Is the Magic (VT) model good for other ski areas?

Snowcountry wrote

Magic Mountain, in Londonderry, Vt., recently “sold” its 333th ownership share. That was the, well, “magic number” needed to begin a new skier-based ownership entity.

The Magic Partnership LLC. shares were sold for $3,000 each, raising just under $1 million. Most of the capital will be used to improve snowmaking capacity.  

More:

http://www.snocountry.com/index.php/snonews/ski-resort-news/snonews-featured-stories/entry/magical-londonderry-vermonts-magic-mountain-sells-out-ownership-shares.html

As you can see, Magic sold all their shares and raised a million. I'm curious about the coop model and how people think it works for Mad River or Hickory, how it will work for Magic, and if it could work for other smaller ski areas.

What are the pros and cons?

What do you think?

Oh boy. This one made me some enemies on another forum.

$3000 T shirts.

I absolutely love the concept of a skimunity coming together to preserve their mountain. As we move thru 2012 and beyond, I predict things like Crowd Funding (where social media meets investing) and Cooperatives will become the norm.

Benny, you're growing on me.

Benny Profane wrote

Oh boy. This one made me some enemies on another forum.

$3000 T shirts.

Save Magic Mtn, VT!

I think that people need to look at these sort of "deals" and decide whether they are making an investment (i.e. dedicating hard earned $$ for which they expect to make a good return as with mutual funds), buying a membership or just making a foolish "feel good investment". The latter is what happens when one doesn't analyze the investment carefully and objectively and gets caught up n the hype. In this case, it was just a few thousand dollars. A few years ago, a number of North Creek area people bought into the Copperfield Inn at a minimum of $30K. The majority of these "investors" got caught up in the feel good hype and may never see their money again or, if they do get their money back, it probably will not yield the return promised.
I think that Magic Mtn is a cool place. I skied there as a kid and it would be wonderful to really see them make a go of it. Unfortunately, the reality is that ski areas are very expensive businesses to run and $1M just won't go that far. the fate of Magic has probably already been determined and may just be delayed. It will require a lot more money to make it good enough to compete with nearby ski areas and run profitably.

First, Hickory is not a Co-op.  It is a corporation, with shareholders, just like any other publicly held company.  At this time, there aren't any more shares available to the public.  We looked into changing to a Co-op, but NY laws would not allow for a ski area to be a Co-op.  I don't recall the details, but NY laws.....need I say more.  We also looked into operating as a non-profit, but again, no go in New York.  

Co-ops and Non Profits can be restrictive and complicated at times.

We have been studying various models and believe selling membership shares into each mountain to be the best way to proceed.

If "membership" doesn't include a season pass or heavily discounted pass, I really don't understand the logic of writing that check.

The original Killington investors, (we're going back into the stone age here) got a lifetime (and transferable once) season pass for their money. That's what I'm talkin' about.

Membership will include discounts on passes, lift tickets and other services, as well as parking, their voice heard thru an elected member's advisory board, an end of season party, priority on peak days (to ensure the riding experience is preserved), reciprocation at other mountain playgrounds (sorta like the Epic pass) and other benefits.

Any idea how much the original Killington Investors put up?

Benny Profane wrote

If "membership" doesn't include a season pass or heavily discounted pass, I really don't understand the logic of writing that check.

The original Killington investors, (we're going back into the stone age here) got a lifetime (and transferable once) season pass for their money. That's what I'm talkin' about.

soulskier wrote

Membership will include discounts on passes, lift tickets and other services, as well as parking, their voice heard thru an elected member's advisory board, an end of season party, priority on peak days (to ensure the riding experience is preserved), reciprocation at other mountain playgrounds (sorta like the Epic pass) and other benefits.

Any idea how much the original Killington Investors put up?

Benny Profane wrote

If "membership" doesn't include a season pass or heavily discounted pass, I really don't understand the logic of writing that check.

