Vail Buys Stowe!
For weeks, the signs have been there: fleet cars with Colorado plates cruising the Mountain Road, helicopters hovering over Spruce Peak, rumors of Vail Resort’s senior management locked in closed door sessions with the head honchos from Stowe Mountain Resort and AIG.
Today, at 8:00 am Vail Resorts announced it had entered an agreement to acquire Stowe Mountain Resort from Mt. Mansfield Company, Inc. (MMC), a wholly owned subsidiary of American International Group, Inc. (AIG), for a purchase price of $50 million, subject to certain adjustments. Stowe Mountain Resort will be Vail Resorts’ first mountain resort on the East Coast and complements the company’s network of 10 world-class mountain resorts and three urban ski areas.
Over the past few weeks, stock prices for Vail continued to soar, rising to 180 as of close on Friday from 168 on January 24 when VT Ski + Ride first broke the rumors of a potential sale (see 8 Reasons Why Vail Would Buy Stowe) Of particular interest were two SEC filings made last week, Amended Statements of Beneficial Ownership that must be made when a person or organization owns more than 5%. The first was by the Vanguard Group. The second was by Abigail Johnson, who owns a home at Stowe’s Spruce Peak development and also happens to be the CEO of Fidelity Investments.
The sticking points that have caused the deal to be dragged out, sources close to the negotiations say, were whether Vail would get the golden egg: the Spruce Peak development, hotel and real estate. For AIG, this has been a profitable venture. And it didn’t want to give it up.
So Vail went ahead and will simply be buying the ski resort operations, lifts, leased and owned land the trails are on and of the assets related to the mountain operations of the resort. These including base area skier services (food and beverage, retail and rental, lift ticket offices and ski and snowboard school facilities) at Mount Mansfield and Spruce Peak, including the new Spruce Peak Adventure center for kids and the Stowe Rocks climbing gyms.
Other facilities such as the Stowe Mountain Lodge, Stowe Mountain Club, Stowe Country Club and certain real estate owned and held for potential future development around theToll House lift will be retained by MMC.
Operations at the resort for the remainder of the 2016-17 ski season will continue in the ordinary course as will future summer and winter seasonal hiring. Vail Resorts will be retaining the vast majority of the resort’s year-round staff.
Take our poll below: What’s your opinion on Vail buying Stowe? Good or bad:
This acquisition brings together Vail Resorts, the world’s leading mountain resort operator, with AIG Global Real Estate (AIGGRE), a real estate developer and subsidiary of the insurance giant, AIG International which has been involved with Stowe since 1943 when its chairman Cornelius V. Starr and his wife visited Stowe. According to a Burlington Free Press article by historian Brian Linder, the couple were bummed out at having to wait in long lift lines for the single chair and offered to put up 51 percent of the funds for another lift in 1943. Starr owned the Mt. Mansfield ski company until 1970 when he sold it to AIG.
Vail Resorts plans to integrate Stowe Mountain Resort into its Epic Pass and other season pass products for the 2017-18 winter season, subject to the acquisition closing. With the Epic Pass, Vermont skiers and snowboarders will have unlimited access locally at Stowe at an attractive price (last year’s early season Epic Pass price was $809) as well as at Vail, Beaver Creek, Breckenridge and Keystone in Colorado; Park City in Utah; Heavenly, Northstar and Kirkwood in Tahoe; and Whistler Blackcomb in British Columbia, Canada.
“We’re thrilled to add Stowe Mountain Resort to our family of world-class mountain resorts. With the investments in both mountain infrastructure and base area facilities that AIG has made over the years, Stowe Mountain Resort has become the premier, high-end resort for East Coast skiers and snowboarders. We look forward to working with AIG to continue enhancing the guest experience and to ensure the resort’s long-term success,” said Rob Katz, chairman and chief executive officer of Vail Resorts.
Douglas Tymins, president and chief executive officer of AIG Global Real Estate, said, “Under Vail Resorts’ management, Stowe’s reputation as a premier ski destination with a commitment to excellent service will continue to grow. AIGGRE is looking forward to combining Vail Resorts’ tremendous mountain operations capabilities with our continued commitment to the development of the Spruce Peak community.”
Stowe Mountain Resort’s newest facilities and improvements include the Spruce Peak Adventure Center, the new Meadows Quad on Spruce Peak, Evolution Stowe’s RFID tickets, passes and gates and the new Shops at Spruce Peak. Spruce Peak also has new high-speed lifts, new base facilities and gourmet restaurants. MMC will retain ownership of the renowned Stowe Mountain Lodge at Stowe Mountain Resort, a 312-room hotel and spa that has already been recognized as one of the greenest and most luxurious mountainside hotels in the world, and additional slopeside real estate opportunities.
