It happened so gradually, most people hardly noticed the Colorado ski and resort corporations slowly buying up the premier properties in Tahoe. But this winter, with the back-to-back sales of Northstar-at-Tahoe to Vail Resorts and Squaw Valley to Denver-based KSL Capital Partners, the pattern is undeniable — Colorado corporations have come to Tahoe, quietly buying up the largest stakes in the highest-grossing ski resorts around the lake and staking their claim as the power players in the future of Tahoe skiing.
The faces behind the new owners of Tahoe’s most prestigious resorts and properties are a circle of Vail businessmen who cut their teeth at Vail Associates (the former name of Vail Resorts), and then emerged as some of the most ambitious ski and resort heavyweights in the nation. From Booth Creek Ski Holdings founder George Gillett to East West Partners’ Harry Frampton to Michael Shannon, the founder of new Squaw owner KSL Capital Partners — all are former executives of Vail Associates.
Combined, this class of Vail graduates has developed the largest chunk of privately held land in Truckee, built one of Tahoe’s largest ski villages, bought Tahoe’s only Olympic resort from its founding family, and taken over Heavenly Mountain Resort. Now, with Vail Resorts owning two of the top ski resorts in the Basin, Gillett’s Booth Creek still holding onto Sierra-at-Tahoe, and KSL’s ownership of Squaw Valley — the future of Lake Tahoe skiing is now, more than ever, a Colorado affair.
Coloradization
It started more than a decade ago when Colorado business tycoon George Gillett resuscitated himself from financial disaster partly by using his company, Booth Creek Ski Holdings, to buy Northstar-at-Tahoe and Sierra-at-Tahoe from timber, vinyl siding, and insulation company Fibreboard Corporation.
Booth Creek rose from the ashes of Gillett’s early 1990s financial meltdown, which culminated in a 1991 bankruptcy fueled by rising interest rates on junk bond financing.
‘I had to buy back my clothes. I had to buy back my dogs,’ Gillett, the former president and owner of Vail Associates, told Time Magazine in 1997 of his spectacular financial collapse.
By the mid-1990s, Gillett was flying high again. Truckee-based Booth Creek Ski Holdings soon became a major player in the ski industry and added resorts such as Grand Targhee in Wyoming, Waterville Valley, and Cranmore Mountain in New Hampshire.
Meanwhile, Gillett grew into one of the world’s most high-profile and rapacious businessmen. He bought one of the most famous soccer teams, Liverpool, an NHL team, a NASCAR team, meatpacking plants, and natural food companies.
In Tahoe, Gillett and another former Vail executive, Harry Frampton, teamed up to overhaul Northstar-at-Tahoe. Frampton’s East West Partners had arrived in Truckee in the mid-1990s, buying up the largest tracks of private land left within the town limits. Their mantra, ‘It’s not just about skiing anymore,’ might have made some locals cringe, but it was the Colorado developer’s blueprint for a building spree of golf course communities, large-lot mansions, clubhouses, and exclusive restaurants that soon changed the face of Truckee.
Frampton’s development firm and Gillett’s Northstar soon teamed up on one of the most ambitious development projects Tahoe ski resorts have ever seen. Beginning in 2004, the East West–built Village at Northstar, the Highlands, and the on-mountain Ritz-Carlton transformed Northstar into something more than a ski resort — a real estate, hotel, and commercial center.
As Gillett and Frampton were busy inking deals to transform Northstar, their former company, Vail Resorts, was busy buying into Tahoe skiing on the South Shore. Vail Resorts, the nation’s largest ski resort company, purchased Heavenly Mountain Resort from American Skiing Company in 2002.
As the booming real estate market began to flatten and then nosedive, the financial repercussions soon opened the door for Vail Resorts to buy into Tahoe’s North Shore.
The souring economy began to take its toll on Gillett, whose series of financial troubles over the last couple years began making headlines. The Colorado businessman was forced out of his ownership stake in the Liverpool soccer team and sued for $117 million by a hedge fund that had financed the deal. He had to unload his piece of NASCAR’s Richard Petty Motorsports after reportedly defaulting on over $90 million in loans, according to a recent New York Times article. It was then that Gillett began unloading ski resorts — Waterville Valley, Mount Cranmore, and Northstar.
Vail Resorts, which Gillett previously owned, jumped at the chance to purchase the resort this winter for $63 million, a paltry sum when compared with the sales of resorts like Steamboat Springs and Mammoth Mountain that both went for over $200 million. The discounted price may have reflected the fact that the resort’s operations were the only thing that changed hands, since the property at Northstar had already been sold off to CNL Lifestyle Properties.
