Cannon Mountain...thoughts

[jack97]

what comes around goes around

Speaking of old data....here's an article back in 2008, it talks about the same issues brought up recently.

Some of the most important quotes from proponents wanting to maximize the earning potential of the place.

"[Cannon is] looking at drawing it out for four or five years because they don't have the capital to maximize the ski area," said Johnson. "Their spin is they want to keep it natural. But the audience for that is very small. If that's their target audience, the mountain will lose money."

Johnson said other ski areas, such as Gunstock Ski Area & Resort, Mount Sunapee and Loon Mountain Resort, have put millions of dollars into capital improvements that "make them marketable and bring in the business.


Here's the article

http://caledonianrecord.com/main.asp?SectionID=1&SubSectionID=1&ArticleID=39011

 

[EPB]

my POV, it comes down to this..... "uniqueness" or "sameness".


I go to a place like Whaleback, Ragged, MRG and to a certain extent Cannon.... it feels unique.

I go to a places like Okemo, BW and Sunapee (before they seed), its feel like a shopping mall. Once inside, they all look the same.

I can buy that for sure. Given Cannon's wind issues and agreement with the federal government to expand Mittersill's trails back to their original width, it seems unlikely that Cannon could get to the point where it would feel like a cookie cutter area like Okemo or Bretton Woods.

 

[bobbutts]

At Cannon, don't mess with success ; John Devivo Opinion Article at Concord Monitor.

 

[riverc0il]

Over the past four years, Cannon's average annual net profit has exceeded the Mount Sunapee lease payment to the state,

Wow, that is quite the statement against leasing, IMO. The success of the Sunapee lease is often cited as evidence to lease Cannon. I would guess Sunapee processes more visits, or at least more visits as a percent of available terrain.

This brings up an interesting point regarding outsourcing/leasing: good management trumps bad management. State run with good management will generate more revenue than leasing with bad management. And as we saw before JD and in comparison to Sunapee during that time, vice versa.

 

[bobbutts]

Arguing for a change right now in the midst of a successful few years is pretty bad timing. Given the governor's position on the matter it's probably moot too.

Another subj, I'd like it if the unload area on the Peabody Quad were improved a bit.. it's a cramped spot with no flat area.. I'm using cinch (snowboard) bindings which are super easy to enter on flats, and a bit pain on a pitch. It starts to get on my nerves when lapping that lift. It just overall feels more like a skier's mtn. to me vs. snowboard.
Is some of Cannon's appeal is that it's (at least in my obs) higher slanted towards skiers vs. snowboarders in general vs. other non-MRG areas in NE?

 

[jack97]

Is some of Cannon's appeal is that it's (at least in my obs) higher slanted towards skiers vs. snowboarders in general vs. other non-MRG areas in NE?

I think other places have better terrain parks.

 

[riverc0il]

Another subj, I'd like it if the unload area on the Peabody Quad were improved a bit.. it's a cramped spot with no flat area.. I'm using cinch (snowboard) bindings which are super easy to enter on flats, and a bit pain on a pitch. It starts to get on my nerves when lapping that lift. It just overall feels more like a skier's mtn. to me vs. snowboard.

It is better than it used to be. For years, you couldn't turn left off the chair towards Bypass nor ski down around the right side of the chair onto Middle Cannon. They finally fixed that snafu a few years ago. I don't know about no flat area though, the landing area is pretty flat, just to small to handle a lot of people hanging around.

 

[threecy]

So even with your shitty old data, which shows FNSP and Cannon having earned the taxpayers of the state 3 million+ in gross profit, Im not sure I get your point.

I thought you said you were an accountant? Do you really think those charts show Cannon as earning taxpayers net income?

Given the governor's position on the matter it's probably moot too.

Not unless he can do a lot of lobbying. The Legislature can override his veto.

 

[threecy]

Wow, that is quite the statement against leasing, IMO. The success of the Sunapee lease is often cited as evidence to lease Cannon. I would guess Sunapee processes more visits, or at least more visits as a percent of available terrain.

