Who’s buying Jay Peak Resort, and when? That’s the question that has been buzzing around northern Vermont ever since Jay Peak and its sister resort, Burke Mountain Resort, were placed in receivership following allegations of fraud and misuse of EB-5 funds by former owner Ariel Quiros.
After an initial announcement this winter, the buzz heated up this week as Michael Goldberg, the court-appointed receiver, wrote in a filing on August 10 that Jay Peak was close to being put up for sale.
“Receiver has spent significant time preparing the Jay Peak Resort to be marketed for sale,” he wrote. “To that end, the transfer of all resort related properties (i.e. the Jay Peak Mountain) by Ariel Quiros has been completed and the Receiver’s attorneys have almost completed all title work. The Receiver has negotiated an agreement with a preeminent banker who specializes in the sale of ski resorts to represent the Receiver in connection with marketing the Jay Peak Resort. The Receiver expects to file a motion approving this agreement within the next week. It is expected that the sales process will take between six to ten months to identify a purchaser and close a transaction.”
There’s a lot to unpack there. As Steve Wright, the general manager and former marketing manager who took over running the resort in 2016 following the ouster of his former boss, Bill Stenger, notes: “We’re in good shape now, we’re in the ninth inning of building the financial and marketing books. Our financials are the best we’ve ever seen and employee morale is high.” Wright, who has been at the resort for 15 years, adds: “We’ve already had a number of inquiries but I expect it will be about a year before all the offers are in, the due diligence is done and a sale goes through.”
In the last three years, Jay Peak has completed a number of the projects outlined in its original EB-5 filings. The cottages around the resort’s Stateside area have been completed, and a 15,000-square foot Clips & Reels recreation and entertainment center built, complete with a climbing wall. In an effort to attract soccer and lacrosse tournaments, two outdoor recreation fields were also built, replicating a model that worked well for Jay’s NHL-sized Ice Haus skating arena, which has attracted numerous ice hockey tournaments to the resort. “Those are great events for us as families come and stay all week,” noted Jay Peak’s director of communications, JJ Tolland. Many of those projects were funded by the $19.7 million Jay Peak received in the EB-5 settlement.
Goldberg’s statement also noted that while the new hotel at Burke was not yet profitable, “This summer has seen record bookings for the Burke Hotel and it is becoming apparent that the Burke Hotel is actually an all-season hotel.” That was echoed by Burke Mountain Resort’s Jessica Sechler. “We’ve had our busiest weekend ever this summer, thanks to mountain biking,” she said.
Goldberg is optimistic that the Burke Hotel’s performance will continue to improve next year and that it can operate close to breakeven or even become profitable. However, he added: “Receiver does not plan to market the Burke Hotel at this time because it has yet to create the required jobs for all investors to meet their EB-5 requirements.”
Under the federal EB-5 investment-for-visa program (which Jay Peak and Burke used to raise funds), for every $500,000 in investment by a foreigner, a project must create at least 10 jobs for a visa to come up for approval. Those jobs have been critical to the Northeast Kingdom, one of most rural regions of Vermont and one that has historically had the highest unemployment.
The good news, Goldberg shared is that he “believes that enough jobs have been created for all investors in Jay Peak Phases I – VI to meet the requirements under the Federal EB-5 program.” That means investors in those projects could still get their visas.
So who will buy Jay Peak? “Jay Peak is more unique because of the way our balance sheet is constructed,” says Wright. “We are not as focused on lift ticket sales and we rely as much on lodging and real estate. We’ve done that consciously to protect ourselves from the vagaries of weather.” It’s a move that counters the trend of divesting in real estate and relying on season pass sales that has swept the ski resort industry, led in part by Vail Resorts.
“Because of our real estate, water park and sports centers, we’re being looked at as much by hospitality and outdoor recreation companies as we are by ski resort operators,” noted Wright. In the past, Jay Peak’s marketing efforts have touted its expert terrain. Campaigns such as the 2013 “Raise ‘em Jay” featured a woman knitting a baby cap that featured a skull and crossbones, and the text “Nobody grows up soft on rugged terrain.” However, recent marketing has highlighted kids and grandmothers, often using animated cartoons and focusing on inclusivity.
“We’re as much about the new skier, or the some-time skier who may come for the water park and ski one day, or play hockey or ice skate. We’ve intentionally kept our lift tickets low,” says Wright, noting that a day ticket will go for $89 this fall. That’s a sharp contrast to the three-figure prices at many other ticket windows around the state.
“The consolidation and rise of the multi-resort season pass has made skiing cheaper for the avid skier, but with day ticket prices soaring, it’s not benefited the newcomer so much,” notes Wright.
So will it be Vail Resorts (recent buyer of Stowe and Okemo), Alterra (which scooped up Stratton, Vt. And Mt. Tremblant in Quebec) or possibly something completely different, say a Disney?
Let the bids roll in.
All photos courtesy Jay Peak Resort.