Utah Aspen/KSL Buys Deer Valley

[Tricia]

Here is the AP news release
SALT LAKE CITY — Deer Valley Resort announced Monday it has been purchased by a new company that has brought 13 ski areas from Quebec to California under one umbrella, marking the latest deal in an industry that is becoming more consolidated.

Deer Valley becomes the yet-to-be-named ownership group's first ski area in Utah and joins a collection of resorts that also includes Mammoth and Squaw Valley in California; Steamboat and Winter Park in Colorado; and Mont Tremblant in Quebec. The new company is run by affiliates of KSL Capital Partners and Henry Crown and Company.


The acquisition of Deer Valley, considered one of the best in the U.S., sets the company up to challenge Vail Resorts, which last year purchased Canada's Whistler Blackcomb and owns 14 total ski areas.

The purchase price was not disclosed in the Deer Valley deal that is expected to be finalized before ski season. Deer Valley had been owned by the Stern family since it opened in 1981.

Bob Wheaton, the longtime general manager of Deer Valley, called it a great opportunity to join forces with other world-class resorts while maintaining local decision-making power at the resort in Park City. He said the resort will remain the same, including a ban on snowboarding.

Being part of a larger coalition of resorts will help get better deals on purchases of everything from snow cats and chairlifts to lettuce and tooth pics easier, Wheaton said. He said the new company has also discussed different joint ski passes options but that nothing has been decided.

Vail Resorts offers the popular Epic Pass, which allows skiers to buy one pass to ski multiple times at its different resorts.

"The partnership with three other resorts will unlock some doors as far as future possibilities and different products," Wheaton said. "What those are, I don't know yet."

The collection of 13 resorts now owned by the new company doesn't include four Colorado resorts owned by Aspen Skiing Co. — Snowmass, Aspen Mountain, Aspen Highlands and Buttermilk — even though that company is owned by Henry Crown and Company, which forms part of this new joint venture, said Lis de Roziere, of the company Intrawest.

 

[DoryBreaux]

I love how they couldnt even figure out a name for themselves before they started buying resorts

 

[Pat AKA mustski]

It will be most interesting to watch it all unfold!

 

[New2]

Big news... and I agree that it'll be interesting to watch further developments!

Does anyone know if some or all of the underlying real estate is included in this deal? Or is it just operating rights and a long-term lease? The comments about accelerating the Mayflower development makes it sound like the buyers some sort of interest in the sellable real estate. But most of the land holdings are in another company's name that Deer Valley leases from, as I recall... Royal Street? Something like that. And that company owns the Guardsman Pass land that would be used for a Brighton-Park City interconnect.

Speaking of Brighton, @Muleski has mentioned the possibility of this new entity going after one or more ex-CNL-now-Och-Ziff properties, which include Brighton. But it seems to me that if they were seriously looking at Brighton, they would've acquired Solitude along with Deer Valley. So I'd tend to cross Brighton off of the potential shopping list for the new KSL/Aspen entity.

 

[Kneale Brownson]

Doesn't Boyne have management rights to Brighton as part of their deal with CNL?

 

[Muleski]

Doesn't Boyne have management rights to Brighton as part of their deal with CNL?

Yes.

CNL is a REIT operator. Their Lifestyles REIT, which sold all of the ski properties to Och-Ziff, a huge hedge fund manager, owned the hard assets. They entered into long term leases with operators, many of whom had sold the properties to CNL. Those leases are now held by Och-Ziff, and were evidently part of the challenge that CNL had in liquidating the portfolio.

The leases are triple net leases that have decades to run. So anybody contemplating acquiring one of those properties has to factor in the leases. Either keep the operator in place, and work together, or try to buy them out of the lease. The leases obviously vary in value. Lots of speculation that a solid operator like Boyne will eventually buy back "their" properties. They are in a more competitive position, should they want to. And of course they would need financial partners.

My hunch is that KSL/HCC would only be interested in cherry picking a couple. I suspect Vail might, and at some point Boyne will. That is a very "unique" group of resorts.

My guess is that Brighton would not fit with this group, nor did Solitude.

