Cannon lift out to bid

[threecy]

Where do you come up with the info for this statement?

Take a look at the various articles and proposals. This will be a "backcountry" area. As per Cannon's site, "There is no snowmaking right now, but there may be limited snowmaking on just a couple of primary trails some time in the future"


I've hiked around this area in just about every calendar month in the past three years...the critical points of the area do not hold snow as well as Cannon. This isn't much of an issue as an expert backcountry area, however as a lift served intermediate area, it is.

Here's a shot from above the double chair base terminal from last March, for instance:

Or Christmas week this year:

 

[Tin Woodsman]

Take a look at the various articles and proposals. This will be a "backcountry" area. As per Cannon's site, "There is no snowmaking right now, but there may be limited snowmaking on just a couple of primary trails some time in the future"


I've hiked around this area in just about every calendar month in the past three years...the critical points of the area do not hold snow as well as Cannon. This isn't much of an issue as an expert backcountry area, however as a lift served intermediate area, it is.

Here's a shot from above the double chair base terminal from last March, for instance:

Or Christmas week this year:

Two things - the new lift will be built to last 50 years or so. It's reasonable to assume, given what you posted and the nature of the terrain and ski industry in the northeast that snowmaking will be used for trouble areas at some point early on in that lift's projected lifespan. Moreover, I'd be interested to know the impacts that grooming and skier compaction would have on snow retention. A few cherry-picked photos from the bottom of the mountain don't really help to inform these questions all that much.

 

[threecy]

Really? That's your answer? "I could tell you but I won't" I'm sure no one is paying you to tell them how many used double chairs were available during that period, sans names, locations, sizes, prices and capacities etc.. What a cop out.

What's with the moving target? I thought the modified question was limited to only this year, since it wasn't fair to look back over the years since the project was announced. Being that it's limited to this year, it's a question of what *is* on the market, which I'm not going to disclose here.

The answer to that is self-evident. New trail pods, especially ones as large as Mittersill, have orders of magnitude more visibility and marketing hype than a simple replacement of an older lift.

Visibility and marketing hype? Then why put in a double chairlift and little to no snowmaking?

None of the mountains you referenced lower down in your post used the old lift to support new terrain. Not one.

Really? Firstly, your list was actually mixed (new terrain vs. replacement). Secondly, if you look at my list, which was not under the guise of serving all new terrain, many of those *did* serve net new terrain. Thirdly, a well installed used chairlift would in fact look like a new chairlift (especially if they were to opt to put in a new drive).

Bottom line, most skiers can't identify the age or make of a lift. This brand new double chairlift will look virtually the same as a nicely painted 20 year old lift to most folks.

Bullshit...clip...So all in all, I'd disagree strongly that no significant new terrain was added in support of those lifts. The terrain, while not significant from the perspective of a mega-resort or the industry as a whole, was very much significant to those mountains and their market positioning.

With all due respect, you're all over the place in using your own rules as to what constitutes new expansion and what constitutes replacement.

How many of those lifts serve major new terrain for those mountains? How many of those areas does Cannon legitimately compete in the same league with?

What *is* Cannon's league? This is a question that has been a tough one for many people in the industry to answer. Regardless, we're talking about a ~1K vertical double chairlift, whether it was installed new or old. We're not talking about a major pod that will transport 3,000 skiers an hour, or be the basis of 300 new condos, etc.

Wachusett, BEast, Catamount, Jiminy, Gunstock and Shawnee are either geographically irrelevant or serving a different section of the market altogether.

But Bolton Valley and Saddleback are?

Of the remainder, Sunapee, Okemo and Sunday River only used these lifts to replace existing ones and none of them served core terrain.

So Mittersill is core terrain? Regardless, are you 100% sure of the rest of your statement?

 

[EPB]

Even with installation, you're looking at an initial cost difference of roughly $1.5MM in today's dollars.

It's certainly possible, though that might be a little much.

Moreover, how does fewer years of cash flow (a measure of duration) have any impact or relationship with the"Estimated Annual Cash Flows" (I love how you capitalized this term for effect as if it's a formal term) within those years?

More years of cash flow from a lift means more PV of cash flows. It also spreads the negative amount of cash flow spent up front over more years.... EACF is the abbreviation that I was taught; I imagine many wouldn't know what I was referencing. Remind me why is the capitalization was relevant to anything you're asserting. Are YOU familiar with the EACF calculation? It doesn't seem to be the case.

