Canada’s RED Mountain Resort shakes up traditional ski area business models
The consolidation of the continent’s ski areas continues by the year, but a small resort in British Columbia is hoping to buck the trend with a new approach that will ensure it remains independent.
RED Mountain Ski Resort, the oldest ski area in all of western Canada, launched a first-of-its-kind crowdfunding strategy this summer and now seeks $1.3 million more to fulfill its financial goal. The “Fight the Man. Own the Mountain” campaign is an attempt to keep the 4,200-acre, formerly ski club- and community-operated Rossland, British Columbia, gem out of the hands of corporate possession.
Various business models
“Watching the current trends in the larger ski resort world, protecting RED is even more urgent than ever,” Howard Katkov, owner and CEO of RED Mountain since 2004, said in the campaign video. “The heart of a true mountain lifestyle can’t keep beating if every resort is trying to squeeze every last dollar out of every square inch. It just can’t.”
In total, RED — about the size of Copper Mountain Resort — seeks to raise $10 million at buy-in levels ranging from $1,000 to $10,000, each coming with its own set of ownership perks. So far, more than 2,400 people have made commitments as the resort approaches its target.
Historically, the state’s and nation’s ski areas have operated under various business and operating models. Vail Resorts, for instance, then-owner of Vail Ski Resort and Beaver Creek Resort, incorporated in 1985 ahead of purchasing Breckenridge Ski Resort and Keystone Resort from Ralston Purina in 1997 to form the largest mountain resort company in North America. After eight more resort acquisitions since 2010, the Broomfield, Colorado-based company bought British Columbia’s Whistler Blackcomb this past August for more than $1 billion.
Others, such as the 960-acre Arapahoe Basin Ski Area, owned by the Dundee Resort Development company, are a one-off investment, while Powdr Corp., owner of Copper Mountain and recently Eldora Mountain Resort in Boulder County, also maintains ski area properties throughout the nation, in Vermont, Oregon, California and Nevada. Family-owned resorts such as the southwest Colorado Wolf Creek Ski Area, held by the Pitchers, and the four Aspen Skiing Co. holdings possessed by the Crown family out of Chicago, are getting more rare with each buyout.
“It’s all over the map as far as how a ski area is organized,” said Paul Rauschke, associate professor of the ski area operations program at Colorado Mountain College in Leadville. “It’s just a function of how deep an individual’s pockets are, and how much risk they want to expose themselves to. Vail Resorts is the 800-pound gorilla and publicly traded.”
Running a ski resort is not an inexpensive feat. A single snowcat for trail grooming operations can cost hundreds of thousands of dollars, while the installation of a lift is close to a couple million. Utilities, such as power bills, also come at exorbitant costs. Covering those costs requires the willingness to take on massive debt, and deciding how best to raise funds can be, as any enterprise, the difference between eventual success and failure.
“I think it comes down, at the end of the day, to the personal philosophy of the board or the owner and how they do business,” Rauschke said. “If you incorporate, it gives you the opportunity to sell stock and raise capital quickly, versus — and this is basic business 101 — sole proprietorship, where you’re on the hook for everything, but you also get to control everything.”
As an example, Clear Creek County’s tiny Echo Mountain sold to a new buyer last summer for about $3.8 million. The prior owner intended to sell memberships to the private peak before inviting the public outright to improve business and take advantage of the ski hill’s accessibility from the Front Range. It didn’t work, and the resort proprietor filed for bankruptcy. Today, the 226-acre ski area is open Tuesday through Sunday and sells adult passes for $49.
Vail Resorts, on the other hand, started selling stock in February 1997 with an initial public offering of $22 to raise around $220 million upon first sale. As of Monday’s close of the New York Stock Exchange, it was selling for more than $174 a share.
The ski resort environment remains in consistent flux, with Reuters first reporting in January that Steamboat Ski Area is potentially on the market. The 2,900-acre resort, which dates to 1963, is owned by Intrawest. The Canadian resort management company also owns Winter Park Resort in Colorado, in addition to holdings in Vermont, West Virginia and Quebec and Ontario.
Such uncertainty is why British Columbia’s RED Mountain hopes it can avoid ultimately being swallowed up by one of the ski industry’s conglomerates, and persist as an autonomous mountain treasure for as little as $1,000 at a time.
“We face the same questions as the big guys,” Katkov said, “we simply chose to answer them differently. In the face of corporations that are changing the sport we love forever, we’re building a sanctuary to counter the (commercial) insanity. It’s your chance to preserve the legacy.”