Stenger and Quiros Ousted from Management of Jay Peak and Burke

[cdskier]

Article about Sugarbush's use of EB-5 with some quotes from Win Smith on the program and situation with Jay/Burke.

http://valleyreporter.com/stories/news/11269-sugarbush-use-of-eb-5-program-was-successful

Nothing earth-shattering here, but figured I'd share anyway.

 

[MEtoVTSkier]

My guess is once the motion is granted to take control of all of the Burke entities including the ski area.

They booted Mike Pappalardo right away at the takeover, supposedly due to "conflict of interest"... just surprising Jr was kept.

 

[thetrailboss]

They booted Mike Pappalardo right away at the takeover, supposedly due to "conflict of interest"... just surprising Jr was kept.

Oh I imagine that Ary is there to show them where things are...and that he will probably be gone soon. However, he never did know where things were. When the Sherburne Lodge had a fire sprinkler break in January he had no idea where the water main valve was.

 

[from_the_NEK]

When the Sherburne Lodge had a fire sprinkler break in January he had no idea where the water main valve was.

And everyone that did know had either been fired or quit...

 

[thetrailboss]

And everyone that did know had either been fired or quit...

Exactly. I heard that it was a sad and confusing sight that night when the Fire Department responded.

 

[VTKilarney]

Another day another Caledonian Record article. This article is about the court hearing in Miami. The Receiver asked for funds to keep the ski areas going.

Remember how EB-5 was supposed to make Jay Peak prosperous and profitable? Remember how the funds to fix the tram were supposed to be set aside already? Guess again.

Goldberg, the receiver, and his attorney explained to the judge that millions are needed for Jay Peak and Q Burke’s operations, including a gondola that needs repair at Jay Peak for at least $1 million, maybe up to $1.3 million, and which there are not sufficient funds to cover.

Goldberg said he is seeking to borrow between $7-11.5 million which will be needed for the receivership to keep the resorts running and ready them for ski season next year.

Quiros objected to the $750,000 loan because he says that these funds are being used to secure a Citibank loan. The judge said, "too bad." (Note: At this point the Receiver has only asked for $750,000. That number is obviously going to go MUCH higher.)

There is some good news. The judge granted the motion for the Burke hotel to come under receivership.

And there may be a white knight for Burke. I wonder who it could be... ahem... ahem...

He (Goldberg) said he has spoken to two parties, including the State of Vermont and a private party who is from Burke and “who is not very complimentary or friendly with Mr. Quiros,” but may be willing to lend funds. Both potential funding sources would require assurances that Quiros is not coming back into the picture, he said.

Bottom line: BenedictGomez is being proven right in every way. I've also long maintained that Jay Peak hemorrhages money in the summer. I'm going to pat myself on the back for that one.

What's really alarming about this is that Jay Peak has no money even though they haven't yet begun making more than a minimal amount of token payments to Phase 1 investors. This whole thing was CLEARLY a house of cards. Those investors didn't stand a chance in hell of getting repaid in full. And I'm willing to bet that Stenger was VERY optimistic to future investors on his recent trips to South Africa and Vietnam. Yet he wants you to believe that he is completely innocent here. Right...

 

[mbedle]

I think you need to understand that just because Jay Peak doesn't have any money in their checking account, doesn't necessarily mean that they don't turn a profit over the entire year. I would guess that given what is happening on the EB-5 projects and Quiros' business decision, every penny that resort made was transferred from its accounts to the owner.

 

[VTKilarney]

I think you need to understand that just because Jay Peak doesn't have any money in their checking account, doesn't necessarily mean that they don't turn a profit over the entire year. I would guess that given what is happening on the EB-5 projects and Quiros' business decision, every penny that resort made was transferred from its accounts to the owner.

That will be interesting to see. If it is true, it at least signifies that Quiros had no intention whatsoever of repaying the investors. But that shouldn't come as a shock at this point.

It still verifies my belief that summer isn't living up to what they had hoped for.

I'm still skeptical that Jay Peak turns an overall profit, but only time will tell.

 

[fbrissette]

I'm still skeptical that Jay Peak turns an overall profit, but only time will tell.

If it cannot turn a profit, there's no hope for most ski resorts. They do have 70 weddings planned this summer, the ice-house is booked 40-45 week-ends per year and a few weeks during summer. It used to be a ghost town in the summer, not anymore. Tremblant it ain't, but nobody wants Jay Peak to turn into Tremblant.

Could they turn a profit while entirely repaying all investors ? Of course not.

 

[fbrissette]

If it is true, it at least signifies that Quiros had no intention whatsoever of repaying the investors.

This has been clear for a while and especially since the tramhouse lodge shenanigans. However, it was clear from the beginning that these infrastrucures could not be funded via a simple 5-year interest free loan. To me it was always 'get a green card for 500k' and consider yourself lucky if you see any money down the line. But clearly, it's not what they told the investors.

