INSIDE TALE OF “SKI INC.”
Ex-Steamboat chief offers insight, perspective in book
Chris Diamond spent 44 years captaining ski resorts, enjoying a front row, slopeside seat to the rise and maturation of one of America’s most dynamic industries. He’s helped build an empire and watched it collapse. During his 17 years in the corner office at Steamboat ski area, he saw his venerable Colorado resort anchor not one but two resort Goliaths.
And as he says in his first book since retiring almost two years ago — “Ski Inc.,” an intriguing peek into the machinations of some of America’s most spectacular ski resort ascents and crashes — “you can’t make this stuff up.”
For anyone who has ever marveled at the multilayered complexity of a rural ski resort capable of hosting more than a million visits a year, Diamond’s perspective, which spans nearly every fundamental development in the ski industry’s evolution, is an insightful portal into the process of delivering the best of times.
The American resort industry’s decades-long path to putting people on snow is a minefield of unchecked egos, conflicting politics, mega corporations, dreamers, tight-knit communities, hedge funds and, of course, many players with a passion for flying down snow fields strapped to metal-edged boards.
And for more than four decades, Diamond stirred that volatile brew, concocting a fun-filled ski experience for millions of visitors; a well-tended mirage that reveals none of the sweat, ugly business, battles or drama. No, he saved all that stuff for his book.
Few have richer insights than Diamond, who headed Vermont’s Mount Snow before moving to Colorado and also was chairman of the National Ski Areas Association and Colorado Ski Country. The father of two grew up in Massachusetts and served as a platoon leader in Vietnam before joining the legendary Pres Smith in reviving Vermont’s Killington and Mount Snow and Maine’s Sunday River in the 1970s. Smith’s team built his S-K-I Ltd. into one of the most successful ski resort companies in history, linking together 34 consecutive years of profitability by focusing largely on the ski experience with a deliberate avoidance of real estate development. Then along came Les. Les Otten, the founder of American Skiing Co. who trained under Smith, took over S-K-I Ltd. in 1996 and almost immediately transformed the resort industry. He focused on building inexpensive condos first, and the profits from selling ownership in those slopeside, castlelike hotels fed investment in the mountain. Using almost all borrowed money, the strategy worked for a hot minute before imploding.
While just about everyone in Diamond’s book is reflected in a positive light, he draws a bead on Otten, who, by the late 1990s, controlled an empire of nine major resorts in five states, each boasting a massive, condominiumized, onesize-fits-all Grand Summit hotel at its base. Without being rude or throwing stones, Diamond paints Otten’s meteoric rise in the ski industry as a debt-laden exercise of vanity and greed.
American Skiing’s dazzling demise started with Otten’s $290 million acquisition of Steamboat and California’s Heavenly ski areas. With little regard for community input, a myopic focus on building the 300-plusroom Steamboat Grand Hotel and the installation of a corporate, top-down strategy, Diamond details a lengthy list of failures by Otten at Steamboat, almost from his first day as owner.
“This was a clash of cultures if there ever was one,” Diamond writes, noting how Otten failed to embrace Steamboat’s homegrown, carefully fostered identity as a Western, family-friendly town. Flying in on a private jet to announce layoffs and prodding Steamboat locals to look at Beaver Creek and Deer Valley for the ultimate ski experience was not the right tack. ” Sly locals started adding an “L” to the many Grand Summit banners and stickers around town, creating widespread ads for the “Grand Slummit.”
Diamond, back East during Otten’s tumultuous introduction to Steamboat, was pondering an escape from the ski industry when Otten tapped him to manage the Routt County ski area in 1999. He parachuted into a crisis and spent countless hours repairing relationships injured by Otten.
As American Skiing went public and pumped millions into its growing quiver of resorts, it was ill-prepared for even a hiccup in real estate sales. When it hit that bump in the road, Otten shed critical base-area parcels at his resorts, a move that hindered his company’s ability to recover. A hedge-fund cash infusion stemmed some bleeding. but American Skiing staggered under a crippling debt, its once high-flying stock trading for pennies. By 2002, Otten was gone as chief executive and his company launched a widespread purge, jettisoning resorts. Heavenly went to Vail Resorts for $99 million in a deal that left Tim Mueller — whose family now operates Crested Butte Mountain Resort — waiting in a New York City real estate title office, pen in hand and ready to close on Steamboat for $90 million.
