The talk of the snow sports industry continues to be the news surrounding the acquisition heard around the world, Vail Resorts buying Whistler Blackcomb. As Outside Magazine put it, "it wasn’t Coke buying Pepsi, but to skiers and snowboarders and anyone who follows the balance of snow sports power, it was close."
The news was first announced early on the morning of Monday, August 8th, 2016.
Vail Resorts, Inc. (NYSE: MTN) ("Vail Resorts") and Whistler Blackcomb Holdings, Inc. (TSX: WB) ("Whistler Blackcomb") today announced that they have entered into a strategic business combination joining Whistler Blackcomb with Vail Resorts. Under the transaction, Vail Resorts would acquire 100 percent of the stock of Whistler Blackcomb, whose shareholders would receive C$17.50 per share in cash and 0.0975 shares of Vail Resorts common stock, for consideration having a total value of C$36.00 per share.
To put into layman's terms, Vail will own and operate 100% of Whistler Blackcomb. This comes at a hefty price of $1.06 billion ($1.4 billion Canadian) or as Ski Mag stated, "Whistler’s purchase price tallies at roughly sixteen times Whistler Blackcomb’s EBITDA (earnings before interest, taxes, depreciation and amortization), making it the highest valuation of a North American ski resort in modern mergers and acquisitions history."
This announcement was met with strong reaction from some of the biggest names in the industry.
"The competitive environment just went up a full notch," said Andy Wirth, President and CEO of Squaw Valley and Alpine Meadows in California’s Lake Tahoe basin, where three Vail Resorts ski areas already operate.
"It's great for the ski industry," says Rusty Gregory, CEO of Mammoth Resorts. "And for those of us that own ski assets, particularly well-positioned high alpine resorts, it means our stuff has value. Some of the big resorts still have a lot of growth in them."
Christian Knapp, Vice President of Marketing for Aspen Skiing Company, acknowledged that "there is some anxiety and trepidation around the recent consolidation," but notes that while "it may be a concerning trend, it's not a new trend in the industry." Knapp, the chief developer of the Mountain Collective pass program, which was launched four seasons ago by a handful of independent resorts as a response to the Epic Pass program, says the Whistler purchase "allows other destinations to further differentiate themselves" from the Vail family of resorts.
Outside Magazine's Devon O'Neil provided a very interesting perspective:
The question is this: Is the ski industry healthier when families and independent businesspeople own and operate the resorts, or would it be better for a thriving public corporation to own and operate many of them?
Before you answer, and no matter where you stand, consider a few factors central to this argument: First, it is no coincidence that independent ski areas are going the way of $5 cheeseburgers. Competing nowadays costs big capital, and consumers—especially those who travel for their turns, the most coveted submarket—are going to go where the amenities and terrain are better, even if a bowl of chili costs twice as much and you know your money feeds a corporation instead of a family.
Second, climate change doesn’t care how much fun powder days are or how much better it is for business when the ski season lasts through April. The facts are the facts, and as seasons get shorter and snow lines rise like fog (a reality Whistler knows well), it will take human intervention—and, yes, big-time investment—to maintain any semblance of the way it used to be.
I understand the trepidation locals face when VR buys their mountain—especially at a ten-digit price tag. I live in Breckenridge, Colorado, where the Epic Pass has exacerbated crowding. Breckenridge counts about 1.6 million skier visits each year, roughly the same as Vail and a total greater than the populations of 11 U.S. states—all in a town where 4,500 people live year-round. Tucked away at the bottom of the WhistlerQuestion’s story about Monday’s announcement was this fact: Vail Resorts sold about 50,000 season passes less than a decade ago. Now the number is closer to 550,000.
You cannot argue that the greatest value in skiing is the Epic Pass, which also makes it nearly impossible to compete with. Thanks to VR’s spending spree—the company has bought nine resorts in three countries in less than six years—and decision to offer on the same season pass unlimited skiing at all of them, as well as at Vail, Beaver Creek, Breckenridge, Keystone, and Arapahoe Basin in Colorado, the $809 purchase price feels like a fraction of that. However, such tactics also bring about monikers like “Evil Empire.” Fair or not, this is the cost of maximizing your shareholders’ bottom line in a sport founded on soul.
We are not heading toward a day when one company dominates the industry. That day is here; the Whistler sale only confirmed it once more.
Whistler Blackcomb CEO Dave Brownlie said in a statement that appeared in Powder Magazine that Vail will bring “increased financial strength, marketing exposure, guest relationships and greater resources to support our current operations and our ambitious growth plans, including the Renaissance project, the most exciting and transformative investment in Whistler Blackcomb’s history. Our board of directors has also been monitoring the unique challenges facing the broader ski industry due to the unpredictability of year-to-year regional weather patterns. Whistler Blackcomb, with its unprecedented acreage of high alpine terrain and Glacier bowls, is well positioned, but by no means immune to these challenges. Partnering with the geographically diversified Vail Resorts and extending its successful Epic Pass products to Whistler Blackcomb are customer-focused ways of securing the long-term future of our resort, our industry and our community."
Will Vail's massive investments in not only Whistler but the 2014 acquisition of Park City pay off in the long-run? Only time will tell but the 800-pound gorilla that is Vail Resorts is full steam ahead, no matter what the rest of the snow sports industry has to say.
Content for this article originally appeared in Outside Magazine, Ski Mag, and Powder Magazine. Full links to the articles can be found here:
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