Raising the money
The cash resources of the Vail Corporation were budgeted for expenditure between December 1959 and April 1961 for studies of lift equipment, aerial surveys, and mapping. Engineering studies of lift design and construction, water supplies and sewage disposal systems were completed, along with architectural studies of terminal facilities and a preliminary site plan and layout of a golf course.
Then there were the economic-feasibility studies of lift operations and hotel operations and a preliminary study of suggested land values, attorneys’ fees, accountants’ fees, the purchase of a Snowcat and a Jeep, the construction of a small summit house, and requirements for salaries and office expenses. By this time it was no longer a feasibility study – it was a development study.
Next, the Vail group went to the First National Bank in Denver and met with Davis Moore, one of the top officers and the head of the loan committee. His brother was married to Jack Tweedy’s sister. After several discussions, and against his colleagues’ recommendations, Moore persuaded the bank to loan $500,000. Of that amount, $350,000 was guaranteed by the Small Business Administration.
A limited partnership to raise $1 million was created. One idea was to get four people who would put up $250,000 each. But that brought up the question as to who would end up in control and whether four people putting up that much money could be managed and how long they would stick together. The board concluded that it might not last very long. Someone would get bored or get his nose out of joint, and the whole deal would fall apart.
The board, therefore, decided to sell 100 units at $10,000 each, with each unit including four lifetime lift passes. Next, an SEC limited partnership was put together. This took a lot of doing on the part of Jack Tweedy and Bob Fowler. Because most of their practice was in the oil and gas field, they felt that some of the liberalized laws relating to permissible tax write-offs would apply to the Vail partnership. Their scheme was approved by the SEC.
Because he knew so many people and had raised a great deal of money for oil ventures, George Caulkins was the logical man to help with this aspect of the plan.
“I don’t know anything about ski areas,” he said when told about it.
“Well, you’ve raised money for your oil business,” Seibert responded. “This is not too different. You know a lot of people, and maybe you could go to New York and talk to some of the investment banking people you know.”
Caulkins did precisely that.
Tweedy, Seibert and Caulkins made a trip to New York to visit some of the financial institutions there. The first one was the White Weld Corporation. They talked to a young person who was a skier.
“This is a good-looking project, but really, our clientele is a little too cautious for this,” he said after looking into the situation.
They talked to another firm – Joe Fox at Kidder Peabody – and asked whether a limited-partnership route would be the best way to sell the project. Again they were told that the firm was “very conservative.”
The trip to New York was not successful as far as the objective was concerned. However, as Tweedy remembers, they were given a lot of advice about what they could do and what they couldn’t do. It helped. The lions’ share would go to the investment bankers anyway.
“Why don’t you raise the money yourself?” Seibert then said to Caulkins. Caulkins decided he would give it a try. He said it was the hardest thing he ever did.
At this point, the Vail formula was put into effect. People began giving parties in their hometowns, at their country clubs or at their downtown clubs, to interest people in investing in Vail, including Fitzhugh Scott in Milwaukee, Joe Rich, (one of the first 20) in Chicago, John Murchison in Dallas, Ray Hankammer in Houston, Moose Taylor in Denver, myself in Cleveland, and all the original directors in Denver.
In each city, centers of activity were created to encourage people to invest. “I formed a securities company just to do that particular underwriting,” Caulkins said of his accomplishment. “I’m very proud of that!”
Editor’s Note: In a continued effort to help the community understand its roots, the Vail Daily for a second time is serializing Dick Hauserman’s “The Inventors of Vail.” This is the 34th installment, an excerpt from chapter 5, “Creating a Plan to Make it Work.” The book is available at Verbatim Booksellers, The Bookworm of Edwards, Pepi’s Sports, Gorsuch Ltd. and The Rucksack, as well as other retailers throughout the valley. Hauserman can be contacted by phone at 926-2895 or by mail at P.O. Box 1410, Edwards CO, 81632.