and criticize statements when the bottom line is not your responsibility. In other businesses such cut throat statements from a CEO are the norm and perfectly acceptable.

 

[tipsdown]

If someone makes comments that take skiers away from one ski area in favor of their own, it maybe good for their organization, but bad for skiers who favor choice and want to see every area succeed. I fall in that category and feel the entire industry needs growth and that key industry people should be rooting for everyone.

QUOTE]

AMEN

 

[Vortex]

Fair competition is good. You play to win though. I want bouyne to be successful to see them keep opening early and closing late and spending big dolalrs on snow making. Its a business. If they don't make money these things don't happen.

 

[JerseyJoey]

Kirchers statement seems to show how threatened he feels by Saddleback. If they are such an unsustainable business model, why does he feel so threatened by them?