Vail Resorts dumps Daly
In the wake of the Vail arson fires in 1998, Vail Resorts President Andy Daly famously shouted to a gathering of 400 locals, “Don’t let the bastards get you down!”One would think he’d be muttering the same thing to himself these days after having his position eliminated by the ski company Tuesday, Oct. 22. But Daly says that isn’t the case.”I’m doing great, actually,” Daly says. “I’ve already had some very attractive offers to go into business with some folks, but I really want to take some time I look at this as one of the few opportunities a guy has in his lifetime to step back for 90 days and say, ‘What is next?'”A ski industry veteran who is a member of the Colorado Ski Hall of Fame, Daly, 56, has been with Vail Associates since 1989, first as president of Beaver Creek, then as president of Vail Associates from 1992-96. That’s when he was named president of Vail Resorts by new owner Apollo. He helped shepherd the company out of bankruptcy in the early 1990s and into its modern era of expansion and initial public offerings in 1997.And he was at the helm when eco-terrorists caused $12 million in damage to lifts and buildings on Vail Mountain in protest of the Blue Sky Basin expansion. Daly was a strong presence in those trying times, and was instrumental in rebuilding the ski mountain and successfully launching Blue Sky Basin.But he is now apparently the victim of equally difficult circumstances for the company. The possibility of war, a prolonged recession and continuing drought conditions have forced the company to trim up to 4 percent of its budget for the coming fiscal year.In September, CEO Adam Aron announced a hiring freeze on full-time management and said that the company would not be giving performance-based raises to 400 managers for the fiscal year ending July 31. Further cuts were alluded to then.”Needless to say, this effort to operate prudently must take place atall levels throughout our organization,” Aron said in an internal memo to the company’s staff Tuesday. “Additionally, if sacrifice is required for Vail Resorts to prosper, then that sacrifice must take place fairly up and down the line, even and some would say especially at the highest levels of our company.”I want to stress that Andy’s separation from Vail Resorts is not forperformance reasons, but rather because we feel our company will operate better if it does so with a lower cost structure, and to the extent possible, with fewer layers of management.”Aron stated in the memo that Daly would be leaving at the end of the month and that more staffing changes will be announced early next month. Rumors of further corporate downsizing have been swirling for weeks, but company officials limited all comments to a press release from Aron.”Naturally, Andy’s departure will trigger some shifting andre-organization of duties and reporting relationships,” Aron stated. “These changes will all be fully announced no later than Friday, Nov. 1, 2002.””I was also told this is just the beginning,” says Avon-based ski industry consultant Jerry Jones, a former Vail executive who was ousted in the ’90s.Daly would not comment directly on the current wave of cuts, but attributes his situation to flagging destination skier numbers over the past six years an intolerable situation for a growth-hungry public company.”The destination skier growth hasn’t met expectations, so we as a company have had to adjust to that, and that’s our core market segment and one that we have to remain absolutely focused not only as a company, Vail Resorts, but as an industry as a whole,” Daly says.Bottom-line decisionVail Resorts will announce its fourth-quarter results Oct. 29, taking advantage of the full 90-day window to report. Its stock along with many other leisure industry stocks has taken a beating in recent weeks, hitting an all-time low of $12.23 a share. It was trading at $13.77 a share as of Wednesday afternoon.Stacy Forbes, senior equity analyst at Janco Partners, says the Daly move is a reflection of tough times for companies in the leisure and travel industry.”It’s not just Vail that’s laying people off, and I think they’ve done a really good job in trying to not disrupt their infrastructure, but it gets to a point where you have to make some cuts,” Forbes says.From an investor standpoint, she says Daly’s termination will not be viewed with as much concern as the loss of Aron would.”(Daly’s) very instrumental in the company itself, but he has less of high profile (than Aron),” Forbes says. “Daly was involved with investors and the street, but I think Adam Aron is much more the figurehead in that situation. (Daly’s) industry background will be greatly missed and it’s a value to the company, but if they need to cut back “Forbes says that Vail Resorts is in a better financial position than most ski companies, but that the company clearly has some bad news on the way.”The fact that that they’ve taken the full 90 days to report to the street that obviously reinforces that sentiment that what they have to say is not as positive as some would like,” Forbes says.Industry consultant Jones says the elimination of Daly’s position is clearly a bottom-line move, but not necessarily one that strengthens the company over the long haul.”It’s a short-term policy versus a long-term policy,” Jones says. “The alternative to what is the stock price today is what could it be 10 years from now if we build it to be a quality company for the long term?”Jones says Daly’s old-school ski-industry ethics clearly clashed with a board of directors looking for short-term gratification. “I believe Andy is a guy who has high ethics and morals and compassion for the industry and is trying to build something.”Daly says the corporate consolidation of the industry over the last few years has in no way soured him on the sport.”I don’t think it has diminished my passion, but certainly the realities have changed, and that is tied to public companies,” Daly says. “Our principle responsibility is to the shareholders, and when you have public companies whose livelihoods are tied to small mountain communities, that sets up a dynamic tension that is at times both draining and sets up so many potential conflicts.”Besides building customers service, improving the quality of the product and overseeing Blue Sky Basin, Daly says he is most proud of the way the company has been able to rebuild community relations over the last few years.That relationship may have been damaged a bit by the departure of Daly, who is viewed as someone who cares deeply about the industry and about his community.”As a community, we are losing our voice in what was once a community corporation,” former VR employee Evelyn Pinney-LeVine of Edwards said in a letter to the editor. “Through the many changes in Vail Resorts over the past decade, Andy has been steadfast in his passion for the industry, his employees, and for our community.”Landing on his feetDaly reportedly earned $3 million in 2001, included $428,100 in salary, a bonus of $280,000 and $2.1 million from the sale of stock options. He also cashed in millions more in stock over the years.”I’ll bet Andy is on cloud nine right now,” Jones says. “He did extremely well financially, and this is a good example of someone leaving not having any negative implications about the person.”Daly is not sure he’ll stick around in the ski industry, although he says he and his wife Lucinda and two boys will continue to live in Vail for years to come.”The ski industry has been wonderful for me, but after 32 year I think it’s probably time to look at some other adventures,” Daly says. “While skiing is deeply rooted in my soul I definitely have a passion for skiing and I will continue to feed my passion that doesn’t mean it has be the source of my livelihood.”But other observers say Daly will have a hard time staying out of the industry for too long.”I bet you by March 1 at the latest you will see Andy in a major leadership position at another resort,” says Paul Witt, a local public relations specialist who served as director of corporate communications under Daly. “He’s too good of a ski area leader to stay out of the industry for too long.”
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