New England Hermitage Club, VT, in the news.

[LKLA]

I’ve recently heard rumors that the Adams Farm has gone bankrupt due to the fact that they went in on some real estate purchases with Jim Barnes and either co-signed or guaranteed loans. Can anyone confirm this? It sounds straight up nuts. If true this is verging on Bernie Madoff territory, no?

Give credit to where credit is due! Bernie managed to scam upwards of $60 billion. Jim Barnes has barely managed a couple of hundred million.

 

[K2 Rat]

I’ve recently heard rumors that the Adams Farm has gone bankrupt due to the fact that they went in on some real estate purchases with Jim Barnes and either co-signed or guaranteed loans. Can anyone confirm this? It sounds straight up nuts. If true this is verging on Bernie Madoff territory, no?

All I heard was that Adam's Farm was going to shut down (again) most of their activities like putting zoo, pony rides etc. But were going to try to have sleigh rides this winter and would keep their butcher shop still going. So, if this is true, does not sounds like bankruptcy. But more like lack of business. But I can't confirm what I heard is true anyway.

 

[LiquidFeet]

Report that the Hermitage may not be able to open for Christmas this season.
https://www.reformer.com/stories/holiday-reopening-unlikely-for-hermitage-club,553245

 

[K2 Rat]

Report that the Hermitage may not be able to open for Christmas this season.
https://www.reformer.com/stories/holiday-reopening-unlikely-for-hermitage-club,553245

yup, i am hearing a likely target date to spin lifts is 2/1/19. They hope to have the clubhouse open for dining starting over Christmas holidays. Feb opening does not really help many people. They got shut down for an extension of the building permit for the hotel. The new president has been saying that the future of the club depends on building a hotel.

"All the parties of interest in the Hermitage Club realize that the hotel is an important part of our economic future because the business model of running any kind of resort or club on a four or five month winter season is simply not sustainable," he told the DRB during an Oct. 1 hearing. "And proof of that is where the Hermitage is, which should be in better shape than other resorts because of our membership base and the income associated with that. In spite of that, it's fallen under financial stress because of the huge amount of infrastructure associated with trying to run a ski resort."

https://www.reformer.com/stories/hotel-permit-extension-bid-denied-to-hermitage-club,553690

 

[LegacyGT]

"All the parties of interest in the Hermitage Club realize that the hotel is an important part of our economic future because the business model of running any kind of resort or club on a four or five month winter season is simply not sustainable," he told the DRB during an Oct. 1 hearing. "And proof of that is where the Hermitage is, which should be in better shape than other resorts because of our membership base and the income associated with that. In spite of that, it's fallen under financial stress because of the huge amount of infrastructure associated with trying to run a ski resort."

This is just plain scary. The challenges are real. But if they believe that the club will only be sustainable with a hotel, then they should let someone else run the club or just shut the thing down for good. First of all, this is a private club so the idea of focusing on a hotel for guests is a little off. How do you let hotel guests distract you when you haven't figured out how you're going to serve your members?

Then there's the fact that The Hermitage already is a hotel. OK fine, it's an inn and it's small but it has rooms. Additionally, the Club also spent the last several years buying up nearby properties including, guess what?, hotels. Hotel rooms are neither the problem nor the solution in this enterprise.

Here's where it gets worse. The above quote has contradictions built right into it. Yes, it is hard to run a seasonal resort. And yes there is stress associated with the infrastructure. So, why would you ever want to add more infrastructure? Does the Club need another piece of infrastructure that would be underutilized 8 months a year? That's exactly what the hotel would be. This management team should explain exactly how many days they expect weddings to fill the hotel between April and November. This is nonsense.

I've posted here before that members should be demanding that the new management team make a clear business case for running this club in a sustainable way and they have not done so. Even worse: with the looming probability that they will not be able to get the Club up and running for this ski season, management has spent the past few months focusing on a hotel. This has been the trouble with the Club from the start. They have never focused on current membership and existing operations. It has always been about future members and developing new operations.

In this case, by withholding the permit, government is saving The Hermitage from itself.

 

[LKLA]

This is just plain scary. The challenges are real. But if they believe that the club will only be sustainable with a hotel, then they should let someone else run the club or just shut the thing down for good. First of all, this is a private club so the idea of focusing on a hotel for guests is a little off. How do you let hotel guests distract you when you haven't figured out how you're going to serve your members?