Unfortunately, I suspect the statement you cited is full of spin. I haven't seen the 2011 numbers yet (FY11 is not complete), however based upon the data I've seen, one can spin that Cannon is bringing in the state money in recent good snow years. This is not the full story, however. More to come later.

 

[jack97]

Seems the spinner is spinning the spin.......

Unfortunately, I suspect the statement you cited is full of spin. I haven't seen the 2011 numbers yet (FY11 is not complete), however based upon the data I've seen, one can spin that Cannon is bringing in the state money in recent good snow years. This is not the full story, however. More to come later.

If this was truly spinning the story, then the proponents for privatization would have brought up accounting issues for the past four years since they got the new GM. I have not heard this to be the case, meaning profits for the past fours years being in questioned. The only consistent criticism has been that Cannon under state control will not be maximized to its fullest potential in terms of revenue generation.

If the spin is whether they can still make a profit with several bad snow years.... thats another story. Something I'm curious about myself.

 

[threecy]

If this was truly spinning the story, then the proponents for privatization would have brought up accounting issues for the past four years since they got the new GM. I have not heard this to be the case, meaning profits for the past fours years being in questioned. The only consistent criticism has been that Cannon under state control will not be maximized to its fullest potential in terms of revenue generation.

You may hear something about this in the near future.

If the spin is whether they can still make a profit with several bad snow years.... thats another story. Something I'm curious about myself.

The one advantage they have now versus half a decade ago is that they have half a million dollars in additional season pass revenue than before, so in an average (160 inch) snow year, they hopefully wouldn't show the deep losses they claimed in 2006-2007 (166 inches).

In a below average snow year, it remains to be seen - their operational costs are up in good snow years. One of the trickiest things about the ski industry vs. traditional businesses is that in a bad year in the ski industry, your costs can skyrocket while your revenue plunges.

One example of this - they certainly don't have a state of the art snowmaking system. In a bad season, a typical New England ski area will have to open on 100% snowmaking trails, resulting in high snowmaking costs and much lower through-the-window revenue. Another dimension to this - a bad season can mean more marginal temperatures. Marginal temperatures have a logarithmic effect on yield from an hour of snowmaking, meaning they'd had to run guns for more hours at the same cost to put down what they otherwise would in cold temperatures. One more dimension - a bad season can mean rain and thaws, further impacting snowmaking.

Net net, I'm skeptical that Cannon, in its current government controlled structure, could claim a break even year with less than average snowfall.

 

[jack97]

The one advantage they have now versus half a decade ago is that they have half a million dollars in additional season pass revenue than before, so in an average (160 inch) snow year, they hopefully wouldn't show the deep losses they claimed in 2006-2007 (166 inches).

Now that's spinning......

The present GM, John DeVivo started his position on July of 2007. Subsequently, he cleared off this debt (the loss you mentioned) the following year and made a profit. Again, if this was cooking the books, the legislators who have a business interest in terms of privatization would have put him to task on this.

You of all people should know that when to make snow and getting the right equipment is key to all this. In addition, marketing was another reason for boasting season pass and day tickets. All of this was due to the GM.... the result of the legislators hiring a manager with excellent and well proven credentials.

 

[EPB]

Now that's spinning......

The present GM, John DeVivo started his position on July of 2007. Subsequently, he cleared off this debt (the loss you mentioned) the following year and made a profit. Again, if this was cooking the books, the legislators who have a business interest in terms of privatization would have put him to task on this.

You of all people should know that when to make snow and getting the right equipment is key to all this. In addition, marketing was another reason for boasting season pass and day tickets. All of this was due to the GM.... the result of the legislators hiring a manager with excellent and well proven credentials.

The extent to which Cannon is making/can make money would be reflected in the price of the lease. If Cannon is not particularly profitable, the state would not able to get much money in a lease agreement. If Cannon's money making prospects look positive, the state would be able to lease the area for more money.

The whole point in leasing the area in the first place is to receive defined positive cash flows each year. Operating the area cannot promise any sort of specific net cash flows.

