VAIL SUCKS

[kingslug]

You moved to Park City instead of the Front?

Draper

 

[eatskisleep]

Is Vail’s downfall inevitable?

The comments section is great too…

 

[EPB]

Is Vail’s downfall inevitable?

The comments section is great too…

I saw that. Figured I didn't need to watch because BG has been laying out the case for years now.

 

[BenedictGomez]

I didn't need to watch because BG has been laying out the case for years now.

Yeah, I started writing about this about a decade ago on here, and it's pretty much all going according to how I predicted, except I'll likely have to push Vail's "downfall" a few more years as they've operated/performed a bit better & have more levers to pull before true desperation sets in. Timing this sort of thing is always the hardest part. You should still watch the video though, I found it pretty solid & informative.

There are a few things I'd take issue with, like how he seems to think EBITDA is more important than Net Income, which is not always the case & certainly not in the case of a company like MTN. I remember in graduate school my favorite professor asked, "Can anyone tell me what EBITDA stands for?" - which is a super basic question in a room full of finance and/or economics wonks. Of course a bunch of hands go up, he calls on one, and the person says, "Earnings Before Interest, Taxes, Depreciation, and Amortization". Professor says, "Wrong", and repeats, "Can anyone tell me what EBITDA stands for?" Now of course everyone looks confused, because EBITDA does stand for, Earnings Before Interest, Taxes, Depreciation, and Amortization, but nobody says anything. Professor says, "Nobody?" - and then proceeds to say, "EBIDTA stands for, "Earnings Before I Trick Dumb Auditors" - and much of the rest of the semester is about how EBITDA is a corporate ploy to fool people into ignoring whatever financial problems a company has, and all the ways EBITDA is used to obscure and fool people into thinking a companies financial health is much better than reality. It was one of the best classes I ever took in my life at any level, and Vail embodies the point of that class from a financial statement analysis perspective.

 

[AdironRider]

I bet BG loves the smell of his own farts

 

[deadheadskier]

"Earnings Before I Trick Dumb Auditors"

That's pretty great. I've known for a long time that EBITDA isn't the whole story, but I have never heard it said like that.

 

[eatskisleep]

Love it. Love watching Vail’s downfall. Easy short position. I’d play the options game with them but there is practically zero liquidity and a huge B/A spread, so shares it is.

 

[x10003q]

The future replacement of all the old high speed lifts is a real problem.

 

[ss20]

The future replacement of all the old high speed lifts is a real problem.

All the resort boom hsq's of the early 90s are coming of age. 1-2 hsqs per year in the 90s was the norm at Breck, Vail, and a lot of the mega resorts.

To not replace a single lift this off season in their entire portfolio of resorts is more damning than I think a lot of investors and non ski folks realize. I equate it to a major airline declaring they're going to not replace any aircraft in their fleet for a year. A pretty drastic move.

 

[EPB]

Yeah, I started writing about this about a decade ago on here, and it's pretty much all going according to how I predicted, except I'll likely have to push Vail's "downfall" a few more years as they've operated/performed a bit better & have more levers to pull before true desperation sets in. Timing this sort of thing is always the hardest part. You should still watch the video though, I found it pretty solid & informative.

There are a few things I'd take issue with, like how he seems to think EBITDA is more important than Net Income, which is not always the case & certainly not in the case of a company like MTN. I remember in graduate school my favorite professor asked, "Can anyone tell me what EBITDA stands for?" - which is a super basic question in a room full of finance and/or economics wonks. Of course a bunch of hands go up, he calls on one, and the person says, "Earnings Before Interest, Taxes, Depreciation, and Amortization". Professor says, "Wrong", and repeats, "Can anyone tell me what EBITDA stands for?" Now of course everyone looks confused, because EBITDA does stand for, Earnings Before Interest, Taxes, Depreciation, and Amortization, but nobody says anything. Professor says, "Nobody?" - and then proceeds to say, "EBIDTA stands for, "Earnings Before I Trick Dumb Auditors" - and much of the rest of the semester is about how EBITDA is a corporate ploy to fool people into ignoring whatever financial problems a company has, and all the ways EBITDA is used to obscure and fool people into thinking a companies financial health is much better than reality. It was one of the best classes I ever took in my life at any level, and Vail embodies the point of that class from a financial statement analysis perspective.

Timing is without question the hardest part of short calls. I can spot businesses to avoid, but imminent share price doom is much tougher to identify.

The industry should really just use normalized free cash flow. That takes more effort and room for quibbling though.

At least some lenders I run into use EBITDA-capex. Of course, EBITA would basically serve the same purpose.

 

[thetrailboss]

All the resort boom hsq's of the early 90s are coming of age. 1-2 hsqs per year in the 90s was the norm at Breck, Vail, and a lot of the mega resorts.

To not replace a single lift this off season in their entire portfolio of resorts is more damning than I think a lot of investors and non ski folks realize. I equate it to a major airline declaring they're going to not replace any aircraft in their fleet for a year. A pretty drastic move.

FWIW I was at Alta yesterday and went to the shop. Besides walking out with a pair of skis, I overheard some of Mike Maughan's comments to staff going through a training. He said that IKON and season pass sales were down this year--attributed to the pricepoint and inflation fatigue. Other multi-day discount products were solid. I have to wonder if EPIC sales are not doing as well. Alterra has also cut back on a lot of their improvements that were scheduled for 2025.

