George Gillett: a "likeable guy’
In 1989 Rod Slifer, when asked by Sports Illustrated to compare the various Vail Associates’ regimes, had said “I think Peter and George Gillett have similarities. The mountain and skiing interest them, and the quality of skiing comes first. Harry Bass ran it like a business. He didn’t put money back in the mountain, he drained it off. Pete and George believe in the European idea of business: Think of the future, think of your kids. This isn’t a place to grab instant profits, it’s a long-term investment. I think George Gillett might be the best owner Vail ever had. He has lots of money, he has lots of contact with the town, he makes people here feel good.”
But three years after the World Championships, no one in town was feeling very good about Gillett. His vast TV kingdom had serious problems; he had borrowed big throughout the 1980s, first to accumulate the stations, then to keep them afloat in ever-rising red ink. He got his financial backing from junk-bond czar Michael Milken and from Drexel Burnham Lambert, Inc., the well-known (and now-defunct) Wall Street firm that underwrote those bonds.
Gillett’s company, Gillett Holdings, Inc., which officially owned Vail, issued millions of dollars in junk bonds underwritten by Drexel Burnham. Some of those bonds were burdened with interest rates as high as 17.5 percent. When TV advertising revenue continued to sink, George couldn’t even pay the interest in some cases. Talk of bankruptcy began as early as November 1989. He fought it off at first, then surrendered and declared Chapter 11 bankruptcy in June 1991 and Chapter 7 personal bankruptcy a year later. Ultimately, he had defaulted on debts of more than $1 billion.
Ever the optimist, George insisted that Vail’s operations would not be affected, saying, “The figures from this past season (1991-92) show that, once again, Vail and Beaver Creek were the nation’s favorite ski resorts in terms of attendance. We fully intend to continue that momentum and to live up to our commitment to excellence.”
And when someone asked him about the greatest piece of advice he had received during the years of financial upheaval, he chuckled and said, “Just because someone is willing to lend you money doesn’t mean you should borrow it.”
With great reluctance, Gillett sold Vail in 1992 for $130 million to pay a portion of his debts.
The following is the 65th installment of the Vail Daily’s serialization of “Vail: Triumph of a Dream” by Vail Pioneer and Founder Pete Seibert. This excerpt comes from Chapter 13, entitled “Heart of the Rockies.” The book can be purchased at the Colorado Ski Museum, as well as bookstores and other retailers throughout the Vail Valley
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