Well this assumes constant or rising prices, doesn't it? I'll bet you could have gotten yourself a lovely used lift for a song in the winter/spring of 2007/2008 after Lehman went tits up and the economy went into free fall. No one was buying anything. Maybe not so much now with a recovering economy and the 2nd strongest year in skier visits on record.

Inflation would lower PV of cash flows too. Skilifts.org also said this about the triple: "Sold to Shawnee Peak Maine in 2006. Had a special variance from NH Tramway Board to run at 550 fpm. " Pre Lehman going "titties up".

Is this sarcasm or some form of satire? Do you really think there's some bureaucrat at a desk in Concord who is performing a comparative analysis of various Mittersill lift installation options? I would imagine that there isn't a single employee of the State of New Hampshire not working for Cannon who has any familiarity whatsoever with the financial planning for the Mittersill lift.

A little bit of both. You too have a documented track record of sarcasm and satire; I'm glad you picked up on mine.... Last time I checked, Cannon had a GM that was at least somewhat responsible for financial planning. Wouldn't you say? The last statement in this bit is almost certainly not true- "any familiarity whatsoever..." You should know better than to use such broad sweeping statements.

Threecy's logic and experience are compelling and relevant. I have no doubt that a used lift would have been the financially superior alternative. But his argument is missing a few critical components. Referring specifically to the Shawnee lift is misleading as, in his owns words "Shawnee purchased the triple years ago when it came on the market, then installed it when they felt it was time". As he should know from the rather tortured history of the Mittersill reclamation, Cannon never had the luxury of buying a lift and storing it until they thought they were ready. They had to fight a very complex battle with multiple competing and overlapping govt entities at both the State and Federal level. The achievement of a successful outcome in this process was NEVER guaranteed and was, according to many observers, quite a bit in doubt for a long time. Given this landscape, it would have been foolhardy and most certainly a waste of NH taxpayers' dollars to purchase a used lift, no matter how cheap, and place it in storage just in case the land swap was executed and the approvals secured. The uncertainties inherent in that process were to great to act otherwise.

This seems spot on to me; I agree. He also didn't point to any used lifts that could have been a viable option even IF they would have been able to purchase and store for a few years.

Even if there used options, I think Rivercoil's point is valid in that there are no private ski areas of Cannon's class who would have installed a used lift for a such a major expansion. Could you name a precedent that would fit this mold? Jackson Gore? No. Bolton Valley's new Vista lift (not all that major)? No. Loon Peak South Mtn? No. Saddleback? No. Stowe's Spruce Peak? No. Ascutney North Peak? No. Bretton Woods? No. Heck, even when tiny old, small-school owned and operated Middlebury Snow Bowl had to replace their Worth Mtn chair, they bought a brand new Dopplymayr.

This is exactly where my point B that you dismissed earlier comes from. Customers of larger areas expect new lifts. The precedent that you alluded to here makes it seem that Cannon could miss out on a noteworthy sum of extra cash by building something cheap. Good financial planners would be able to make a decent estimate as to how much business they would lose by choosing the cheaper option. It certainly isn't easy as you said earlier. I also wouldn't say that someone with, "a dilettante's understanding of the issue" would be able to decipher if the cash flows lost due to a chintzy lift install would be significant.

Given the time crunch involved as well as the prestige and market positioning of Cannon Mtn, I think it's entirely defensible to have purchased a new chair. That $2.6MM does sound like a lot, so I'm interested to know why that cost so much as compared to the longer and more technically challenging single replacement at MRG (2000' of steep vertical) or the Worth Mtn chair I mentioned (1000' vertical), both of which came in at around $1.7MM.

The crunch time as Threecy mentioned earlier could certainly have something to do with it. I believe he also brought up the state bidding process, though I wouldn't know the extent to which that would affect pricing.

 

[threecy]

Two things - the new lift will be built to last 50 years or so.

A used lift can last just as long. New or used, they would have the same concrete. New or used, they would have rust free towers installed. Cables and grips are likely to be replaced at some point, new or used. Drives may need to be replaced at some point, new or used. We're not talking about a beat up used car vs. a brand new Lexus.