Then there's the fact that The Hermitage already is a hotel. OK fine, it's an inn and it's small but it has rooms. Additionally, the Club also spent the last several years buying up nearby properties including, guess what?, hotels. Hotel rooms are neither the problem nor the solution in this enterprise.

Here's where it gets worse. The above quote has contradictions built right into it. Yes, it is hard to run a seasonal resort. And yes there is stress associated with the infrastructure. So, why would you ever want to add more infrastructure? Does the Club need another piece of infrastructure that would be underutilized 8 months a year? That's exactly what the hotel would be. This management team should explain exactly how many days they expect weddings to fill the hotel between April and November. This is nonsense.

I've posted here before that members should be demanding that the new management team make a clear business case for running this club in a sustainable way and they have not done so. Even worse: with the looming probability that they will not be able to get the Club up and running for this ski season, management has spent the past few months focusing on a hotel. This has been the trouble with the Club from the start. They have never focused on current membership and existing operations. It has always been about future members and developing new operations.

In this case, by withholding the permit, government is saving The Hermitage from itself.

In the end this was doomed from day one and if you did not see that or thought otherwise and ponied up some money to become a member then you have no where to go. So, what most members are doing is trying to find a way out and that way out for many of them seems to be doubling down. They don't want to walk away and admit to their mistake, they don't want to write off their membership, they don't have anyone bidding to buy them out...so there is little else for them to do then try all these batshit crazy things and hope that they work. And of course the management and the folks working there are going to want to try things because it keeps them employed. As to where the money will come from to try and keep the club open and prolong the agony is anyone's guess (members will have to invest more).

 

[Erik Timmerman]

In the end this was doomed from day one and if you did not see that or though otherwise and ponied up some money to become a member then you have no where to go. So, what most members are doing is trying to find a way out and that way out for many of them seems to be doubling down. They don't want to walk away and admit to their mistake, they don't want to write off their membership, they don't have anyone bidding to buy them out...so there is little else for them to do then try all these batshit crazy things and hope that they work. And of course the management and the folks working there are going to want to try things because it keeps them employed. As to where the money will come from to try and keep the club open and prolong the agony is anyone's guess (members will have to invest more).

It seems to me that they can run the resort, they just have to be clear about what it will actually cost to do it, and charge the members that much. It's either that or walk away from the properties they already have.

 

[Average Joe]

The current management reminds me of a broke casino gambler. Instead of calling it a night, they've gone to the cashier with a credit card and bought more chips, because the next seat at the roulette wheel is sure to pay.......
Opening in February? It defies imagination. They must be smoking some powerful medicine.

 

[LKLA]

It seems to me that they can run the resort, they just have to be clear about what it will actually cost to do it, and charge the members that much. It's either that or walk away from the properties they already have.

They obviously can NOT run the resort! And they don't own/have those properties. They are all mortgaged perhaps beyond what they are worth.
Charging the members more

 

[K2 Rat]

It seems to me that they can run the resort, they just have to be clear about what it will actually cost to do it, and charge the members that much. It's either that or walk away from the properties they already have.

they have said that it takes $10mm a year to run the ski area. So, the ideal membership number is 1000 paying 10 grand a year. The problem is that they only had about 400 members so they were short 6mm. The idea behind the model, I think, was to have real estate sales subsidize the ski area. But those got hung up with permits and maybe other things. With 400 members, they would have to pay 25k each and that is not going to happen. I don't see them getting 1000 members ever, especially now, so I don't think the biz model made sense from the beginning.

 

[LegacyGT]

they have said that it takes $10mm a year to run the ski area. So, the ideal membership number is 1000 paying 10 grand a year. The problem is that they only had about 400 members so they were short 6mm.

There you have it. Not sure where the numbers come from but this is the idea. I think they were talking about raising annual dues to $15K but that still doesn't get them where they need to be. This is a conversation that needs to take place. And not just with membership. With the public as well. This Club promised a lot to the community and was given a lot in return. But the current situation is more of a communal burden than an asset.

If membership dues cover less than half of operating expenses, then this is a real problem. And a $6 million gap only grows under their recent proposal because a few summer weddings aren't going to cover the expenses of running a hotel that is vacant most of the summer.

Count me among the people who were skeptical of the Club from the start. Not because it couldn't succeed. There probably is a formula under which it works. But this formula hasn't been discovered yet. And sadly, the new management team seems more interested in resurrecting the previous (failed) formula rather than finding a new one that is sustainable.

 

[Wilhelmson]

There must be some nice tax benefits.

