American Skiing Company (ASC) and the consolidation of
the ski industry were examined by CNBC's Tyler Mathisen on
"Business Center." While ski resorts used to be small,
family-owned businesses, "Today's skiing industry is a far
cry from the storied, simpler days of the past. Nowadays,
the companies that run more and more of the big resorts ...
are multimillion-dollar conglomerates with all the latest
complex financing structures and a publicly traded stock on
Wall Street" ("Business Center," 4/23).
SMOOTH SKIING: American Skiing posted revenues of $259M
for the '97-98 season, and ASC CEO Les Otten "has been
expanding his realm at a ferocious pace." Four years ago,
"his only holding was Sunday River" in ME, but since '94
Otten "has been on a shopping spree, acquiring eight resorts
in four years. And his reign spreads across the country,"
from Killington, VT, to Heavenly, CA, Steamboat, CO, "and
his most recent acquisition," The Canyons in UT. Otten said
he expects further consolidation: "I think you'll see the
majority of resorts owned by between five and 10 companies
before the end of the century." Mathisen: "In the past
decades, the number of U.S. ski resorts has shrunk from 700
to 521, and 50 of the top 75 ski areas are now owned by just
six companies." National Ski Areas Assn. President Michael
Berry: "You see the big guys getting bigger and the small
guys, to be very honest with you, are working hard to stay
in business. ... The name of the game is cash flow."
DOES WALL STREET HAVE ITS SKI LEGS? Otten, who paid
$325M total for Steam Boat and Heavenly, financed the deal
through an IPO last November. ASC went public at $18 a
share, but has "had a bumpy ride since then," closing at 15
1/2 Thursday. John Rohs, Managing Dir of Schroders, which
has ASC on its recommend list, said, "I think investors are
still developing a feel for the industry and understanding
exactly how it works, and exactly what the growth potential
is of the industry." Otten "is heavily involved, too, in
the often precarious time-share business, frequently buying
ski areas where there's room to build resorts." Rohs: "The
real estate side is where the balance of the accelerated
growth comes from." Sunday River has 200 quarter shares at
$60,000 each, "reaping a total of close to" $50M. Otten:
"Skiing is the goose that laid the golden egg, which is real
estate. I wouldn't say we're a real estate company; I
wouldn't say we're a skiing company. I think we're well
balanced between the two" ("Business Center," CNBC, 4/23).