 

[riverc0il]

One item for consideration that would support used being a better decision is longevity really will not be an issue. Though, I did suggest that might be the case as a new will certainly last longer and have lower overall long term costs. However, that said, I will reconsider based on the following reasoning: This lift won't run a heck of a lot. As threecy pointed out above, as a natural snow area, the main routes don't hold snow exceptionally well. Cannon had Mitty "closed" a good portion of the season last year. There are often years when it is not skiable until late January or even early February (by my standards, which are much more generous than most folks that care about their skis). So one factor is that this lift will likely spin no more than 60-70 days per season at best until other lifts that spin a significant percentage higher.

Also, it is interesting that just two years after they cut out select tram operation mid-week for expense savings, they will now have to staff a whole new lift for what is likely an evenly off setting amount of days or wages.

Any ways, I still think new is the way to go but I can understand the argument for used even if I don't agree with it. And even if state run operations' revenue is "owned" by the tax payers (in a manner of speaking as threecy uses), all state run operations would be in dire trouble if they did not wisely reinvest their extra revenue in long term infrastructure upgrades. Ultimately, I think this is a good long term purchase.

 

[deadheadskier]

Also, it is interesting that just two years after they cut out select tram operation mid-week for expense savings, they will now have to staff a whole new lift for what is likely an evenly off setting amount of days or wages.

That I understand. Tram doesn't open up any terrain that can't be skied from other lifts. Mittersill, as it currently stands, isn't 'lift serviced' in the eyes of 95% of people using the product.

I'm guessing the thought is that the added revenue they project lift servied Mittersill will bring in increased skier visits will offset the cost of operation.

 

[thetrailboss]

Two things - the new lift will be built to last 50 years or so. It's reasonable to assume, given what you posted and the nature of the terrain and ski industry in the northeast that snowmaking will be used for trouble areas at some point early on in that lift's projected lifespan. Moreover, I'd be interested to know the impacts that grooming and skier compaction would have on snow retention. A few cherry-picked photos from the bottom of the mountain don't really help to inform these questions all that much.

I've skied Mittersill twice and loved it. I recall, and Google Earth confirmed, that Mitty faces due north so I was a not confused to hear that it does not hold snow well, but considering that my memory is that the terrain does tilt a bit to the NW, and wind is a problem with that area, I am not really too shocked I guess. I wonder if they will roll some fan guns to the base during lean seasons....

 

[threecy]

Here's another way to put it, using rough numbers for sake of discussion.

Is a new double chairlift 3X better than a refurbished double chairlift?

They will be spending 3X more money to install this brand new double chairlift as compared to a refurbished chairlift (perhaps I should be using the word refurbished instead of used, as used chairs are generally refurbished prior to install). Again, they are likely to have the same lifespan. Perhaps some maintenance will be needed a few years sooner, but not a replacement, and not for millions of dollars.

Again, using rough numbers for sake of discussion, what if Cannon was able to save $2M by installing a refurbished chairlift. What is considered by many to be one of Cannon's biggest problems (rightly or wrongly so)? Conditions.

The hypothetical savings would buy Cannon nearly as SMI Polecat fan guns as Peak bought for Mt. Snow back in 2007. Remember how big of a splash that was, both in terms of marketing and conditions?

Scenario A: Cannon advertises a "brand new" ~1K vertical double chairlift, open when natural snowfall permits.

Scenario B: Cannon advertises a "new" ~1K vertical double chairlift, open when natural snowfall permits, and a massive fan gun snowmaking expansion.

 

[thetrailboss]

Interesting discussion.....

 

[AdironRider]

Looks like Threecy is really fired up about this project!

Man, I noticed this like 5 pages ago. Im willing to bet he was never for Mittersill being opened back up in the first place.

I still think that this is going to bring in much more money in terms of revenue than 2.6 million over its useful life, so the taxpayer of NH is more than getting a good deal. Threecys taxpayer argument is moot if you ask me, which is really all hes got going for him right now.

Maybe it could have been done for cheaper, but the taxpayer is going to make much more than 2.6 million over the 20-30 years this thing will be in operation. So its not as good a deal as it possibly could be, but were talking a couple hundred grand over 20-30 years. This is the government were talking about here.

