killington cancelling lifetime passes

[SkiDork]

Just so its out in the open, I have never worked (nor currently work) for Killington, ASC, or SP/Powdr. Quite frankly, Killington is one of my least favorite ski areas.

Yes, it's a rotten situation. However, it appears there is language in the contracts/agreements that allow SP/Powdr to make a conclusion that they are not under an obligation to honor these passes. In addition, the language is strong enough to allow ASC to confirm this in the form of the letter they sent out.

Let's assume SP/Powdr cannot be legally forced to honor or refund these passes.

Which ethics are more important - honor passholders passes that SP/Powdr never sold or collected compensation from or honor shareholders who would otherwise be forfeiting millions of dollars worth of services.

If SP/Powdr honors these passes (again, previous assumption in place), the value of skiing at Killington drops. Some paying passholders will be unhappy that others are getting free or heavily (if that bit about people reselling their lifetime passes every year is true) discounted passes. Shareholders will be unhappy that they are giving away millions of dollars of skiing for nothing. Those who have the lifetime passes and are mad at SP/Powdr will still be mad at SP/Powdr and will still badmouth them.

If SP/Powdr doesn't honor those passes, many who wouldn't be paying SP/Powdr for season passes still won't and will ski elsewhere. Others will buy a normal priced pass after the free period expires. Paying passholders will not feel that their getting as bad of a deal in comparison to 'freebies.' Shareholders will be happy that they are getting compensated for the product they sell. Those who have the lifetime passes and are mad at SP/Powdr will still be mad at SP/Powdr and will still badmouth them.

If I were SP/Powdr, I'd go with option 2.

ummmm - this has been going on for many years. Why would "normal" season pass buyers suddenly take exception to it?

 

[ski_resort_observer]

The last time kmart had "normal" season pass prices was about 200,000+ skier days ago. While it is true that most season pass holders probably did not know much about LT passes until this issue came up I cannot think of any logical reason why they would care from a big picture perspective.

Conversly, if they do end up raising the season pass prices sharply, say $1000, and the LT passes would continue to honored, I am sure some season pass holders who care about every dollar that might leave their wallet might have a problem with that scenerio.

If Powdr decided to only raise the season passes to $600 perhaps the howling by the LT pass folks would be drowned out or at least greatly softened by the loud praise bestowed upon the new owners. Hmmmm...maybe this issue will end up helping kmart's loyal pass holders. They need a big positive PR boost. Then again...maybe not. :lol:

 

[JimG.]

I would like to know if JimG, "the moderator" works for or is in any way compensated by Killington.
This (SP Land/Powdr and ASC) is reminding me of a company that makes a product they know will hurt people. Their analysis shows them they will earn $20 million in profits and only have to pay out $2 million in lawsuits, so they go ahead and make/sell the harmful product. Is that ethical behaviour, that should be justified as good business?
It was SP Land Co/Powdr's choice to not honor the lifetime passes (ones which the holders certainly seem to have been led to believe went with their lifetime and not the lifetime of Sherburne Corp which hasn't really existed in a long time). It was certainly no secret that the passes exist. Killington ski area may never have gotten off the ground without such passes. Maybe SP Land/Powdr should have paid ASC less $ for Killington and behaved in a responsible/good faith manner as their first step, if they felt the passes were a costly liablity. Maybe SP Land/Powdr should go after the $3 million held in escrow and honor their obligation to the passholders. Maybe if the language in the SEC filed Purchase agreement had not stated that the lifetime passes would be honored, many of us would have asked more questions earlier and gotten involved in the transfer of the land lease with the State of Vermont.
How insulting to these loyal Killington people to drop this bomb, then say in the letter, if you have any questions call the season pass office which isn't open until August. I have tried to call Killington, but I can't get anyone (they are on vacation for a month), except in sales and reservations. Even though I did leave a message for Chris Nyberg (who is physically present in Killington), he has not returned my phone call.
The ski community is very linked around the country, if not the world, and SP Land/Powdr seems to have underestimated the passion many of us have for the sport. Of course word would spread of SP Land/Powdr's bad faith. Here in VT there are several other decent ski areas ~ an hour's drive from Killington. Many of us will ski at the other areas, as will the family and friends who used to come here and buy tickets or passes because we skied at Killington.

No, I am not affiliated with Killington in any way. Just stating my opinions.

But it sounds like you have a vested interest...and I have already apologized in advance for your hardship.

And I would do the same if I was in your position...vote with my dollars and ski elsewhere.

Maybe all of your friends will stop skiing at Killington...but I still doubt the total number of such defections will seriously impact Killington financially.

JMHO.

 

[JimG.]

LMAO. If Jim has skied KMart 2 times this season, thats a lot. He's a Hunter faithful. Don't mistake his candidness for bias.

Actually, it was once...on 4/29.

