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What the heck is going on at Magic?

slatham

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This email came to me today at 12:20 from Tom Barker. Anyone have any insight?

At this point I have organized a new company, Magic Mountain Resort LLC, (MMR LLC) to operate Magic Mountain. That role for MMR will commence as soon as a lease is negotiated. There is general agreement on the terms of the lease. There is also an agreement that transfers to MMR LLC certain mountain related equipment, Point of Sale Terminals and similar office equipment and computers, Snowmaking Equipment , Groomers, Mowers and tools to MMR. MMR has not received and does not expect to receive any funds related to the Magic Faithful Club. Revenues from early 2014/15 season pass sales are being spent on the mountain for maintenance and MMR will fully honor those season pass commitments.

Recognize what is the structure of Magic’s management organization. At any time a company holds an operating lease and that operating company is totally responsible for its actions. In succession those companies were businesses that the Thorners and Boston Concessions owned, Old Fashioned Ski Company that Boraski owned, Magic Group that Aichholz owned, JLS Magic that Sullivan owned and now Magic Mountain Resort that I own. Each company was faced with running a mountain that has not generated significantly more revenue than it spent to sell the tickets. The Magic share program and the Magic Faithful Club were efforts by JLS Magic to address the problem and like other efforts by prior companies that program did not pass onto the next company. It seems intuitively safe to say the MFC funds were spent on the mountain. There were major repairs and purchases, i.e. Groomer, Red Chair, Irene silt in the pond, Snowmaking pipe welding, etc., that were paid for while there was no cash generated by the mountain. Where else could the money have come from?

At this point in time we do not have the accounting detail to state just how Mr. Sullivan spent the MFC funds. If MMR LLC finds an auditable explanation of MFC expenditures it will be published to the MFC donors. That is not because MMR LLC is responsible for any of this but because we all want the MFC donors to understand what happened, to not hold MMR LLC responsible and to remain faithful customers. However, if you have a legal complaint against the MFC operation your discussion has to be with Mr. Sullivan. His company JLS Magic still exists and it must respond to legal proceedings, but it has no revenue source from Magic.

Prior operating companies have failed because they could not contain cost to 75% of revenue. I’m facing that same problem. Relative to what will be done going forward, I am forced to make Magic work the old fashioned way, selling more stuff than I have to buy. My focus now and for the foreseeable future will be cost control. Last year Magic’s total revenue was about $950K and its total costs were $950K +/- $2K. That defines a breakeven situation. I will be focused on (1) maintaining or growing the revenue, (2) putting in enough money to carry operations through to winter without borrowing, (3) managing cost to end the year $200 to $300 K in the black and (4) rolling that extra cash back into the mountain on the type projects that were targeted by MFC funds.

As always I’m always available for discussions and I will be posting a manager’s blog to describe what is happening.

Tom
 

reefer

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From the Magic Faithful page. Makes me want to go up and check out the fireworks Saturday..................

Magic Faithful Club
We believe in Magic


June Ownership Update

Here's an update from ownership as of 6/25/14:

In light of recent perceptions that changing management of the mountain would be a prudent maneuver for the mountain and its future, please be advised that JLS Magic, LLC and its sole member, Jim Sullivan, will no longer be in charge of operating or managing the mountain and a new entity headed by Tom Barker will take over control of operations and all financial matters. The mountain will continue to operate, and the ownership is looking forward to moving Magic forward."

 

thetrailboss

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From the Magic Faithful page. Makes me want to go up and check out the fireworks Saturday..................

Magic Faithful Club
We believe in Magic


June Ownership Update

Here's an update from ownership as of 6/25/14:

In light of recent perceptions that changing management of the mountain would be a prudent maneuver for the mountain and its future, please be advised that JLS Magic, LLC and its sole member, Jim Sullivan, will no longer be in charge of operating or managing the mountain and a new entity headed by Tom Barker will take over control of operations and all financial matters. The mountain will continue to operate, and the ownership is looking forward to moving Magic forward."


Hmmm....

Mr. Barker needs to at least proofread his press releases/Emails. I took what was posted to be a crazy rambling Email as opposed to a communication from a business person. Maybe I'm harsh or jonesin to ski, but that was just my opinion.
 

Abubob

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Magic is under new management - that's it. Sullivan is out but responsible for any complaints against his company. Barker is in, admits everyone else's failures, will honor any early 14-15 passes sold, try to control costs, finish the upcoming season in the black.
 

thetrailboss

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Magic is under new management - that's it. Sullivan is out but responsible for any complaints against his company. Barker is in, admits everyone else's failures, will honor any early 14-15 passes sold, try to control costs, finish the upcoming season in the black.

