Vail Buys Crested Butte, Okemo, and Stevens Pass

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Vail Buys Crested Butte, Okemo, and Stevens Pass

Postby EMSC » Mon Jun 04, 2018 9:32 am

The buy-out of resorts continues with Vail buying up the Muellers resorts - Crested Butte, Okemo and Sunapee; and also is adding the first PNW resort outside of Whistler to be added to the big passes buying Stevens Pass, Washington.

Details on the purchase prices, etc...
https://theknow.denverpost.com/2018/06/04/vail-resorts-to-buy-crested-butte/186438/

Stevens pass would not be a concern, but one has to wonder if the justice dept will get involved at some point with all the acquisitions/joint passes. Vail will be up to 7 Colo resorts on the Epic pass, and Ikon pass will be at 8 resorts for next season. That's more than half of all ski areas in Colo and WAY more than half of total skier visits by a long shot.
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Re: Vail Buys Crested Butte, Okemo, and Stevens Pass

Postby Tony Crocker » Mon Jun 04, 2018 11:59 am

Stevens gives the Seattle market a daytrip Epic option in addition to Whistler. I said when the Ikon Pass details were announced that Crystal (and Bachelor) should be on it. I’d say there’s some more incentive now for Crystal.

I’m guessing Colorado for the time being is better off with two 800 pound gorillas than just one.
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Re: Vail Buys Crested Butte, Okemo, and Stevens Pass

Postby berkshireskier » Mon Jun 04, 2018 2:08 pm

EMSC wrote:The buy-out of resorts continues with Vail buying up the Muellers resorts - Crested Butte, Okemo and Sunapee; and also is adding the first PNW resort outside of Whistler to be added to the big passes buying Stevens Pass, Washington.

Details on the purchase prices, etc...
https://theknow.denverpost.com/2018/06/04/vail-resorts-to-buy-crested-butte/186438/

Stevens pass would not be a concern, but one has to wonder if the justice dept will get involved at some point with all the acquisitions/joint passes. Vail will be up to 7 Colo resorts on the Epic pass, and Ikon pass will be at 8 resorts for next season. That's more than half of all ski areas in Colo and WAY more than half of total skier visits by a long shot.

Wall Street likes the purchase. The stock of Vail, Inc. ("mtn") is up over $8 today and is now selling for over $250. You could have bought this stock in the low 40's 6 or 7 years ago. I'm still kicking myself for not buying some!
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Re: Vail Buys Crested Butte, Okemo, and Stevens Pass

Postby EMSC » Tue Jun 05, 2018 10:02 am

berkshireskier wrote:Wall Street likes the purchase.


The real test of Vail Resorts will be the next downturn. They already have nearly $1.2B in long term debt. Debt based financing works great in the "up" part of the cycle. And cash flow wise is a horrible thing to have too much of in the 'down' part of the cycle. Add in a several hundred $M more for these purchases and it could go the way of Intrawest depending on when/how severe the next downturn end sup...

They are buying a lot at the upper part of the business cycle. No guarantee when the next downturn will hit, or why, but I would not want to be adding quite so much debt financing this long into the business cycle.
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Re: Vail Buys Crested Butte, Okemo, and Stevens Pass

Postby berkshireskier » Thu Jun 07, 2018 12:12 pm

EMSC wrote:
berkshireskier wrote:Wall Street likes the purchase.


The real test of Vail Resorts will be the next downturn. They already have nearly $1.2B in long term debt. Debt based financing works great in the "up" part of the cycle. And cash flow wise is a horrible thing to have too much of in the 'down' part of the cycle. Add in a several hundred $M more for these purchases and it could go the way of Intrawest depending on when/how severe the next downturn end sup...

They are buying a lot at the upper part of the business cycle. No guarantee when the next downturn will hit, or why, but I would not want to be adding quite so much debt financing this long into the business cycle.


Yea, I haven't looked at their financial statement but always risky to build up an inherently cyclical business (like the ski resort business that is heavily dependent on weather and on people having enough money to ski) using too much debt. So far the strategy has worked, though; the stock is soaring again today (now over $270 per share) on better than expected earnings and greater than expected sale of season passes. See story below.

https://finance.yahoo.com/news/allergan ... 31034.html

I think it was a brilliant business maneuver to sell relatively cheap season passes that can be used at multiple resorts, in different parts of the country, diversifying the "weather risk" somewhat. I understand Vail sells 700,000 to 800,000 passes each year now, generating a substantial cash flow up front. Plus, once people buy those passes, they're unlikely to ski at other non-Vail resorts with the sunk costs for the lift tickets already in hand. And then the ski areas can make money on lessons, rentals, lodging, food, etc. I don't think this business model is completely recession-proof, but it's not really like the old days when every resort had to fend for themselves and could be hurt badly by poor snow conditions or a bad economy.
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