Otten was no visionary

[K2Trav]

http://www.rutlandherald.com/apps/pbcs.dll/article?AID=/20070315/OPINION02/703150306

March 15, 2007

I first ask the Rutland Herald what their definition of a visionary is?

I do not know how anyone could imply Les Otten was good for Killington other than he, himself, doing only what he knows how to do best which is self-promotion and "puffing."

And yes, the stockholders took it all — from their initial purchase at $18 a share, which is now worth what? Nothing.

While the puff piece would seem to indicate that Otten was a businessman, I am sure the lenders and the former stockholders would have another opinion. How anyone in Maine could see their way into allowing him to reacquire Sunday River and Sugarloaf is beyond rational thinking.

Les Otten did his best to suck as much of the cash flow, since his purchase of Killington and for all those years, out of Killington to build the Canyons in Utah. He had absolutely no respect for the source of those funds without which much of Otten's program would not have been funded. That same leadership was taken over by the successors to his charge who are now "dumping" due to heavy, heavy debt that placed them beyond bankruptcy.

Now, however, they have a basically a "debt-free" Canyons in Utah, with all their subsidiaries having paid the price. And these subsidiaries, for the most part, have been left in somewhat of a state of disrepair and disarray. More importantly has been the loss of respect for Killington as a ski area and respect that Killington had achieved since a vision of Preston Smith and many years prior to ASC's involvement.

And let us not forget Pico which basically has had no major upkeep since the day Otten slid into Sherburne. It should also have been mentioned that Killington never lost one dime under Preston Smith, not one dime! And, speaking of a visionary, Preston Smith was a visionary.

And let us not forget the "good faith" dealings of Otten and company, which became very evident and public with his/ASC's "transactional" dealings with the Muellers of Okemo and the contract to purchase Steamboat (all public record). I mean who subsidized that piece in the Herald?

In fact, and even today, one might go to Steamboat and take a read on their feelings about Mr. Otten and ASC.

I just can not understand how anyone could even consider Otten a visionary. Sepp Rusch of Stowe was a visionary as well as Hannes Schneider of Cranmore, Brad and Janet Meade were visionaries, and Paul Bousquet (snowmaking). Walter Schoenkneckt (founder of Mount Snow) was a visionary, Bass was a visionary as well as Nancy Greene. Les Otten was not and never will be a visionary and whoever puts him in that league has on blinders.

The article you may wish to pursue is one focusing on how those employed at Killington and in the area held Killington and Pico (the ski areas) and the local businesses together all those years while watching the cash be transported to the Canyons.

More importantly is the risk Otten and company put most of Killington's businesses in the past few years of ASC's tenure, placing many of them in severe financial difficulty.

With Park City to be involved in the management of Killington, it is everyone's desire that they can return to Killington and Pico the luster and respect both have lost all these years under the Otten regime.

In any event and as one born and brought up here, I am venting my concern for what has happened since Otten's tenure at Killington as a "visionary" began.

One last point, however, is that Mr. Otten did manage one contribution to the ski business. It is the "new" negative underpinning lenders will use to block our future visionaries (in the ski business and industry) in need of capital to build their vision. That is the legacy Mr. Otten has left as a visionary.

 

[Warp Daddy]

H'mmm sounds like he did his MBA @ The Vlad Dracula School of Management . Just Another cash sucking ,puff daddy who only interests appear to be his own --SAD

 

[kbroderick]

Although ASC was a colossal failure financially, I think that letter is awfully tilted towards the later (and less-successful) years. Les did an incredible job in expanding Sunday River from a mid-single-digit trail count to the size it is today, and it was the years of success doing that which he leveraged (in all senses of the word) to pull off the initial ASC expansion. In part, I think that was due to the successful business model from ASC (invest heavily in on-mountain projects, sell real estate and dump the money back into terrain expansions and snowmaking equipment, etc) not working as well when applied to resorts (such as Killington) that didn't have the same room to grow.

(but that's just my two cents, and I will admit to spending a whole lot of time in the past skiing at Sunday River and becoming quite appreciative of the positive sides of McSnow and McLifts).