Six years later, Diamond — and his Vietnam-learned, Pres Smith-honed, “lead from behind” approach to management — would facilitate the sale of Steamboat to Intrawest, at the time the largest resort operator in North America, for $265 million, roughly three times the price Steamboat almost sold for in 2001. That 2006-07 pre-recession season was a high-water mark for U.S. ski resorts and American Skiing’s hedgefund owners tapped that rising tide by soliciting a slew of heavy-hitting bidders for Steamboat. After Steamboat sold, American Skiing evaporated into the history books with the sale of its final resorts out East and Canyons in Utah.
Intrawest, with its exceptionally deep pockets, sparked a much-needed renovation of the Steamboat base area. The company owned Copper Mountain and operated Winter Park for the city of Denver back then. Even though Intrawest was primarily focused on real estate development, it was well regarded for investing heavily in its ski resorts. While its balance sheet was strong enough to survive a hiccup, it could not weather the Great Recession.
In the decade that Intrawest has owned Steamboat, the company has withered to a shadow of its former self, selling off its major resorts such as Copper Mountain and Whistler Blackcomb. And once again, Diamond was front-row center for the collapse of yet another resort leviathan.
That viewpoint is what makes Diamond’s book shine. His insights into the rise of Vail Resorts, the state of today’s ski industry and its future are enlightening.
He’s also seen skiing become much more approachable, with discounted season passes making time on the hill more affordable than at any other time in history. Snowmaking, grooming and lift improvements have improved the mountain experience.
Diamond’s intuitive thoughts on the role of behind-the-scenes resort advancements — like radio frequency identificationchipped season passes eliminating the need for manual scanning, rental shops offering the best gear, on-mountain eateries delivering gourmet cuisine, and re-engineered ski instruction — are illuminating.
When Diamond peers into his crystal ball, “Ski Inc.” lays out a road map of the future of skiing. He expects the acquisitions and mergers will soon slow, as Vail Resorts’ growth reaches an apex. Most of the recent big deals in the resort industry beyond Vail Resorts — such as Powdr buying Eldora and Deer Valley buying Solitude — Diamond notes, have been defensive, in reaction to the growing behemoth of Vail Resorts. Diamond predicted Vail Resorts’ news last week that it was buying Vermont’s Stowe resort for $50 million, speculating that the company would “certainly find a way to enter the Northeastern market.” Intrawest, which has become more of a resort holding company, also is rumored to be on the block and Diamond thinks the company’s parts — anchored by Steamboat and its deal with Denver to run Winter Park for another several decades — is worth more than the company as a whole, hinting at a dissolution not unlike that of American Skiing.
Diamond eschews the shop-worn narrative that paints Vail Resorts as the ski industry’s evil empire and its captain, Rob Katz, as skiing’s Darth Vader.
“If ASC was undone by its CEO Les Otten, Vail Resorts was successfully re-engineered by Rob Katz as the premier ski resort operator of winter destination resorts in the world,” Diamond writes. “That’s my opinion, but I don’t know how it could be challenged.”
Diamond has plenty of reasons to throw stones at Katz. He was chairman of the Colorado Ski Country board when Vail Resorts yanked its membership from the trade group.
But he holds Katz and his game-changing Epic Pass in high regard. With Vail’s day lift tickets now nearing $200, the $800 Epic Pass — purchased by 650,000 skiers and snowboarders this season — takes value-priced season passes “to the next level,” Diamond writes. Add in Katz’s aversion to any real estate development, his push toward year-round amenities at Vail’s resorts and his aggressive investment in topof-the-line infrastructure and Vail stands alone, Diamond says.
“While many of the big ski area holding companies struggle to establish a valuation that exceeds that of the individual companies, for Vail Resorts there is no question. The whole is more valuable than the parts,” Diamond writes. “The company is organized around that simple principle. The credit goes to Rob Katz.”
Diamond saves the best for last, speculating in the final chapter of “Ski Inc.” that ski communities can play a larger role in the industry. More people are going to want to move to mountain towns, especially as the internet enables working from afar. Towns like Steamboat Springs, Diamond writes, could better control their destiny with an equity stake in the resort that fuels its economy. That ownership stake — say 5 percent to 10 percent, Diamond suggests — would ease regulatory processes and bolster the relationship between a town and its ski area. Offer ownership slivers to local businesses as well, writes Diamond, who still lives in Steamboat and logs more than 70 days a year on the hill. Then locals can share in the good times and help shoulder the burden in the leaner days.
“Original ownership would still have control, but the new stakeholders would bring a fresh perspective to the table, emphasizing issues such as a cooperative approach to pricing affordable employee housing,” Diamond writes. “It would seem inevitable that increased corporate influence will temper the creativity that, to date, has defined the sport. But maybe not. The people I have had the pleasure of working with day in and day out are still just big kids on a powder day. I think that will save us.”