Rumor Central: Greenberg to buy Stowe?

[billski]

AIG

Hank Greenberg, King Of The Mountain?

Carrie Coolidge, 11.20.08, 01:35 PM EST A Vermont ski town's future is tied to AIG's misfortunes and the dreams of its former chairman.

Maurice "Hank" Greenberg, the former chairman of troubled insurer American International Group and an avid skier, says he wouldn't rule out buying the Stowe Mountain Resort in Vermont's picturesque Green mountains and now in the midst of a $400 million expansion.
Called Spruce Peak, the development, which is nestled between two peaks, includes a newly opened 139-room luxury hotel, restaurants, 18-hole golf course, 21,000-square-foot spa, high-speed chairlifts and mountainside residences. "I have an emotional attachment to the place," Greenberg says. "If I can play a role in putting a group together to buy it, I would consider it."


His attachment derives from a fact unrealized by much of the outside world: The resort is 100% owned by AIG (nyse: AIG - news - people ). The insurer, which is struggling to survive even after receiving a $150 billion government bailout and ceding 80% ownership to the American taxpayer, has invested $200 million in the project thus far but needs to spend another $200 million to finish it.
Stowe Mountain makes few mentions of its corporate parent on its Web site, and it is next to impossible to find mention of the resort on AIG's site. AIG's most recent annual report is no more forthcoming. The word "Stowe" is not to be found and there's only a single line in the SEC filing that reveals the insurer's 100% ownership of Mt. Mansfield Company--the official corporate name of the ski resort.
While the development is a small piece of AIG Global Real Estate, a division that oversees AIG's property portfolio of more than 53 million square feet of retail, residential, industrial, office and hospitality properties and projects in more than 50 countries, the ties between Stowe and AIG are deep and historic.


The relationship began when AIG's founder, Cornelius Vander Starr, visited the ski town for the first time in 1943. Six years later, Starr launched the Mt. Mansfield Company, which he owned until he sold it to AIG in 1970. AIG owns one of the two mountains at the resort, while the other is leased from the state of Vermont. Many of AIG's highest ranking executives built and bought homes in Stowe. Some chose to retire there.
Owning Stowe brought a certain cache to AIG, says Greenberg, now chairman of C.V. Starr, a privately held global investment holding company with insurance agencies and a portfolio of global investments (including five condos at Stowe). "We used to have brokerage meetings there and races for clients and brokers," he says. "It was a very unique property for us. It was one of the many things that made AIG great and differentiated us from other companies."


Forbes, Nov 20 2008



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Stowe, Vermont - November 21, 2008
There are more indications that the Stowe Mountain Resort is for sale.
It is owned by insurance giant AIG. They are looking to liquidate assets to payoff a government bailout of $85 billion.
According to Forbes.com, former AIG CEO Hank Greenberg, who retired in 2005, is considering purchasing the resort. He owns two condos there.
It is estimated the resort could sell for as much as $85 million.


http://www.wcax.com/Global/story.asp?s=9391450

 

[Old Geezer]

I hope not. But they could do worse for a buyer.

 

[JD]

Anyone know how he made his money? Interesting story.

 

[billski]

Anyone know how he made his money? Interesting story.

Is this a trick question? AIG.

 

[JD]

Is this a trick question? AIG.

How he MADE his money. I know how he lost it.

 

[billski]

How he MADE his money. I know how he lost it.

Yeah, we're on the same wave - I thought he made it from AIG, no?

 

[Tin Woodsman]

Yeah, we're on the same wave - I thought he made it from AIG, no?

Made more than he lost, both at AIG.

 

[deadheadskier]

Why and 82 year old would want anything to do with owning and operating a ski area is beyond me. I recognize that there probably are individuals that age in the business, but I'd have to imagine they have a good deal of help from family.

 

[SLyardsale]

Why and 82 year old would want anything to do with owning and operating a ski area is beyond me. I recognize that there probably are individuals that age in the business, but I'd have to imagine they have a good deal of help from family.

You never played monopoly?

