Report details Ski Corp. financials |

Report details Ski Corp. financials

A break in the clouds reveals a snow-covered Storm Peak at Steamboat Ski Area on Tuesday.
Tyler Arroyo

— The Steamboat Ski Area’s operating profit last year was $27.5 million on gross earnings of $76.7 million, according to confidential documents prepared for potential buyers of the ski area.

Revenues at Steamboat, including those from the operation of the Steamboat Grand Resort Hotel and Steamboat Central Reservations, grew by 12.3 percent. The $27.5 million represents Steamboat’s earnings before interest, taxes, depreciation and amortization or EBITDA.

The ski area’s fiscal performance was laid out in an article in the Denver Post on Thursday morning. Post reporter Julie Dunn said she obtained a copy of the document prepared by investment banking firm Bear Stearns & Co. on behalf of the American Skiing Company, parent of the Steamboat Ski and Resort Corp. Dunn would not say who gave her the document.

Bear Stearns has been retained to market the sale of the ski area and advise the company, American Skiing CEO B.J. Fair told Steamboat Pilot & Today in July.

ASC officials were tight-lipped in the wake of the story’s publication, but it was clear they were displeased by the release of the information. In a sale process, qualified buyers typically sign a confidentiality agreement before being given the financial report. In some cases, prospective buyers are allowed to destroy the report when they are done with it. In others, they are expected to return it.

Asked whether the unintended release of financials would affect the sale process in any way, or whether the company was considering the possibility that it resulted from an internal leak, spokesman Andy Wirth would say only, “We’re not in a position to discuss that matter at this time.”

A ski industry source said Thursday that the confidentiality agreement typically would forbid prospective buyers from discussing the financial report with other buyers. The intent of that prohibition is to ward off any form of collusion among buyers and generate honestly competitive purchase offers, the source said.

The financials contained in the Bear Stearns report give an indication of the sales price ASC might seek for Steamboat.

In December 2005, Starwood Capital purchased a 77 percent ownership interest in Mammoth Mountain Ski Area in California for $365 million. Often, sales prices are based upon a multiple of EBITDA. Industry sources confirmed for the Steamboat Pilot & Today on Thursday that the multiplier used in the Mammoth sale was in excess of 10.

Applying a multiple of 10 to Steamboat’s EBITDA comes out to $275 million.

Just four years ago, American Skiing was on the brink of selling the Steamboat Ski Area to a group of investors lead by Tim and Diane Mueller for $91.4 million.

The Bear Stearns report reveals that Steamboat’s revenues have grown fairly steadily since 2002, but that they haven’t tripled. Gross revenues in 2002 were just less than $60 million, and EBIDTA was less than $20 million.

A report carried by The Associated Press late Thursday afternoon detailed how much Steamboat’s different operations contribute to total revenues. It showed 49 percent of Steamboat’s fiscal 2006 revenues came from the sale of lift tickets and season passes. Ski school operations and food and beverages each accounted for 13 percent of the total. Hotel and summer operations contributed 6 percent, as did Central Reservations.

The report reveals that 80 percent of Steamboat’s revenue comes during a 100-day period during the height of ski season.

Fair said in July that American Skiing got a late start on the sale process this year. Still, there is substantial motivation for a buyer to close a purchase before Christmas to realize the revenue that accrues during the critical 100 days of the ski season.

– To reach Tom Ross, call 871-4205 or e-mail

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