 

[snoseek]

Wonder how the sales of epic passes have been this year so far. If they don't hit good numbers on that they're completely fucked...not alot of people can just walk up and buy a ticket. All they can do is cut more budget and charge more for little stuff.

 

[takeahike46er]

All the resort boom hsq's of the early 90s are coming of age. 1-2 hsqs per year in the 90s was the norm at Breck, Vail, and a lot of the mega resorts.

To not replace a single lift this off season in their entire portfolio of resorts is more damning than I think a lot of investors and non ski folks realize. I equate it to a major airline declaring they're going to not replace any aircraft in their fleet for a year. A pretty drastic mov

Just at W/B alone, they have some major lift replacements required in the coming years. And this is despite having installed four major new lifts in recent years.

Whistler Village Gondola is a workhorse lift in dire need of replacement. It’s always having issues.

7th Heaven is up there in age and totally insufficient for the volume of people it serves. Replacing with a higher capacity lift isn’t straightforward either and will require either major blasting, moving the Horstman Hut, and/or adding an additional lift.

Showcase t-bar is on its last legs and will soon go the way of the Horstman.

 

[BenedictGomez]

The future replacement of all the old high speed lifts is a real problem.

I thought that was the most informative part of the video.

I was well aware Park City's lift system is badly aging, but I didn't realize a slew of Vail's other important lifts all over the place are really long in the tooth as well. Hopefully the theoretical lifespan of these 1990s lift installs winds up being much longer than originally thought and planned for.

I didnt appreciate it as a kid, but I guess the 1990s were something of the golden age of lift installs.

 

[snoseek]

Have they even put in a lift at kirkwood yet? 10 years plus now.

 

[deadheadskier]

RE: lift replacement time bombs

Does the largest operator in North America struggling impact future pricing from Dopp / Poma? Anyone know if lift replacement in Europe (largest market) have slowed as well?

Seems to me the price of lifts have gotten pretty nutty in the past decade. I wonder what the margins are for the two major players?

 

[benski]

RE: lift replacement time bombs

Does the largest operator in North America struggling impact future pricing from Dopp / Poma? Anyone know if lift replacement in Europe (largest market) have slowed as well?

Seems to me the price of lifts have gotten pretty nutty in the past decade. I wonder what the margins are for the two major players?

I was thinking that to. After so much consolidation, it would makes sense that margins went up. I am really hoping someone else gets into the North America game.

It also looks like the technology has matured and perhaps resorts just don't see the value in upgrading. New Poma fixed grips look exactly the same as 40 year old Poma's. A few detachables have those chaine things but how many are so dated a customer would notice an upgrade. Only one for me is Sugarbush's North Ridge, and maybe a few slower ones from the 1990's. I here if you maintain them well, they will last forever and can think of a few lifts that rarely break down but are really old. So perhaps they no longer view new lifts as nessisarily an upgrade but sometime just an extremely expensive maintence project.

 

[ctdubl07]

I would like to hear the internals now on the "feeder" resorts strategy that Vail pursued with the many small and midsize regional purchases they made.

Is it safe to say that the people demos who daily the local mtns that came in with a purchase like the Peaks rollup, continue to be affected by inflation and will reduce their pass purchase or visit frequency? So then long term, was the roll-up justification that these mtns feed/introduce visitors into the larger resort eco system really successful?
Or are they not an operational and talent drain?

I could see Vail slowly firesaling a few of these properties at a time back into the hands of impassioned locals to free up small amounts of short term operating cash as they restructure some debt and remove the need for infrastructure planning outside the core resorts.

 

[drjeff]

I was thinking that to. After so much consolidation, it would makes sense that margins went up. I am really hoping someone else gets into the North America game.

It also looks like the technology has matured and perhaps resorts just don't see the value in upgrading. New Poma fixed grips look exactly the same as 40 year old Poma's. A few detachables have those chaine things but how many are so dated a customer would notice an upgrade. Only one for me is Sugarbush's North Ridge, and maybe a few slower ones from the 1990's. I here if you maintain them well, they will last forever and can think of a few lifts that rarely break down but are really old. So perhaps they no longer view new lifts as nessisarily an upgrade but sometime just an extremely expensive maintence project.

The thing is with what I will call "1st generation" detachable lifts (the ones that were installed in the late 80's through late 90's during the initial detachable lift building boom) is the industry as a whole doesn't exactly know what the dependable lifespan of those lifts are, since they're 1st generation lifts, and a style of lift where there were suddenly way more components involved than those fixed grips lifts which have been around much longer and haven't had too many substantial changes to their basic design.

You certainly have seen some of those 1st generation detachable become "lemons" once they get to 25/30yrs of operation, even with all the prescribed maintenance, whereas others keep working fine with over 30yrs of operation.

Since many of the 1st generation detachable lifts were installed in high profile, core lift of a resort locations, you are seeing resort operators wanting to make sure that a core lift won't be down for mechanical reasons for a extended amount of time, and their own mechanics often have a feel for the lift, and you are starting to see more and more replaced after less years of service than a fixed grip, often because the industry truthfully doesn't yet know what the long term functional reliability of those 1st generation detachable lifts is

 

[doublediamond]

North America is currently Doppelmayer's top market