Good summary.

What is the backstory? It seems like there is some hostility/uncertainty here. Why would a new manager be coming out so defensive?
 

WWF-VT

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At this point in time we do not have the accounting detail to state just how Mr. Sullivan spent the MFC funds. If MMR LLC finds an auditable explanation of MFC expenditures it will be published to the MFC donors. That is not because MMR LLC is responsible for any of this but because we all want the MFC donors to understand what happened, to not hold MMR LLC responsible and to remain faithful customers. However, if you have a legal complaint against the MFC operation your discussion has to be with Mr. Sullivan. His company JLS Magic still exists and it must respond to legal proceedings, but it has no revenue source from Magic.

Seems like this refers to the June 2009 Magic Mountain Partnership, LLC Business plan:

http://www.magicmtn.com/partnership/Magic Partnership Business Plan.pdf

And the private placement / funding:

http://www.magicmtn.com/partnership/Private Placement Memorandum.pdf
 

Tin

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.
At this point in time we do not have the accounting detail to state just how Mr. Sullivan spent the MFC funds. If MMR LLC finds an auditable explanation of MFC expenditures it will be published to the MFC donors. That is not because MMR LLC is responsible for any of this but because we all want the MFC donors to understand what happened, to not hold MMR LLC responsible and to remain faithful customers. However, if you have a legal complaint against the MFC operation your discussion has to be with Mr. Sullivan. His company JLS Magic still exists and it must respond to legal proceedings, but it has no revenue source from Magic.

Sounds like more money may have been spent than what we have, we are not sure how much we owe, sue the other guy.
 
Last edited:

crank

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The only real question is what was the buy in to the MFC and what were you supposed to get for it. Sounds like other than a season's pass anything else is forfeit. No that I know if there is anything else so if there are any MFC members out there please fill us in.
 

slatham

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Some more news, via email this morning. My only comment, as a MFC member, is that while I am frustrated by the lack of communication regarding use of funds, IF the money was used for the mountain and to allow it to be opened over the past couple of years, then I have no issue. Hopefully there are funds left as there is still work to do. I am also happy Jim will remain involved - I am a firm believer that his heart has always been in the right place.

Dear Friends and Magic Faithful:

For several reasons I have been advised and requested to stay silent relative to the recent changes here at Magic and in relation to the Magic Faithful Club, but I feel compelled to send out this note in response to the many e-mail strings and discussions which have been brought to my attention. Apparently many of you did not receive my e-mail of a few days ago, so I wanted to recapitulate a few of the points and address some of the rumors that we all know can take on a life of their own and tend to get exaggerated each time they are passed from one party to another.

As most of you are aware by now, Tom Barker is establishing and funding a new operating company which will be running the mountain. Tom will be responsible for the finances of the operation and personnel. Based upon the experience I have garnered over the past eight seasons, Tom has requested that I assist him in order to make sure that the mountain operates as smoothly as possible. I have agreed to do so and will be pushing Tom to adhere to the higher standards we have established over the past several years. I am not walking away, and the mountain is not folding. I will likely not have a specific title, but as has been the case since I arrived, I will be doing whatever is necessary to make the mountain work, and sharing my knowledge with Tom will be an integral part of my role. I will also continue to run the racing program which is a personal passion.

Now, with respect to the Magic Faithful Club, I am working with the State of Vermont to come to a resolution. The Securities Commission is looking at the whole process from the initial offering, to the change to a club, and to all of the receipts and disbursements. There undoubtedly will be requirements of me when that process is completed. Club funds have been used, all completely within the four corners of the offering and associated business plan, but obviously without the express consent of the Club. The reasoning behind the use of the funds was simply to keep the mountain open and moving forward, as there were so many demands relative to the lifts and snowmaking. Otherwise, the mountain would have closed. I fully understand that I did not handle the situation correctly and for that I sincerely apologize. Upon the completion of the process with the Securities Division there will be a complete accounting of all funds, and again I will do whatever is required to rectify the situation.

There are other avenues which I could have taken in response to the current issues, but such action would have resulted in closure of the mountain. Most of you have gone to extraordinary lengths to support Magic in my tenure, and I will do everything in my power to honor the commitments you have made by helping to keep the mountain open and moving forward and by addressing and rectifying the situation with the Magic Faithful Club.

Thank you all for taking a moment to read this. I am happy to reply to any inquiries. Have a wonderful Saturday, and I expect that I will see many of you at the fireworks this evening.

Jim Sullivan
Magic Mountain
 
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