As you can see, Im not buying that a used lift would be 1/3 the price. Im also not buying that used lifts last nearly as long for not much more in terms of maintenance costs. Look at the Hunter debacle this winter. A crappy lift can really change opinions of a place.

 

[threecy]

Im willing to bet he was never for Mittersill being opened back up in the first place.

Not for $10,000,000. Frankly, I think having Mittersill as a backcountry area and then spending the $10M (the estimate used for the whole project) on improving Cannon would be a much better idea.

I still think that this is going to bring in much more money in terms of revenue than 2.6 million over its useful life

There's a big difference between revenue and profit. Using rough numbers as an example and assuming a 10% profit margin (which would be extremely high for the ski industry), Cannon would need to generate $26,000,000 in additional revenue from this area in order to break even.

As you can see, Im not buying that a used lift would be 1/3 the price.

It's absolutely possible. Heck, take a look at Hugh Knapp's listings...slim pickings at the moment, but none of those approach $2M. In regard to install, there are lift crews who specialize in installing refurbished lifts. Crotched opened a few years ago with all refurbished lifts, saving them millions of dollars as compared to new installs.

Im also not buying that used lifts last nearly as long for not much more in terms of maintenance costs.

There are plenty of refurbished workhorses in New England that have been operating without a hitch for decades. Are you familiar with lift maintenance? Why do you think a refurbished lift is going to be suddenly inrreparable? What parts are going to cost dramatically more in terms of maintenance between a refurbished lift and a net new lift? Did you know that some parts for new lifts are actually dramatically more expensive?

Look at the Hunter debacle this winter.

1) That's a detachable, not a fixed grip. Nobody here is advocating installing a used detachable. Big difference. 2) That was a new install.

 

[deadheadskier]

I agree that the Hunter lift is a bad example.

I also can't think of a fixed grip lift in the east that is continually down for maintenance unless it is very old or at an area that lacks financial resources to maintain it properly. Tenney and the Hornet double come to mind with the latter.

 

[bigbob]

Sugarloaf has a few older lifts, always breaking down. Timberline and King Pine bowl lifts reused from other locations on mnt.They have issues also. Why would the Loaf want to speng the money to rip out the spillway lifts and install a refurbished quad? Why not just rehab whats there?

 

[deadheadskier]

my understanding with the spillway chairs is the thought that a heavy fixed grip quad will run better in heavy winds than the current doubles do.

 

[drjeff]

One of the big things I'm noticing in this thread when the mention of refurbished installs keeps being brought up is that all of the ski areas cited in the use of refurbished lifts are privately owned. I wonder if that, the situation where obviously cost conscious in any situation, the folks at Cannon (and at any other publically owned ski area) don't have to be quite as cost conscious???

Come to think of it, can anyone think of a publically owned ski area that has installed a refurbished lift??

 

[thetrailboss]

Again, appreciate all the viewpoints and discussion on this topic. Keep it coming.

 

[threecy]

Wow, look at all of these horrible lifts that were installed used...oh the humanity!

Q1 Quad, Jiminy Peak, 23 years old

Summit Quad, Crotched, 21 years old

Valley Quad, Crotched, 21 years old

West Double, Crotched, ~40 years old

Zero G Triple, Crotched, 21 years old

Pistol Triple, Gunstock, 24 years old

West Quad, Berkshire East, 21 years old

Summit Triple, Berkshire East, 23 years old

Top Notch Double, Berkshire East, 46 years old

Macomber Double, Easton, ~30 years old

Vickery Triple, Wachusett, ~30 years old

Morning Star Triple, Okemo, 27 years old

Eagle Cliff Triple, Cannon, 23 years old

 

[threecy]

Come to think of it, can anyone think of a publically owned ski area that has installed a refurbished lift??

Gunstock and Cannon both have, but in those cases, they reinstalled their decades-old chairlifts (Pistol Triple at Gunstock (former Summit Triple) and Eagle Cliff Triple at Cannon (formerly the Summit Triple at Sunapee, I believe).

Sunapee has also installed a used chair, but that was after it was privately leased.

 

[thetrailboss]

Wow, look at all of these horrible lifts that were installed used...oh the humanity!

Love the chairlift porn.....

What a pretty photo. I remember the BEast as having a really neat base area:

Complete with wooden slats! Nice!