Muellers reach deal for Steamboat
Steamboat Springs — Don’t expect Tim and Diane Mueller to transform the slopes of Mount Werner overnight.
“We’re not going to start loading the chairlifts sideways, don’t worry,” Tim Mueller said.
“Yeah, starting next week!” his wife laughed.
The Muellers are the leaders of a group of investors that announced Friday they have entered into a firm agreement to purchase the Steamboat Ski Area from American Skiing Co. for $91.4 million. They have formed a new business entity, Triple Peaks LLC, to operate three resorts Steamboat, Okemo Mountain, Vt., and Mount Sunapee Resort, N.H.
Tim Mueller is the president and CEO of the company. Diane Mueller is the vice president.
Investors in Triple Peaks have invested in all three resorts. The same is true of the banks that financed the Steamboat deal.
The new owners hope to close on the resort by mid March.
The deal does not include the Steamboat Grand Hotel, which remains in ASC’s hands. B.J. Fair, ASC’s chief executive officer, was in town Friday and confirmed the hotel is the only asset his company retains in Steamboat.
Fair said his company is not marketing the hotel for sale and intends to continue operating it in close communication with ski area management.
Assets included in the sale are “Tennis Meadows” near the ski area’s remote parking lot, the “Snowflower II” hotel or condominium site adjacent to the gondola building and Steamboat Central Reservations.
The Muellers confirmed that the new ownership group includes eight local couples or individuals, all of whom will have a say in the future of the company. In addition, there are other investors outside Routt County in places such as Chicago, Houston and New England. At this time, there are no institutional investors, Mueller said.
“The local component is critical at all of our ski areas, but more particularly here,” Tim Mueller said. “Each ski area has to maintain its own unique character and fit in with the traditions and values of the community. We don’t want to (project) a corporate image coming down, but more of a local image coming through.”
The investors in Triple Peaks represent a collection of business acumen and experience he intends to rely on, Mueller said.
“It’s a talented group of individuals,” Mueller said. “We want our board to be visionary and keep us on the right track. We want to have somebody tell us if we’re on track.”
Mueller said he relied heavily on the counsel of Steamboat resident Nick Schoewe, one of his partners in the original Catamount Ranch and Club real estate development, during the weeks that led up to the purchase.
Schoewe said he played a formal role in the due diligence process and contract negotiations with ASC.
Schoewe said he has been impressed with the Muellers’ willingness to listen and their commitment to managing each of their ski areas in the context of the communities where they are located.
“I think that will be a real tonal change,” Schoewe said. “Tim has a great management style and the Muellers intend to run the mountain in a way that fits this community. I think people are going to be really happy.”
The Muellers are well versed in Steamboat’s community orientation and resort economy through their role as original investors in the Catamount Ranch and Club real estate development. Tim Mueller spent a portion of 1996 holed up in an office in Gondola Square studying plans to carry the once proposed lake Catamount Ski Area forward. He later stepped back from a lead role when Cordillera became the managing partner of the project and the plans for a ski area were abandoned.
Tim Mueller said the capital structure of Triple Peaks is conservative in terms of the ratio of equity to debt.
“We’ve built in $10 million in capital into Steamboat for the first two years” of ownership, Tim Mueller said. “We think that should be an adequate amount. We’ll see where that leaves us.”
Mueller said he would prefer not to offer details on possible capital projects at this point, but said he’s aware that replacement of the Sunshine chairlift is the highest priority of ski area managers. He said he’s also been told the on-mountain lodges at Thunderhead and Rendezvous need some improvements.
Mueller approached the purchase of Steamboat based on its resort performance, not on potential for real estate development.
“We looked at this almost, not totally, but almost entirely on a cash flow basis,” Mueller said, and added, “We will not be huge real estate developers.”
Mueller said he’s confident he can grow the ski area’s annual skier visits, but the new company won’t be dependent upon dramatic increases in skier days, nor does he expect growth of 50 to 70 percent.
Paul and Mary Berge of Steamboat are among the minority investors in the purchase of Steamboat. They have been coming to Steamboat since 1972 from their home in Madison, Wis. He is chairman of the board of M&I Bank in Madison. Berge said he was not approached as a potential investor, but sought out Schoewe, who was coordinating the effort to build a local investment component.
Berge actually serves as a volunteer Steamboat Ambassador on the ski mountain. He declined to discuss the size of his investment in Triple Peaks.
“We’ve been aware of some of the challenges the ski area has had over the last several years,” Berge said. “We think Tim and Diane represent ownership that is appropriate for Steamboat. As I look out on that mountain, it’s such a critical part of the community and an integral part of the economy. We just think Steamboat is a great place.”
As a banker, Berge feels the Muellers can succeed in their ownership of Steamboat with proper capitalization.
“I’m thrilled that Tim and Diane were able to complete the deal and I think the outlook for Steamboat is incredibly great.”
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Real estate transactions totaled $42,885,400 across 51 sales for week of Sept. 17 to 23.