The story of AIG is very interesting - The short version - CV Starr goes to Shanghai and eventually starts a Chinese Ins co insuring cargo ships in the Pacific. This co eventually becomes AIG. Skies at Stowe, likes it, but does not like the long line at the single chair. Pulls a power play - Stowe in the 1940's was a mismash of companies; one owned the Mt, one owned the hotel, one owned the longest chairlift in N America at the time, and CV Starr built and owned the T-Bar and did so only to allieviate the long lift line on the single chair. Now C. V. Starr was in a position of strength at Stowe and he went about buying up the other pieces which eventually transferred to AIG in the 70's . Whats interesting to me is the duration they have held Stowe. Not many single operators out there. Fewer still that run them as successfully as Stowe.

 

[deadheadskier]

You never played monopoly?

The story of AIG is very interesting - The short version - CV Starr goes to Shanghai and eventually starts a Chinese Ins co insuring cargo ships in the Pacific. This co eventually becomes AIG. Skies at Stowe, likes it, but does not like the long line at the single chair. Pulls a power play - Stowe in the 1940's was a mismash of companies; one owned the Mt, one owned the hotel, one owned the longest chairlift in N America at the time, and CV Starr built and owned the T-Bar and did so only to allieviate the long lift line on the single chair. Now C. V. Starr was in a position of strength at Stowe and he went about buying up the other pieces which eventually transferred to AIG in the 70's . Whats interesting to me is the duration they have held Stowe. Not many single operators out there. Fewer still that run them as successfully as Stowe.

I'm aware of the history, though not all of the details you have pointed out. I do not agree with you on the last statement regarding the success of the mountain. The current development project was needed to make the mountain economically viable. If they had not gone forward with it, a significant reduction in operations would've been implemented. Lunde came on board in 1997 when the Mountain Company was hurting financially and it took him five years until the place turned a profit.

 

[SLyardsale]

I'm aware of the history, though not all of the details you have pointed out. I do not agree with you on the last statement regarding the success of the mountain. The current development project was needed to make the mountain economically viable. If they had not gone forward with it, a significant reduction in operations would've been implemented. Lunde came on board in 1997 when the Mountain Company was hurting financially and it took him five years until the place turned a profit.

So your saying Stowe, overall, has not been a "success" when compared to other areas in this market? Turning a profit and running a successful area is 2 different animals, no?

Please name me another area in New England, under the same ownership since 1970's, that you could compare to Stowe. I know 1, but not on the same par, and that would be Suicide Six owned by Rockeresorts/Woodstock Inn. There may very well be others, but I can't think of them. There may be smaller areas - but when I think Stowe, I think major league ski area and still owned by a single operator.

 

[deadheadskier]

So your saying Stowe, overall, has not been a "success" when compared to other areas in this market? Turning a profit and running a successful area is 2 different animals, no?

Please name me another area in New England, under the same ownership since 1970's, that you could compare to Stowe. I know 1, but not on the same par, and that would be Suicide Six owned by Rockeresorts/Woodstock Inn. There may very well be others, but I can't think of them. There may be smaller areas - but when I think Stowe, I think major league ski area and still owned by a single operator.

Well, considering Stowe had AIG backing them up to cover operating costs, they were fortunate. Most businesses with their income statement over the years would have folded. Yes, there are different ways to define success, but I do think profitability has to be part of the equation with any business. I don't think the mountain was run particularly well until about 2000. I started skiing there regularly in 1995 and the level of service, snow making and grooming execution were piss poor compared to Okemo, where I grew up skiing. Fortunately for Stowe, Mt Mansfield happens to have the best terrain in the east and second highest snowfall.

Though not since the 70's, Tim and Dianne Mueller have run Okemo since I think 1982 and I would consider them to be the best ski resort operators in the business. This is not to say that I enjoy Okemo more than Stowe, far from it actually, but I do think they do a better job overall with what they have to work with. I want to say Bromley has been owned by the same family since the 50's as well.

 

[SLyardsale]

Well, considering Stowe had AIG backing them up to cover operating costs, they were fortunate. Most businesses with their income statement over the years would have folded. Yes, there are different ways to define success, but I do think profitability has to be part of the equation with any business. I don't think the mountain was run particularly well until about 2000. I started skiing there regularly in 1995 and the level of service, snow making and grooming execution were piss poor compared to Okemo, where I grew up skiing. Fortunately for Stowe, Mt Mansfield happens to have the best terrain in the east and second highest snowfall.