Ditch the hotel idea and sell any satellite properties that aren't way under water. Then swallow the pill of opening up to the public to shore up the balance sheet until a future time when they can go private again.

 

[LKLA]

There must be some nice tax benefits.

Ditch the hotel idea and sell any satellite properties that aren't way under water. Then swallow the pill of opening up to the public to shore up the balance sheet until a future time when they can go private again.

There is little if any market for those properties.

Hermitage is not set-up to be run as a "public" mountain. They would need to make some significant changes to the infrastructure.

Go private again!?! The four most dangerous words in investing of any kind" This time it's different."

 

[LegacyGT]

Then swallow the pill of opening up to the public to shore up the balance sheet until a future time when they can go private again.

They cannot open to the public. For a time Mount Snow owned and operated Haystack. In the 2000s, it was sold with the requirement that it could only be operated as a private club. I don't know if this is in the deed or enforced some other way. In any case, opening to the public is not an option. There may be an option for them to push the limits of what constitutes a private club. Could they offer some type of membership with annual dues closer in price to season passes at another resort? Could membership expand to 2,000? I'm not sure what is permissible. Of course there's also the question of how exclusive they want/need to remain. Expanding membership considerably with a lower cost of entry would alter the nature of the club.

 

[x10003q]

Nobody saw this happening.

 

[Wilhelmson]

They cannot open to the public. For a time Mount Snow owned and operated Haystack. In the 2000s, it was sold with the requirement that it could only be operated as a private club. I don't know if this is in the deed or enforced some other way. In any case, opening to the public is not an option. There may be an option for them to push the limits of what constitutes a private club. Could they offer some type of membership with annual dues closer in price to season passes at another resort? Could membership expand to 2,000? I'm not sure what is permissible. Of course there's also the question of how exclusive they want/need to remain. Expanding membership considerably with a lower cost of entry would alter the nature of the club.

all

Or something along those lines. 100 people a day at $100 each would put a dent in the shortfall after lodging, food, etc. and help monetize the existing infrastructure. The previously mentioned race program could be a draw for affluent but not super rich families. Doubt the deed makes it perpetually private and even Mt Snow would be under pressure to keep it viable for the sake of the region.

Either way it doesn't sound like there's much interest in any major changes. Probably so many intertwined deals that it would be impossible to unravel anyways. Easier to push the lenders for forgiveness.

 

[LKLA]

all

Or something along those lines. 100 people a day at $100 each would put a dent in the shortfall after lodging, food, etc. and help monetize the existing infrastructure. The previously mentioned race program could be a draw for affluent but not super rich families. Doubt the deed makes it perpetually private and even Mt Snow would be under pressure to keep it viable for the sake of the region.

Either way it doesn't sound like there's much interest in any major changes. Probably so many intertwined deals that it would be impossible to unravel anyways. Easier to push the lenders for forgiveness.

You might be able to get 100 people on Sat/Sun, but 100 people a day Mon-Fri is unrealistic at best. $10,000 here and there is not going to help when we are talking about millions of dollars in shortfall. Not to mention that by bringing non-members in you are basically diluting the premise of the whole thing - why pay all that money as a member? Unless the membership fee was a bond, which I don't believe it was, then members are likely not to ever see that money again and might as well cut their losses and stop paying annual dues, which will only go up. Unfortunately for some. they also invested in real estate and in some cases directly into the club, so those folks might think that pouring some more good money after bad money will change things. Doubtful.

Neither Mt Snow nor Stratton likely much care either way. The Hermitage Club is a tiny, tiny part of the area/region.

 

[Wilhelmson]

I wasn't trying to be Socratic but lol if they can't get 100 skiers a day.

 

[LKLA]

I wasn't trying to be Socratic but lol if they can't get 100 skiers a day.

Ha! I am an honestly not sure they get 100 people per day Mon - Fri. Why would someone not ski at Mt Snow right down the road - or at Stratton - as neither is usually crowded mid-week. Perhaps on weekends when avoiding crowds might be attractive to some people they could get 100 people.

 

[LKLA]

In a decision issued late last week, a judge denied Hermitage's request to increase off season maintenance in order to reopen the private ski area. Among the requests included facilitating the annual lift inspections and increasing snowmaking maintenance.

The receiver is currently funded "to preserve the equipment from deterioration," putting the 2018-19 ski season in jeopardy.

Hermitage has been attempting to secure $25 to $30 million in financing to pull the private club out of receivership. Berkshire Bank foreclosed on the club in February, resulting in a receiver being appointed this spring.