My understanding is that they are buying everything at DV. They are not looking to run ski areas alone, unlike Vail seems to be.

 

[Jed Peters]

My understanding is that they are buying everything at DV. They are not looking to run ski areas alone, unlike Vail seems to be.

See also: Mayflower development.

 

[Carl Kuck]

Can you post it?

I deleted it, unfortunately, but it was (as much as I remember) word-for-word the same as what you posted. Standard press release, I guess...

 

[New2]

Funny, we just watched a cool documentary on Monopoly, was about how game started and world wide tournaments that happen every year. It also talked abotu the strategy of the game. This kinda reminds me of Monopoly where these players are buying up properties. Vail is buying the Browns, Purples, Lt. Blues and Magentas and KSL is buying the Reds, Oranges, Yellows and Greens. No one os bothering with Park Place and Boardwalk (Yellowstone Club) yet. In the end, you don't win at Monopoly with cheap properties.

Whistler-Blackcomb, Perisher, Stowe, and Canyons-Park City don't really strike me as "the cheap properties."

Do they gain more, or lose more by having snowboarding? Do they gain more by limiting the numbers on the hill, or lose? By "gain", I mean keeping high end clientele who treasure the place, will bring their friends, and who will spend for the experience. Not every skier is seeking "deals." By "lose" I mean alienating those same people.

My guess is no change to either. And I would not be looking for any price cuts.

Maybe. But everyone else in the Wasatch has lowered prices substantially. This year, a full unrestricted adult season pass at DV ($2295) is more than twice the price of any others (Alta, Snowbird, and Solitude are each charging $999, the next closest). And there's no lower-priced holiday-restricted alternative. True, not everyone's seeking "deals"... but I suspect that being this far out of line with the rest of the market means they're leaving money on the table right now.

Additionally, Deer Valley faces a looming demographic crisis that might be bigger than any of its competitors. The median age on the slopes might already be somewhere in the sixties (if not, it's high fifties and heading that way). And home ownership on the mountain, from what I've seen, also seems to skew pretty old. Policies like banning snowboarding and pricing out anyone who works for a living are contributing to this problem, but at the same time are seen as significant worth by many of the current customers. But as the pace of retirements and retiree wealth contracts in the coming years, they'll face softening demand as the lower numbers of wealthy retirees are increasingly reluctant to buy into a spot perceived as elderly/unfriendly to their or their loved ones' lifestyles.

So far, I think Deer Valley's threaded this needle remarkably well, maintaining a high-value differentiated product that can convince enough people to spend enough money to work. And it really is a pretty phenomenal ski area and real estate development. But the more I think about this, the more I think KSL/HCC has their work cut out for them, and the Sterns are looking pretty smart getting out right at the top of the value curve.

 

[Lorenzzo]

The following is based on an article in today's Park Record, not in the Fake News section, as well as input from individuals in the know at DV I happened upon this past week.

It has been confirmed by Bob Wheaton, the DV GM, the sale includes ownership in both the Mayflower development and the current parking lots at the base. This is likely an important factor affecting things like daily skier caps, reciprocal passes, global passes and possible snowboarding.

The math shows a bottom line from development that dwarfs cap increase revenue. It's hard to make predictions on what sort of marginal bottom line effect might result from reciprocal or global passes but the development potential at least runs counter to those forces, assuming the target real estate market segment is consistent with what exists presently and also assuming the owners will be risk averse as to killing the golden goose in terms of real estate bottom line. The current target segment thrives on high end, daily caps and exclusivity which also makes it unlikely boarding will be permitted any time soon.

As to timing, the parking lots have development approvals from the beginning of DV but to process and achieve full entitlements you're probably looking at maybe 5 years. Also, Wheaton says it will follow Mayflower which has an extended build-out...at least 7 years and probably well more. Many here, including me, view the land ownership as a form of insurance that the DV skiing experience will not degrade significantly during the projectable future.

 

[Tricia]

... land ownership as a form of insurance that the DV skiing experience will not degrade significantly during the projectable future.

That would be my assumption with this particular group of investors.
These investors are skiers, not people who happen to ski.