 

[Geoff]

The whole point in leasing the area in the first place is to receive defined positive cash flows each year. Operating the area cannot promise any sort of specific net cash flows.

Yeah, but it's also more than that. What is Cannon worth? Maybe 20 million? You're not going to get much more than $1 to $2 million/year if you leased it. That would more or less be the cost of capital for borrowing the money to buy it.

The business that leased Cannon would be paying business income taxes (assuming they're profitable), workmans comp, unemployment insurance, .... Today, Cannon as a state-run business pays none of those.

In my opinion, the state should only run businesses when nobody in the private sector will do it; and it has to be for something that is deemed to be for the public good. A ski area where there are 2 others right down the road just doesn't fall into that category.

 

[EPB]

Yeah, but it's also more than that. What is Cannon worth? Maybe 20 million? You're not going to get much more than $1 to $2 million/year if you leased it. That would more or less be the cost of capital for borrowing the money to buy it.

The business that leased Cannon would be paying business income taxes (assuming they're profitable), workmans comp, unemployment insurance, .... Today, Cannon as a state-run business pays none of those.

In my opinion, the state should only run businesses when nobody in the private sector will do it; and it has to be for something that is deemed to be for the public good. A ski area where there are 2 others right down the road just doesn't fall into that category.

Is selling the area an option that's on the table?

 

[jack97]

Is selling the area an option that's on the table?

It's part of the Franconia State Park, as the article states.

Maybe NH should sell more of its state land to real estate developers.... it's a win-win, immediate revenues and tax infusion due from the property taxes.

 

[MadPadraic]

You may hear something about this in the near future.



The one advantage they have now versus half a decade ago is that they have half a million dollars in additional season pass revenue than before, so in an average (160 inch) snow year, they hopefully wouldn't show the deep losses they claimed in 2006-2007 (166 inches).

In a below average snow year, it remains to be seen - their operational costs are up in good snow years. One of the trickiest things about the ski industry vs. traditional businesses is that in a bad year in the ski industry, your costs can skyrocket while your revenue plunges.

One example of this - they certainly don't have a state of the art snowmaking system. In a bad season, a typical New England ski area will have to open on 100% snowmaking trails, resulting in high snowmaking costs and much lower through-the-window revenue. Another dimension to this - a bad season can mean more marginal temperatures. Marginal temperatures have a logarithmic effect on yield from an hour of snowmaking, meaning they'd had to run guns for more hours at the same cost to put down what they otherwise would in cold temperatures. One more dimension - a bad season can mean rain and thaws, further impacting snowmaking.

Net net, I'm skeptical that Cannon, in its current government controlled structure, could claim a break even year with less than average snowfall.

I realize that we'll likely have slightly different takes on this, but to me it is irrelevant if the area makes losses some years assuming the good years make up for it. Again, the area should be run with the intention of breaking even over many years rather than trying to maximize profit.

Your info on snow making yield is very informative.

 

[DoublePlanker]

I hiked the Kinsman Ridge trail from tram to Cannon summit on Sunday. What a great hike! I have never skied Kinsman Glade but it seems to be a great trail. The pitch in that area is excellent. If I were a private operator taking over Cannon, I would want to develop this area. It looks to be ~ 1500 vertical feet of advanced/expert pitch.

 

[Puck it]

I hiked the Kinsman Ridge trail from tram to Cannon summit on Sunday. What a great hike! I have never skied Kinsman Glade but it seems to be a great trail. The pitch in that area is excellent. If I were a private operator taking over Cannon, I would want to develop this area. It looks to be ~ 1500 vertical feet of advanced/expert pitch.

Your assessment is very correct. It a great trail with a lot of options along the way.

 

[witch hobble]

If I were a private operator taking over Cannon, I would want to develop this area. It looks to be ~ 1500 vertical feet of advanced/expert pitch.

And what would you do with it? Blast it and grade it? Make it intermediate's paradise, with a winding road with slopeside mcmansions? Cannon doesn't lack for advanced and expert pitches, and I doubt that would be the focus of the hypothetical lessee.