 

[knuckledragger]

You are right. He was not even the first to suck a ski area dry only he did on a much grander scale than Ralph DeLauriea did at Bolton Valley. Although there is hope for Killington nd Pico Ralph left BV in an almost imposible situation selling all lands and buildings then doing an illeagl logging operation to milk that money out of the land then when you have the state breathing down his neck he sold the only real terrain available for expansion off to pay the fines. There will always be exploiters out there.

 

[MESki]

I don't disagree with the notion that ASC's legacy in the Northeast has been a net negative to this point, especially in regard to infrastructure at places like Killington and Sugarloaf, and I'm not a huge fan of Les Otten. That said, I'm not convinced that executing an unsuccessful entrepreneurial plan makes anyone less of a visionary than those whose plans succeed.

There's currently a tendency among Northeast skiers to see Otten as either the greatest evil ever perpetrated upon our sport or the sole potential savior for Sunday River and Sugarloaf (essentially, a nice guy who had a big idea that didn't work out). I think both these views are gross oversimplifications, and that Otten himself is really just a handy scapegoat for those who feel burned by ASC's (mis)management of their resorts. He's a recognizable name and face, but the passel of venture capitalists who overestimated the potential of this particular business plan are at least equally culpable--especially given how far the board allowed Otten to overextend the company before doing anything about it.

That many people in Maine are excited about the prospect of Otten's potential involvement in SR and SL post-ASC has more to do with Otten's stewardship of Sunday River prior to the ASC expansion than anything else. In terms of local, non-corporate ownership entities, Otten is a known quantity around here for something other than ASC. People are more willing to overlook entrepreneurial failures when they perceive successes elsewhere in somebody's track record, and I think that's what's going on here with regard to Sunday River.

The bottom line is this: what happened to Killington, etc. during ASC's ownership sucks, but demonizing Otten over it is pretty unproductive. There's plenty of blame to spread around, and he hasn't been actively in charge of ASC since 2001, before they moved their headquarters to Park City. He's not going to win any awards for greatest CEO in the universe, but he wasn't the only one in over his head on this deal.

Matt

 

[AdironRider]

I find it funny how everyone bitches about Otten then continues to bitch about how they wont have their precious All For One pass next year.

 

[Geoff]

Les Otten made two big mistakes:

* He didn't understand that his Sunday River Grand Summit quartershare concept wouldn't translate to the other ski areas in his empire.

* When he did the IPO, he should have kept 10% ownership stake instead of a 51% ownership stake. The cash he could have raised by diluting his ownership down to 10% would have zeroed out all that debt.

When his real estate development proved to be an abject failure at Steamboat, The Canyons, and Attitash, there was no way he could generate enough profit to pay down all that 12% debt. Basically, Les Otten was a lousy finance guy and a lousy real estate developer. It's not like he was evil or anything.

 

[BeanoNYC]

Trailboss gave me a real interesting talk about Les Otten once. I hope he chimes in here. Mike: What was that book you read again?

 

[thetrailboss]

Book I read? Well, Otten was a student of Mr. Preston Smith...it is only briefly mentioned in Diane Lorentz's Book, Killington: A Story of Mountains and Men. At that time (1989-1990), Otten was just getting going.

One :-? comment on this is that this is the third website that this individual has posted this same article, which is over a week old. It seems that both authors have a vendetta against Mr. Otten. Perhaps they lost a lot of money in the IPO of ASC. I don't know.

That said, Mr. Otten got too fast too quickly. The amount of debt that he gave ASC was excessive and their hopes and dreams were a bit farfetched. When ASC first came into existence, folks thought that this was the wave of the future. Then came several bad winters on BOTH coasts, a poor economy, slumping real estate sales, and overall anger at the threat of homogenization (e.g. Sugarbush).

The poster and the author failed to note that Otten was ousted from ASC CEO Position in 2001. That was six years ago. So it is not as if he has been driving it into the ground for the entire time. He certainly contributed. I got the news of his ouster on an afternoon ride home from Sunday River. It was a major shakeup. Following that vote of no confidence, the company dumped Sugarbush (Summer 2001) and attempted to restructure. So some of the more recent woes are from ASC itself and not so much Otten.