But I drive by it sometimes on my way to MRG, Sugarbush and points further north.

 

[bobbutts]

giving away millions of dollars of skiing for nothing

....honor passholders passes that SP/Powdr never sold or collected compensation from or honor shareholders who would otherwise be forfeiting millions of dollars worth of services.

Here is your flawed logic.
1. No money is being given to anyone.
2. The obligation is not "For Nothing", it is clearly compensation for getting the mountain off the ground. This is like saying that my parents have 'nothing' to do with me. rubbish
3. "Honoring" the share holders may or may not be best achieved by allowing the passes to remain valid. This however is not an ethical decision, it's pure business. The (un)ethical decision was choosing to work around the wording of the lifetime contract.

 

[threecy]

Here is your flawed logic.
1. No money is being given to anyone.
2. The obligation is not "For Nothing", it is clearly compensation for getting the mountain off the ground. This is like saying that my parents have 'nothing' to do with me. rubbish
3. "Honoring" the share holders may or may not be best achieved by allowing the passes to remain valid. This however is not an ethical decision, it's pure business. The (un)ethical decision was choosing to work around the wording of the lifetime contract.

1 - Not really. ASC recieved money from the sale. Powdr/SP recieved no money from these passholders AND paid fair market value for the resort, without these debts worked into it, as far as I have seen anyways. It makes little sense to me why they should take the blow and the criticism. Allowing a person to ski costs the ski area money.

2 - Right, but in this case, the parents have died (old corps) and the legal guardians who took over (ASC) sold the family house to SP/Powdr. Should the child be allowed to sleep in that house still? It's your childhood house that the parents built.

3 - Just because a decision is made for the best interest of the business doesn't mean its not ethical. Right now, it seems there are two parties who will lose money/good/services - the lifetime passholders from a previous corporation and the shareholders of the current corporation. If the new corporation is doing everything by the book (legally), why should its shareholders have to take the blow? Let the passholders deal with the people holding their cash (which seems to be ASC).


Maybe SP/Powdr should honor the passes - and let the lifetime passholders ride the lifts that were built or in place when they received their passes and ski the trails that were open when they received their passes.

The whole situation stinks and I do have some sympathy for the passholders - but it seems rediculous that so many people are yelling at SP/Powdr and not ASC, who was paid cash for what these passholders' investments went toward.

 

[tree_skier]

It's time to stop crying and get over it. For the the original pass holders it was a great deal, 46 years of skiing for $1000 or x many years plus whatever they sold it for. For someone who bought one last month not so good a deal. But we heard alot of "I wish ASC would sell killington" from the same people who are now complaining about the results. If it is legal I think it is a good decision and they are being very generous with the offer for 2 years.

 

[JimG.]

It's time to stop crying and get over it. For the the original pass holders it was a great deal, 46 years of skiing for $1000 or x many years plus whatever they sold it for. For someone who bought one last month not so good a deal. But we heard alot of "I wish ASC would sell killington" from the same people who are now complaining about the results. If it is legal I think it is a good decision and they are being very generous with the offer for 2 years.

You must represent Killington!

Just kidding and I agree with you.

As for the thought that these lifetime passholders are powerful people on the Killington town board and who own businesses on the access road, so what? Are they going to be able to keep their businesses afloat if they drive POWDR/SP and Killington under? Do they realize the reason they have power and business is because the ski area exists? Are they going to kill the goose that laid their golden egg? Will they benefit by rejecting any plans POWDR/SP has out of spite?

I think not. Come October this will be forgotten and we will again hear from many of the same folks about how Killington should open earlier. Maybe POWDR/SP will surprise a few people and try to open earlier than recently and we'll be discussing that.

 

[thetrailboss]

1 - Not really. ASC recieved money from the sale. Powdr/SP recieved no money from these passholders AND paid fair market value for the resort, without these debts worked into it, as far as I have seen anyways.

Just to clarify....the deal initially included some debt. Whether it was the passes is not clear. I think you were driving at that latter point....

 

[Geoff]

The AP article is on the Salt Lake Tribune's website, not that anybody in Salt Lake would care about Killington but it does show the appeal of the story.

http://www.sltrib.com/ci_5928163?source=rss

It makes complete sense that the Salt Lake Tribune would pick this up. The American Skiing Company executives sit in Park City. The new owners of Killington bought the assets from ASC-owned corporations (Sherburne Corp and Killington, Ltd). The new owners also got the state of Vermont to transfer the land lease over to them. The contract for these lifetime passes is between the individual and the Sherburne Corporation. That makes ASC on the hook for breach of contract.

If you look at the SEC documents, there is a $3 million escrow account tied to this deal. If no claims are made by the new owners, the money goes to ASC. If I held a lifetime pass, I'd be going after a slice of that money and I imagine the Vermont Attorney General's office is taking a hard look at this right now. It's poetic justice that ASC gets $3 million taken from them as their final kick in the pants out of the state of Vermont.