This transaction is subject to Vermont administrative review. At closing, the purchase price will be adjusted for certain agreed upon terms, including a reduction (or increase) in the price by the amount that the resort’s EBITDA exceeds capital expenditures for the period from Nov. 1, 2016, through closing. Stowe Mountain Resort is expected to generate incremental annual EBITDA in excess of $5 million in Vail Resorts’ fiscal year ending July 31, 2018.
About Vail Resorts, Inc. (NYSE: MTN)
Vail Resorts, Inc., through its subsidiaries, is the leading global mountain resort operator. Vail Resorts’ subsidiaries operate ten world-class mountain resorts and three urban ski areas, including Vail, Beaver Creek, Breckenridge and Keystone in Colorado; Park City in Utah; Heavenly, Northstar and Kirkwood in the Lake Tahoe area of California and Nevada; Whistler Blackcomb in British Columbia, Canada; Perisher in Australia; Wilmot Mountain in Wisconsin; Afton Alps in Minnesota and Mt. Brighton in Michigan. Vail Resorts owns and/or manages a collection of casually elegant hotels under the RockResorts brand, as well as the Grand Teton Lodge Company in Jackson Hole, Wyoming. Vail Resorts Development Company is the real estate planning and development subsidiary of Vail Resorts, Inc. Vail Resorts is a publicly held company traded on the New York Stock Exchange (NYSE: MTN). The Vail Resorts company website is www.vailresorts.com and consumer website is www.snow.com.
Welcome the Epic Pass to VT! This is a game changer for the East Coast and the eastern skier!! VR sets the standard for mountain operations, this deal is a win win.
Never heard a good thing about Vail resorts from any of their employees out west. This might be a cheap way to ski/ride out west, but sucks for all of Stowe’s employees
Glad it’s Stowe and not one of the good east coast resorts. All vail is gonna do is jack up the price so only the super rich will go there.
The corporate heads of the ski industry now have Vermont by the balls, and their eyes see only $money$. So long national forests. Hello oceans of condos.
If you read the story carefully you will see that AIG (which is an even larger corporate entity than Vail Resorts) is retaining the real estate and Spruce Peak development.
Yes, AIG is a larger cooperation then Vail Resorts, but AIG is still part of the Stowe community and has been since the 40’s.
Also, what’s been missing from all of VT Ski and Ride’s commentary on the acquisition, is the impact on the town and the skiing. The ski industry loves this stuff as it increases revenue, but the increased crowds and revenue don’t make for better skiing.
I’d love to be optimistic, but I don’t see this as a good thing for the skiing in Vermont.
Good comments David. We won’t know the impact until we hear more from Vail about what its plans are. We can expect the skier/rider visits to increase as Vail has immense marketing power. The question will remain how the mountain (lifts and parking) and the town (rooms and traffic) will be able to keep up.
So western powder skiers will venture to eastern conditions with their Epic passes? Maybe instead more Stowe skiers will head out west.
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As a part-time Stowe resident and long-time Stowe skier, I am cautiously optimistic that this will be good for the mountain and the town. Traffic is already bad and perhaps more skier visits will force more creative solutions – like a really effective shuttle service and satellite lots. It would be nice to leave the car in the driveway and take an electric bus up Mountain Road! It will also be great to be able to buy an EPIC pass since the current seasons passes are nowhere near affordable. The main worry is more crowded slopes and that is not easy to solve as Stowe is really not that big an area and Vail likes to put in more high speed lifts. I actually like lifelines as they keep people off the slopes!! Perhaps they will have the resources and patience to get approval to cut some new trails??
Park city simply cannot keep up with the demand. I waited for 45 minutes to load the orange bubble lift which takes you up from the village. The gondola line stretched around the entire Village circle. For anybody that hasn’t been here, thatis a considerable wait… As a friend of mine stated recently ‘When promotion and marketing exceed capacity, function and design’. Good luck Stowe. I think you need it….
I am a vail resident. I have seen good things from the professional management. Yes change is scary but I typically ski all of vail big resorts every year. I love more options and think it is a good thing!
Phil
ever seen out cold the movie? guess not dipshits
and what will be the next target , they will not want to have just one mountain on the Epic Pass
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