I think that Otten made some mistakes, but you can't take away credit for what he did with Sunday River. When he bought it, folks at SKI thought he was nuts. He was not much older than I am now. He had no money and a mountain (err, hill) in the middle of nowhere that got very little natural snow. But he got his act together. He invested money in what skiers wanted and he was ahead of the curve at that time: fast lifts, wide groomed trails, guaranteed snow. He developed a following and catered to a broad spectrum of the market. He came up with ways to make lodging affordable (ski dorms) and developed snowmaking technology. In the later years, he went head-to-head with Killington and Sugarloaf. His response to K-Mart's snowmaking technology: refine it. Their level of snowmaking: increase his. When they built Outer Limits, he followed with White Heat. Killington used YAN lifts because of cost and durability--so did Otten. When K-Mart extended their season, Otten did too. And he is known for taking snow to Boston during a snow drought to prove that Sunday River had snow. He was involved in the Bethel community and developed great customer service at the mountain with the human resources he had. There's probably more. You can't take that away from him.

In essence, Killington was the ski area of the 1980's and it was replaced by Sunday River, which in my mind became the ski area of the late 1980's and 1990's. They exported a lot of SR's marketing techniques and technology to other areas. Did it work? Not in all cases. Does Sunday River still have its impact? Absolutely. His techniques may have been "gimmicks," but many folks, including me, still swear by Sunday River in a bad snow year.

Certainly Harvard Business School thought Otten was legit. His Sunday River story is a case study....

Is he great? Those who lost money and jobs say no. But from a broader perspective, you can't dispute the impact he has had on the industry, mainly good, but some bad.

 

[BeanoNYC]

Nice TB. I guess that was the book you were talking about. I remember you telling me that someone was trust-busted. Was it Otten? You may have mentioned it was in New Hampshire and he was forced to sell a resort. Sorry if I got the story wrong; you gave it to me on the snowdon quad.

 

[thetrailboss]

Nice TB. I guess that was the book you were talking about. I remember you telling me that someone was trust-busted. Was it Otten? You may have mentioned it was in New Hampshire and he was forced to sell a resort. Sorry if I got the story wrong; you gave it to me on the snowdon quad.

That's right.

When ASC made the move to merge with SKI, ASC owned Cranmore and Attitash. SKI owned Waterville Valley. That meant that ASC would have had a huge portion of the NH and New England markets (four resorts in NH alone). As a result, they were trust busted, which ironically, led Booth Creek to pick up Cranmore and WV. So in the end, Booth Creek owns three NH resorts and ASC owns one. How that fied things, I don't know because we still have one company owning three of NH's resorts. Perhaps Sunday River's proximity and impact on the NH market has something to do with it....

 

[goldsbar]

Straying off topic (but we basically get the idea on Otten), I found this snowmaking quote on the SR website interesting:

Hydrant spacing is also a factor. Many resorts space hydrants up to 200 feet apart – meaning that each gun must cover a much larger area of the trail. Sunday River utilizes an average hydrant spacing of 85 feet – and on trails intended for early season skiing, hydrants are placed as little as 30 feet apart. Wide spacing also tends to produce large "whales" of snow that must then be pushed around by groomers. This packs the new snow down and doesn't allow water a chance to seep out – resulting in hard, even icy snow. By spreading snow evenly as it's made, Sunday River can generally avoid grooming new snow for at least 24 hours, allowing the snow to "cure" or dry.

----------------
Some of you like snomaking whales, but I find them annoyingly "unnatural".

 

[loafer89]

How about this lofty title that The Boston Globe bestowed upon Les Otten in their magazine on October 30th, 1994:

 

[tcharron]

I find it funny how everyone bitches about Otten then continues to bitch about how they wont have their precious All For One pass next year.

How true..

Hopefully, future deals will show that the multimountain pass doesn't require not spending money on any of the mountains. :smash:

 

[ctenidae]

As a side note on the "venture capitalist" influenc:
1) Oak Hill is not venture capital. It's private equity, buyouts to be precise. Though the ASC deal looks more like mezzanine or high yield.

2) Private equity isn't always a bad thing for ski areas. Fortress backed Intrawest, and they've done a pretty good job.

3) It's not Oak's fault ASC fell apart. Believe me, the last thing they want is for a company to fall apart before they can exit. The continued support ASC's gotten from Oak Hill is probably the only reason they've been able to refinance so many times and try to stay afloat.

Just sayin'.