Though not since the 70's, Tim and Dianne Mueller have run Okemo since I think 1982 and I would consider them to be the best ski resort operators in the business. This is not to say that I enjoy Okemo more than Stowe, far from it actually, but I do think they do a better job overall with what they have to work with. I want to say Bromley has been owned by the same family since the 50's as well.

OK, I knew there had to be others just needed some brain jiggling. I would agree with the Muellers, VG operators with Okemo and Sunapee (not a single operator, though) and their attempt to buy out west. Bromley I have no knowledge about. Don't get me wrong, I actually am not a great Stowe fan, and being a 3rd generation insurance agency guy, have never enjoyed doing biz with AIG, but I think the story of Stowe, overall, is unprecedented in NE. I guess to me that translates as a successful run. Ironic to think that the faltering RE situation is bringing Stowe down - so to speak.

 

[Old Geezer]

One big point Stowe had going was it never had to rely on real estate to keep afloat until very recently. Other than the very old Inn at The Mountain, there never was any development within miles of the mountain.

 

[ski_resort_observer]

Sleazy Hank has owned a home in Stowe for many years. Over the years Stowe has several failed attempts to find a proposal for real estate and increased snowmaking that would pass local/state approval. My favorite has to be their proposal to build a pipeline to Waterbury Resevoir about 10 years ago.

Stowe has the most known brand of eastern skiing....sorry kmart. I would prefer they sell Stowe to someone who actually knows how to run a ski resort.

Wanna take a small risk for big possible returns. Buy 100 shares of AIG for $175, cheaper than an iPod, if it gets back to what is was 6 months ago you have $6,000.

 

[deadheadskier]

Wanna take a small risk for big possible returns. Buy 100 shares of AIG for $175, cheaper than an iPod, if it gets back to what is was 6 months ago you have $6,000.

I took that gamble. My thought in doing so was if the government is bailing them out and doesn't want AIG to fail, it's a pretty safe bet, though I think it will take years before the stock is worth anything. I'd be happy if it got up to $10 a share.

 

[JD]

You never played monopoly?

The story of AIG is very interesting - The short version - CV Starr goes to Shanghai and eventually starts a Chinese Ins co insuring cargo ships in the Pacific. This co eventually becomes AIG. Skies at Stowe, likes it, but does not like the long line at the single chair. Pulls a power play - Stowe in the 1940's was a mismash of companies; one owned the Mt, one owned the hotel, one owned the longest chairlift in N America at the time, and CV Starr built and owned the T-Bar and did so only to allieviate the long lift line on the single chair. Now C. V. Starr was in a position of strength at Stowe and he went about buying up the other pieces which eventually transferred to AIG in the 70's . Whats interesting to me is the duration they have held Stowe. Not many single operators out there. Fewer still that run them as successfully as Stowe.

and where does Greenburg come in?

 

[Glenn]

I hope he buys it....then hires Elliot Spitzer to be a lifty for $6 an hour so Elliot can offset the costs of his legal bills. That would be awesome.

 

[billski]

and where does Greenburg come in?

I'm no insider, but if you read what Greenberg has to say, as AIG chief he always has been an avid skier and views Stowe as a "unique corporate asset", tantamount to a company-owned club. As he recounts, there were many corporate and client events held there. He characterizes it as something only his insurance company could offer.

So from the above, it's always seemed that Stowe was an ancillary operation, a company perq, that many AIG executives bought into. It's not about making money (although they were always measured on that), it's an instrinsic value-add. Other examples include The Balsams, Suicide and (follow me now) the collegiates (Dartmouth and Middlebury.) None of these could possibly be money-making operations on their own. So, how do you define success? Longevity? Profitability? Attendance? It's more accurately defined by business purpose. Are they meeting their internal goals?

Look at MRG for a vastly different business model. They rely more on their owners to bail them out each year rather than the general public. Is that success? By their goals, certainly.


Granted, resort goals are often vastly different than the goals of AZ correspondents. For me, if the hill keeps turning lifts, and keep it open to the public, I'm happy.

 

[thetrailboss]

Seeing how well he ran AIG, I certainly hope that Stowe is not going to end up under his control.