 

[deadheadskier]

Saying that you believed Jay lost money during summer is almost a water is wet comment. Very few ski areas so much as break even during the summer. The three ski areas I worked at and had access to their financials did not turn a profit during summer. Snowshoe had massive weekend events, but was a ghost town midweek. The only reason they stayed open at all was to sell real estate. Another of those areas was Stowe, but pre-hotel days. The third was Wisp, which is located right on Deep Creek Lake, MD; a popular summer destination.

 

[mbedle]

That will be interesting to see. If it is true, it at least signifies that Quiros had no intention whatsoever of repaying the investors. But that shouldn't come as a shock at this point.

It still verifies my belief that summer isn't living up to what they had hoped for.

I'm still skeptical that Jay Peak turns an overall profit, but only time will tell.

I think it more supports that Stenger and Quiros had more concerns with covering their overruns with any profits.

 

[fbrissette]

Saying that you believed Jay lost money during summer is almost a water is wet comment.

We're taking year-round profit. Time will tell. If the resort cannot make any profit as some of you are implying, nobody will want to buy it once it goes for sale. I don't see this happening.

 

[VTKilarney]

Saying that you believed Jay lost money during summer is almost a water is wet comment. Very few ski areas so much as break even during the summer. The three ski areas I worked at and had access to their financials did not turn a profit during summer. Snowshoe had massive weekend events, but was a ghost town midweek. The only reason they stayed open at all was to sell real estate. Another of those areas was Stowe, but pre-hotel days. The third was Wisp, which is located right on Deep Creek Lake, MD; a popular summer destination.

But things were supposed to be different at Jay thanks to the water park and ice arena. At least one person from Jay took issue with me on this very forum about whether or not Jay ran in the black during the summer.

 

[deadheadskier]

I can't speak to Jay, never worked there. I can share this though. Spring semester of 1999 one of my senior classes in UVMs hospitality program was ski area management. One of the seminars had the GM from basically every ski area in the state. Stenger was there, Tim Meuller from Okemo, Hank Lunde from Stowe, Otten; a who's who in VT skiing. The teacher of the class asked a question, "raise your hand if your ski area was profitable every year of this decade." The only one who could do it was Smuggs. Every other area had at least one or more years they lost money for a year. The point was to demonstrate that it is very difficult to make money in basically a seasonal weather dependent business. If you don't make enough hay Christmas through Presidents week to cover you for the year, you're basically screwed. Now Smuggs had the most developed summer business at the time. You can see why many of these other areas have tried to copy their formula.

 

[tumbler]

It is VERY difficult for ski resorts to make money whether winter, summer or combined. Most people believe the fantasy of how awesome it would to own one. Gues what, it sucks! The operating costs are astronomical in the winter and you are totally dependent on something you have no control over, the weather. They open for the summer mainly for marketing, that is how they justify the loss, marketing expense. Corporations and wealthy (smart) individuals own them for the favorable taxes for real estate depreciation and losses.

 

[VTKilarney]

A pretty good article:
http://vtskiandride.com/jay-peak-new-bosses/

 

[4aprice]

I can't speak to Jay, never worked there. I can share this though. Spring semester of 1999 one of my senior classes in UVMs hospitality program was ski area management. One of the seminars had the GM from basically every ski area in the state. Stenger was there, Tim Meuller from Okemo, Hank Lunde from Stowe, Otten; a who's who in VT skiing. The teacher of the class asked a question, "raise your hand if your ski area was profitable every year of this decade." The only one who could do it was Smuggs. Every other area had at least one or more years they lost money for a year. The point was to demonstrate that it is very difficult to make money in basically a seasonal weather dependent business. If you don't make enough hay Christmas through Presidents week to cover you for the year, you're basically screwed. Now Smuggs had the most developed summer business at the time. You can see why many of these other areas have tried to copy their formula.

Bit off topic but you ought to look at Camelback Pa's summer business with the Camelbeach Water Park, a real money maker. Couple of similarities with Jay and Burke with a brand new hotel and the difficulties they went through to get it up and going but it is selling well from what I understand (may I add pretty nice too). Big difference in the location.

Alex

Lake Hopatcong, NJ

 

[tumbler]

Bit off topic but you ought to look at Camelback Pa's summer business with the Camelbeach Water Park, a real money maker. Couple of similarities with Jay and Burke with a brand new hotel and the difficulties they went through to get it up and going but it is selling well from what I understand (may I add pretty nice too). Big difference in the location.

Alex
Lake Hopatcong, NJ

Hit the nail on the head.

 

[yotefan]

They booted Mike Pappalardo right away at the takeover, supposedly due to "conflict of interest"... just surprising Jr was kept.

Apparently Electric Mike is still at Burke. He seems to be trying to rally the troops and distance himself from Ary.