Gillett’s colorful business career, with all the peaks and valleys of an EKG monitor, should come as no surprise to anyone who knows the man. In fact, he spelled out his penchant for business risk in a Time Magazine article that trumpeted his return to the top of the business and skiing world in 1997.
In explaining his ‘weakness for sometimes moving too fast and buying too much,’ he said: ‘I’ve lived my dreams, but then I blow them up.’
Kaye Ferry, who ran the Vail Chamber of Commerce for 19 years, knows Gillett’s history well.
‘I think that George has always had delusions of grandeur,’ Ferry said in a recent Moonshine Ink phone interview. ‘He thought he could play with the big dogs — but he always did it with other people’s money.’
Skiing into the future
Not long ago, Tahoe skiing was owned by an eclectic mix of individuals and businesses — pistachio farmers (Homewood’s Yurosek family), a head of an underwear company (BVD’s Nick Badami at Alpine Meadows), a pioneering ski family (the Cushings at Squaw Valley), a Japanese corporation (Heavenly), and a timber and manufacturing company (Fibreboard).
Those days are gone.
The emergence of Vail, KSL, and Booth Creek in Tahoe means that Sierra Nevada skiing has become part of the corporate skiing world — run by businesses whose sole purpose is to develop, optimize, and enhance resort properties across the nation.
‘The ski resort business … is no longer just a few people who want to drop out and run a ski resort. It is big business and as long as it is a big business, it will gobble up anything it can,’ said Ferry, who, in her 19 years heading the Vail Chamber of Commerce, saw corporate skiing spread from Vail across the nation. ‘For anyone to get into the ski business now, it takes a lot of money — we’re talking big dollars — big, humongous dollars.’
The changes will mean many things to many different people. Some will lament the death of family ownership and the emergence of corporate-run resorts, while others will cheer the infusion of ski capital by deep-pocketed and savvy ski conglomerates. The downside to corporate ownership of ski resorts is that large businesses like Vail Resorts are governed, first and foremost, by finances. Because corporations are bent on squeezing the most profit out of a resort operation as possible, considerations about what is best for the local community are often left as an afterthought, said Ferry.
The upside is that corporations like Vail Resorts are the foremost experts on making ski resorts operate efficiently.
‘No one has a better sense of progressive thought on how the ski industry should develop,’ said Ferry. ‘There’s no place that has a better history for developing the ski industry in a positive direction than here [Vail] … These guys get it. They know what you have to do to make a business run. That might not fit into the sleepy ski town … The ski industry is Wall Street now.’
Squaw Valley CEO Andy Wirth, a Colorado resident himself before moving to run Squaw Valley last year, outlined another way Tahoe skiing may change in the near future.
The issue has nothing to do with lifts, lodges, or grooming, but it could transform Tahoe skiing more than anything else. It has to do with how people get to the mountain.
American skiing, particularly in Tahoe, is an almost entirely car-dependent sport. But Wirth, working with his new bosses at KSL and fellow resort owners like Vail, is working on more airline connections to Reno-Tahoe International Airport and the possibility of passenger rail service to Tahoe.
The emergence of large, well-funded resort owners makes these goals more than talk. Vail and KSL — two large destination resort owners in the area — may actually have the clout and the capital to change the way skiers travel to the mountain.
Regular rail service to Tahoe resorts would change everything — resorts’ carbon footprint, holiday traffic, and lodging appeal, not to mention the entire look and feel of Tahoe skiing.
Wirth was well known in Steamboat Springs, Colo., for his work attracting air connections to the resort town, and with the connections he and Vail Resorts bring to the table, Wirth said he believed new air service could impact Tahoe in the 2011-12 winter season.
Glen Poulsen, a world-class skier whose father Wayne Poulsen co-founded the Squaw Valley ski resort with Alex Cushing, said that ‘any capital improvement at Squaw is a good thing as far as I am concerned.’
As for a destination resort corporation taking control of the ski resort, Poulsen said he is not worried about Squaw changing too much. ‘Squaw will not lose its culture and its character. With the type of terrain we have, the ski culture will stick here no matter what.’
At the same time, Poulsen noted that ‘capital investment could bring a different crowd in.’
While increased grooming and upgrades to the operations of the resort — KSL has already announced $50 million in investment at the mountain — may slowly transform Squaw Valley into more of a destination resort, ‘capital investment, for the health of the local economy, is a good thing,’ said Poulsen.
Vail’s Ferry summed up the impact that Vail Resorts will have on Tahoe by emphasizing that things will change. The area will be marketed heavily and effectively, the resorts will be run efficiently, and the area will attract more skiers.
‘It will have a whole new face,’ said Ferry. ‘It just depends on if you like it or not.’
