Epic Pass may be big winner in battle of Goliaths in Utah
PARK CITY, Utah – By now, everybody in the ski world knows that the Powdr Corp. screwed up, virtually mailing the key to its operations at Park City Mountain Resort to its landlord, the Canada-based real-estate development firm Talisker Corp., who in turn has given the key to Vail Resorts.
From Twitters to newspaper columnists, plenty of people have slapped around Powdr for the 2011 slip-up.
“It’s unfathomable that PCMR let the deadline pass,” writes Tom Clyde in The Park Record. “The landlord, United Park City Mines and now Talisker, has been trying to get out of a below-market lease for better than 20 years. It’s just baffling that PCMR didn’t give notice every morning, for 20 years when they turned the office lights on.”
A district court judge in Utah made the ruling before Memorial Day, finding that Powdr had failed to renew the lease that entitled it to use 3,500 acres of Talisker-owned land for the bargain-basement price of $150,000 a year.
Writing in Outside Online, Marc Peruzzi further draws attention to the arrangement between Vail Resorts and Talisker. Powdr’s failure occurred before Vail Resorts inked a contract with Talisker to manage Canyons, the nearby resort.
Peruzzi says that by all accounts, “Vail Resorts overpaid for Canyons lease ($25 million plus a percentage of revenue), knowing that after some legal wrangling on behalf of Talisker it would soon be in control of both the PCMR property and Canyons, which when combined (one lift would do it) would result in a megaresort of 7,500-plus acres.”
That statement errs in one fundamental way. In fact, despite the ruling—still subject to appeal—Powdr still owns the base portal and some percentage of land up the mountains.
Peruzzi says the company can “deploy a nuclear option and remove the lifts and disallow access from the private land it owns at the base… Or sell its infrastructure and base-area operating rights to Vail Resorts.”
No talk of a deal
Immediately after the ruling, The Park Record tried to get John Cumming, chief executive of Powdr, to tip his hand. For the time being, Cumming isn’t giving any public signs of being open to a deal. What he has offered to first Talisker and then Vail Resorts has been met with silence, he said, while declining to identify those offers. In a later interview with the Record, Cumming affirmed Powdr’s position: “Park City and its base area aren’t for sale.”
Powdr will be appealing, of course, although no observers seem to think the company has much of a legal case.
Clyde, the Park Record columnist, wrote that he is sure a deal will get struck soon enough. “Everybody loses if the operation is splintered up,” he writes. “To put it another way, if two farmers are arguing over the ownership of a cow, you can bet that the cow will be fed.”
He offered another metaphor for what lies ahead: a shotgun wedding. “There’s too much value there to break it apart. So in the end, some kind of deal will happen. They will walk down the aisle, black eyes and fat lips, and say, “I do – because I have to.”
A deal that would make Vail the operator of both ski areas “would be the logical outcome,” says Myles Rademan, of Park City. “But I’ve seen lots of things that in the ski industry that weren’t logical.”
In a second interview with The Park Record, Cumming – whose family (now living in Jackson Hole) bought Park City in 1994 – said that if PCMR is evicted from the property, Powdr will dismantle the lifts. Talisker has said the lifts must remain if PCMR is evicted.
Cumming expressed anguish in many ways. “If there was a little bit of Golden Rule in this thing, Rob (Katz, chief executive of Vail Resorts) and I would’ve worked this out already.” he said.
And as for his status in Park City, “Nobody talks to me about anything. I’m the elephant in the room. I’m the elephant in town. Everywhere I go people are very nice and cordial and don’t really want to talk to me. And I’m not surprised by that. I wouldn’t want to talk to me, either.”
And this: “I’m definitely not as idealistic at the other end of this as I was going in, for sure.”
Cumming also said that his family’s recent purchase of the majority interest in Snowbird Ski and Summer Resort is separated from the dispute with Talisker and Vail. A Wall Street analyst who covers Vail Resorts recently issued a report indicating that the Snowbird acquisition is a hedge by the Cumming family. But Cumming disagreed. “We would have bought Snowbird regardless of what is happening. We have invested with the (Dick) Bass family regardless of what’s happening over here. It’s unfortunate timing. Does it hedge us? I don’t know. Have them call me and explain to me how we hedged, and we’ll see if I agree.”
Vail’s growing dominance
Peruzzi identifies the bigger story with impacts beyond Park City: It allows Vail to further expand its brand, the “insanely affordable” Epic Pass, making it the largest ski area operator in Utah, as it already is in Colorado, where it has a third of all skier visits. It also has a sizable presence in the Tahoe ski market.
Altogether, Vail Resorts sold 350,000 Epic Passes this past ski season. It is rumored that the company has an internal goal of one million.
A long time ago, Vail Resorts left Colorado Ski Country USA, to go it alone instead of joint marketing efforts with other ski areas.
What does this mean for One Wasatch, the idea of linking together the three ski areas of Park City (Deer Valley, Park City and Canyons) with the four on the east side of the Wasatch Range (Snowbird, Alta, Brighton and Solitude)? Peruzzi sees the ski area interlink idea now flailing. Canyons had already pulled out and now Park City is probably gone.
“The undisputed leader in the season pass war, their strategy is to brand, promote, and ultimately sell the Epic Pass,” he writes. “It’s difficult to see how pushing the One Wasatch agenda helps that cause.”
This was originally published in the June 11 issue of Mountain Town News, a subscription based e-magazine. See about subscription details.