The other 'fact' here is that the letters to the lifetime passholders were sent by Allen Wilson before the sale. He worked for ASC, not the new owners and was kicked out the door when the deal was done. The new owners had nothing to do with this and it was actually pretty good PR to offer those people 2 years of skiing.

 

[JimG.]

It makes complete sense that the Salt Lake Tribune would pick this up. The American Skiing Company executives sit in Park City. The new owners of Killington bought the assets from ASC-owned corporations (Sherburne Corp and Killington, Ltd). The new owners also got the state of Vermont to transfer the land lease over to them. The contract for these lifetime passes is between the individual and the Sherburne Corporation. That makes ASC on the hook for breach of contract.

If you look at the SEC documents, there is a $3 million escrow account tied to this deal. If no claims are made by the new owners, the money goes to ASC. If I held a lifetime pass, I'd be going after a slice of that money and I imagine the Vermont Attorney General's office is taking a hard look at this right now. It's poetic justice that ASC gets $3 million taken from them as their final kick in the pants out of the state of Vermont.

The other 'fact' here is that the letters to the lifetime passholders were sent by Allen Wilson before the sale. He worked for ASC, not the new owners and was kicked out the door when the deal was done. The new owners had nothing to do with this and it was actually pretty good PR to offer those people 2 years of skiing.

Great post Geoff. I hope everyone who is crucifying POWDR/SP reads it.

To me, the ultimate injustice would be if the passholders went after POWDR/SP and it totally ruined any efforts they hoped to make to improve Killington. Going after the new owners when again ASC is to blame would be just plain wrong.

 

[ski_resort_observer]

I agree with you guys...this thing is being blown way out of purportion and due to media hype is taking on a life of it's own. My father-in-law bought 2 back in 1961, he just shrugs his shoulder and says he got alot of skiing for himself and his kids for $2000, enough said.

I believe Powdr was well aware of the flak they would take over this but decided to focus on the skiers that make up the 800,000 skier days rather than the 1200 who if they ski 30 days a season make up 36,000 skier days. They also know they need to recapture the 200,000+ that have gone on to whiter pastures in the past 3 seasons..

I do empathize with the LT pass folks but only to a point which was passed a few days ago from what I have read on some of the other forums.

Too bad about Allen Wilson, he was a great manager having gone to kmart from the Bush in the mid 90's. I am sure he will have no problem finding a place at another resort if he wants to.

 

[dmc]

LMAO. If Jim has skied KMart 2 times this season, thats a lot. He's a Hunter faithful. Don't mistake his candidness for bias.

Jim is just the kinda guy that will tell you what you don't wwant to hear... The truth...

 

[tcharron]

In the end, if ASC just liquidates itself, all of this will be a moot point, however.

If I'm contractually obligated to provide you with something, and I die.. STBY..

But yes, the holder should, if they feel they are being ripped, simply demand reperations/sue.

 

[Geoff]

In the end, if ASC just liquidates itself, all of this will be a moot point, however.

If I'm contractually obligated to provide you with something, and I die.. STBY..

But yes, the holder should, if they feel they are being ripped, simply demand reperations/sue.

Right. But there is a $3 million escrow account for the sale of Killington. ASC can't get the money for another 13 months (June 2008 as I recall). There are still assets in the State of Vermont people can go after.

 

[Geoff]

Too bad about Allen Wilson, he was a great manager having gone to kmart from the Bush in the mid 90's. I am sure he will have no problem finding a place at another resort if he wants to.

With all the issues with both the town of Killington and Killington employees, Alan Wilson had to go. It wasn't his fault ASC put Killington on an austerity budget though the ski patrol went union before the real belt tightening happened. Every rank & file employee I know did nothing but bitch about management and the owners for the last half-dozen years. It wasn't his fault that $350 Bronze passes made it nearly impossible to retain much of their part time weekend/holiday staff. It wasn't his fault that SP Land and Killington tried 6 months ago to convince the town to let them build condos without building the village.

However... There are a lot of things that went seriously bad under his management. I can accept reduced snowmaking but there is no excuse for their shoddy snowmaking quality control. I've never seen so many wet guns and never done so many death slides down the face of icy snowmaking whales. Lift ops was just plain inept and all the fixed grip lifts started and stopped all the time due to poorly trained lift attendants. It's a ski resort. Get me up the hill without 15 minutes of delays. Give me a good skiing surface when there's no natural snow.

 

[jerryg]

Out of pure curiousity, came someone with an objective opinion explain how this could have been best resolved prior to the finalizing of the sale. I understand that most people are of the mind that it is ASC's fault that the LT passes were discontinued and then there are people who say it is SP's fault that the passes were discontinued.

