egieszl":2txnksr8 said:
That's nonsense.
An $8 million project, 100% financed at 15-years with a rate of 5% would require an annual payment in the sum of $760,000 or about $63,334/month. I'm making an assumption that you depreciate a ski lift over a period of 15-years and I'm probably a little low on the rate as well. However, it would seem to me that Mono County and local government might be willing to step in and help finance a project like this now. It doesn't take a lot of tickets to generate $760,000 in revenue. For the average resort that would be less than 10,000 tickets.
Sadly, this level of analysis seems to be typical for your "contributions" here.
As Tony pointed out, it's a bit foolish to assume a 5% interest rate when the parent company is borrowing at over 13%. But let's assume they get a sweetheart deal somehow at 10%. Let's further assume, as June's own MDP did, that the loan amortizes over a 10 year period. This combination of assumptions implies annual payments of $1.3M. Of course, headline ticket prices are pretty irrelevant, as it is rather the yield per skier that results in actual revenues. Per
http://www.monocounty.ca.gov/junelake/documents/June Mountain Financial History.pdf, June's yield generally hovered around $50/skier visit through 2005-2006. Let's be generous and assume they got that up to $60 more recently. But there's another step.
You then need to figure out how much of that $60 in revenue falls to the bottom line, and is therefore available for paying interest back to the lender. Of course, there is generally not much in the way of marginal cost that is attributable to any single skier visit, at least not for the lift ticket. That said, yield encompasses ancillary items like food, lessons, rentals etc.. where the relationship to marginal costs is much more concrete. Regardless, let's say thay the $60 yield generates $50 of gross profit per visitor for a healthy 83% margin.
Now let's circle back to that $1.3M annual interest payment. At $50 yield per skier visit, you are looking at a requirement for over 26,000 incremental skier visits above and beyond whatever June needs to reach break-even on its current baseline. That's a minimum increase in skier visits of 50%, and that's before you consider other incremental expenses. A detatch lift brings with it substantial increases in cash operating costs for utilities and maintenance vs. the J1 or any other fixed grip lift. Money also needs to be found to actually market the mountain (budget of close to $0 in recent years), or to build desperately needed bag storage and skeletal skier services at the base.
Basically, an $8M gondola is precisely the LAST thing that June Mtn needs at this juncture. That sort of thinking represents a bankrupt, unimaginitive philosophy that would have us believe there is but a single route to solvency in the ski business. There are any number of successful small areas around the country that can put the lie to that notion. In conclusion, please stop sucking.