The original Killington investors, (we're going back into the stone age here) got a lifetime (and transferable once) season pass for their money. That's what I'm talkin' about.

Don't know. It was the fifties. Cars cost, like, 500 bucks. So, I doubt it was much.

Which membership are you describing? Magic? They charge for parking these days?

I'm describing our proposed membership for Mountain Rider's Alliance.

That's, uh, nice.

Don't you need a mountain first with lifts spinning before you start looking for "investors"?

Benny Profane wrote

That's, uh, nice.

Don't you need a mountain first with lifts spinning before you start looking for "investors"?

That is correct.

soulskier wrote

 priority on peak days (to ensure the riding experience is preserved)

Seems like that would deter more than a few patrons

skimore wrote

soulskier wrote

 priority on peak days (to ensure the riding experience is preserved)

Seems like that would deter more than a few patrons

We'd like to think those patrons would then chose to become a member. The idea behind this is to ensure that the ski experience isn't overtaken by mass crowds. This will be a good problem to have.

soulskier wrote

Benny Profane wrote

That's, uh, nice.

Don't you need a mountain first with lifts spinning before you start looking for "investors"?

That is correct.

Well, OK, why don't you get back to us when you get that all worked out.

You don't buy a coop share at a ski area as a financial investment but rather as a personal investment. Discounts will never balance out the price of a share even over the lifetime of a share. You don't buy in to save money or get discounts, you buy into a ski area coop because you want to preserve and protect and experience deeply important to you. Evaluating buying a share from the perspective of long term personal financial sense is completely illogical.

That said, you certainly should consider the business model, market, market share, and long term sustainability. It wouldn't make sense to purchase a coop share for a mountain that doesn't stand a chance. How do you make that determination? Lots of factors. Ultimately, that is a personal decision. But it still ain't about personal return on investment. Because it isn't an investment.

Well, if you're talking about the co-op biz model for ski areas, I can only think of three. MRG, the old Hickory, and now Magic.
 MRG has been successful from the start because it was a well established ski hill with good business, and the co-op was formed specifically to avoid the evil corporate monsters from buying it and destroying the "experience" you mention. I also argue that MRG is successful because an excellent corporate hill is right down the road (Sugarbush), that a dedicated "Ski It If You Can" MRG skier can run to early and late, and, well, this year, most of the season when they.......can't ski it when they can. Sugarbush also sends a lot of revenue over to MRG when the tourist or local wants a little more core experience than the big bad evil profit machine at Ellen. No snowboarding helps attract a niche market, too. All in all, a success, but very unique.
Hickory was a failure, and I'm not sure why. Probably killed by a much better equipped hill right down the road, and bad winters.
Magic? Sorry, jury still out. This winter had to hurt them, like everyone else. But, I can see more Magics in the future, as the ski industry continues to shrink and consolidate, and loyal customers decide to band together to save old times. I understand the emotion. You have to understand that we are heading into an economic stagnation and a demographic die-off that does not bode well for the ski biz. If snowboarding suddenly becomes uncool to 15 year olds, watch out below. Most people won't have the discretionary funds to keep memories alive. Which will be their parents memories at that point, anyway.

Benny Profane wrote

I also argue that MRG is successful because an excellent corporate hill is right down the road...

Being on the Green Mtn Spine doesn't hurt either.  What's the street value of an additional 150" of snow, annually?  A million?

I think in the short term River's point is the overriding factor. Mountains that have $X amount of stored up passion in a (monied) skiing fan base would have a shot at selling some shares.

Mad has got that, and for the other reasons that Benny points out, the deck seems stacked (relatively) for Mad River.

With regard to the long term trends in the ski biz ... who knows. I guess I should stock up on skis and skins. They can't take that away from me.

The whole "we limit ticket sales on peak days" thing has been tried by many mountains in the northeast, all of which have failed. I'm sure they thought having "limited ticket sales" would be a good problem to have, too, but they should have been more concerned about SELLING TICKETS, not limiting them.