If there was never any intent for the LT passes to continue to be honored, how would this have been addressed in a more ethical way? (Going on the popular assumption that there was malice involved) Should ASC have received say, $1.5 million less for the sale and then let SP deal with the passes? Should the passes continue to be honored with the former owner paying for them? Should there have been some formal transfer of responsibility of dealing with this issue, prior to the closing?

I can certainly see why folks would blame either party for this, but I have a really hard time blaming one side. SP/Powdr could have easily addressed with with ASC and had wording put into the sale that indicated they had no responsibility for the LT passes? That would have made it impossible for anyone to blame them. Wouldn't that make sense if this wasn't their decision? If ASC was selling K, why would they care if the passes were honored? Once the sale goes through, they have no fiscal ties to the passes unless people are trying to say that the Sherburne Corp was never really dissolved and that whereas Powdr doesn't need to pay for the LT passes, ASC does. That doesn't sound like a business decision that either party would have wanted to make. It doesn't make any sense.

It seems that the real issue here might be that neither party thought this would have been an issue at all. If they did, one would think that the new owner would want it addressed so they don't look like the bad guy. I doubt they would go into this thinking that it wouldn't metter 'cause everyone will just blame ASC.

There is no way that blame can be placed on ASC without placing blame on SP, if not merely for poor planning.

 

[Geoff]

Out of pure curiousity, came someone with an objective opinion explain how this could have been best resolved prior to the finalizing of the sale. I understand that most people are of the mind that it is ASC's fault that the LT passes were discontinued and then there are people who say it is SP's fault that the passes were discontinued.

If there was never any intent for the LT passes to continue to be honored, how would this have been addressed in a more ethical way? (Going on the popular assumption that there was malice involved) Should ASC have received say, $1.5 million less for the sale and then let SP deal with the passes? Should the passes continue to be honored with the former owner paying for them? Should there have been some formal transfer of responsibility of dealing with this issue, prior to the closing?

I can certainly see why folks would blame either party for this, but I have a really hard time blaming one side. SP/Powdr could have easily addressed with with ASC and had wording put into the sale that indicated they had no responsibility for the LT passes? That would have made it impossible for anyone to blame them. Wouldn't that make sense if this wasn't their decision? If ASC was selling K, why would they care if the passes were honored? Once the sale goes through, they have no fiscal ties to the passes unless people are trying to say that the Sherburne Corp was never really dissolved and that whereas Powdr doesn't need to pay for the LT passes, ASC does. That doesn't sound like a business decision that either party would have wanted to make. It doesn't make any sense.

It seems that the real issue here might be that neither party thought this would have been an issue at all. If they did, one would think that the new owner would want it addressed so they don't look like the bad guy. I doubt they would go into this thinking that it wouldn't metter 'cause everyone will just blame ASC.

There is no way that blame can be placed on ASC without placing blame on SP, if not merely for poor planning.

The new owners bought the assets from Sherburne Corp/Killington, Ltd and had the lease transfered over to their corporation. You would only do that if you were trying to avoid the liabilities created by the previous corporation. The lifetime passes are the only liability I'm aware of though with 50 years of maintaining diesel-powered machinery, environmental liability due to soil contamination might also have been a motivation.

Alan Wilson of ASC sent out the letters informing people that the lifetime passes were going away. This was clearly a ploy to make the old owners out to be the bad guy. The reality is that this is all going to blow over in a few months and the people the new owners care about... full-fare day ticket people from the flatlands and rich people likely to buy their real estate products... won't know about this issue or care about this issue. Most of the people I know who bought lifetime pass 1-time transfers did it years ago and made their money back tenfold. The few who bought them recently while ASC owned the resort certainly must have known the risk they were taking. Everybody has known for years that ASC was on very shakey financial footing and that a bankrupcy wasn't out of the question.

It's the end of May. Killington closed the earliest I can remember. People need to complain about something. This was the easist thing to latch on to.

 

[threecy]

I have yet to find an industry colleague who has felt SP/Powdr are at fault. The most common response has been "who was stupid enough to sell lifetime passes?!?" Due to the nature of the sale, the common feeling has been that it's ASC's financial liability (if there is one) and SP/Powdr's PR problem (since people are blaming them). I'm not sure if this will ever be portrayed fairly in the press in terms of SP/Powdr's side, due to the "corporations are evil" mentality nowadays.

 

[ctenidae]

Out of pure curiousity, came someone with an objective opinion explain how this could have been best resolved prior to the finalizing of the sale.

It's looking to me like this was resolved prior to the sale. The Agreement says that Powdr can't cancel the lifetime passes. ASC can. So, Powdr had ASC do it prior to the sale closing. Powdr takes the PR hit, but doesn't take the liability and they can always transfer the PR hit to ASC. ASC runs a PR risk, but what do they care? I'd say it was well executed.