That time a ski resort got evicted from its own mountain
That time a ski resort got evicted from its own mountain
Oopsies!
In 1994, Powdr Corporation bought one of America’s most famous ski mountains, Park City Mountain Resort (PCMR). This turned out to be a good decision, as in 1995 nearby Salt Lake City was awarded the 2002 Winter Olympics. PCMR was one of several venues to host skiing events, and the mountain has been one of the most popular in America ever since. Building on this initial success, Powdr expanded, buying resorts such as Killington in Vermont and several summer camps. PCMR, however, remained their flagship resort and the town of Park City, Utah is the location of Powdr’s corporate headquarters.
PCMR is a money-making machine. Skiers and snowboarders come from all over the world to ski Utah’s world-famous “champagne powder”, and the town of Park City hosts the Sundance Film Festival. It was an extremely lucrative operation for Powdr and enabled them to spend tens of millions expanding and upgrading the mountain.
However, Powdr, like many ski companies, didn’t own the land that the ski resort is on. Often ski resort land is in a national forest, meaning that a ski resort owns the lifts, but not the mountain. (Fun fact: when this is the case, skiers can legally walk up the mountain and ski down without paying. It is, after all, a “lift ticket”.) In Powdr’s case, they owned the base area of the mountain, including the lodges, but the upper two-thirds of the mountain were owned by a mining company named Talisker Corp.
You might be wondering how much it costs to lease two-thirds of a mountain from a mining company. $10 million a year? $20 million? More? This is where Powdr hit the jackpot. The original lease that PCMR operated under began in 1971 when skiing was not nearly the business it is today. That lease specified that the owner of PCMR would have a locked-in rate for 20 years, and that lease could be renewed every 20 years for the same rate. The rate was set at an impossibly low $155,000. Given that an adult lift ticket at PCMR today costs over $200, $155,000 is couch change. PCMR makes that much revenue in one hour on a crowded weekend. Neither Powdr nor Talisker were involved in the original lease, so you have to imagine Powdr thanked their lucky stars and Talisker cursed their fate at such an unusual deal.
Again, the original lease was signed in 1971. In 1991, that lease was resigned for another twenty years by a previous operator of PCMR. Then, in 1994, Powdr bought PCMR and continued paying $155,000 a year to Talisker. To ensure the continuation of this sweetheart deal, all they had to do was renew the lease in 2011 for another twenty years. Then, in 2031, they would have the right to renew for another twenty years, meaning the deal of the century would last until the middle of the 21st century.
They forgot to renew the lease.
In an event that will enter US business hall of shame, executives at Powdr realized on May 2 of 2011 that the lease renewal was due on April 30, 2011. They sent a renewal request two days late, backdated to April 30. Talisker was ready. They informed Powdr that their lease was terminated and they had to vacate the mountain. Powdr disagreed and sued in court. Lawyers for Powdr would later argue in court that the backdated letter was the result of “miscommunication”, and totally not a deliberate coverup to avoid one of the most boneheaded mistakes in business history.
Meanwhile, a competitor of Powdr, Vail Resorts, was ready. Vail already owned and operated Canyons Resort, a ski mountain right next to PCMR. Their rent? An eye-watering $25 million a year and an unspecified revenue percentage. Vail’s goal was to combine Canyons and PCMR into one of the world’s largest ski resorts. This marked the beginning of Vail Resort’s takeover campaign, and today Vail is by far the largest ski resort operator in North America.
The ultimate winners here, as per usual, were the lawyers. The court case between Powdr, Talisker, and Vail dragged on for several years. Then, in 2014, a judge ordered Powdr to post a $17.5 million bond, said Talisker could begin eviction proceedings, but stayed the motion to allow the parties to come to a resolution. Powdr posted the bond, but their legal options were running out. Although they owned the chairlifts and the base area for PCMR, ultimately as a tenant they couldn’t occupy another company’s land indefinitely. The town of Park City was also watching this case closely, as their town depends on the ski resort. At one point Powdr threatened to tear out the chairlifts and operate only on the bottom third of the mountain. After all, what would Vail do? It’s not like you can run a ski resort without a base area. This, however, would have been a disaster for the local community and the thousands of employees that work at PCMR every winter.
Ultimately, reason prevailed. Powdr swallowed its pride and realized destroying its flagship resort was not a good idea. Vail bought PCMR from Powdr for $182.5 million in September 2014. One of the conditions of the sale was that PCMR employees would keep their jobs. PCMR opened on schedule that fall.
One has to wonder, however, how this happened. Although Powdr had never had to resign the lease with Talisker, clearly someone knew it needed to be resigned in 2011, as they were just two days late with the request. You would think Powdr would have a giant clock in the office counting down the days to when the lease renewal was due. I do feel sorry for whoever woke up the morning of May 2 and probably had a panic attack when they realized the renewal was due April 30. On the other side, it’s easy to imagine the executives at Talisker getting more and more excited throughout the month of April as the lease renewal never showed. This would be a wildest dream come true.
Today Powdr is still headquartered in Park City. Why you would want to be reminded on a daily basis about the resort you lost is beyond me, but they continue to stay there. Vail owns ski resorts around the globe and has moved the skiing world to a subscription model of pricing. PCMR now includes Canyons Resort, and is the largest ski resort in the United States. All because of a clerical error.
Powdr is such a Boomr