In a deal that was reportedly negotiated over the course of a year, Aspen Ski Company and KSL Partners, a private equity firm, agreed to acquire Mammoth Resorts for a sum rumored to be worth $500-$800 billion. The partnership, in a separate transaction, acquired Intrawest and it's ski resorts for $1.5 billion. The Mammoth purchase, subject to regulatory review, is expected to close in the third quarter of this year and, when completed, will create a consortium of 15 ski resorts.
Rusty Gregory, Mammoth's Chief Executive Officer, addressed a group of about 100 locals on Monday, April 24th to address the ramifications of the deal. He plans to remain CEO at Mammoth for now he said. But, as a 63 year old divorced man sitting on, potentially millions of dollars, he wants to explore his options.
The most anticipated consequence of the transaction for Mammoth will be an infusion of capital into the Mountain. Over the next 10 years Mammoth plans to invest $100 million in lift and gondola improvements according to Gregory. On top of that many millions will be sought for a new base facility at Eagle Run to replace the existing sprung structure and, for a new Main Lodge and renovated Canyon Lodge.
Amidst these rosy expectations, some observers have begun to question where the cash will come from. When Starwood Capital bought Mammoth Mountain for $365 million in 2005 it saddled the ski area with debt and an interest burden reported to be over $20 million per year. Having just ponied up at least $2 billion for recent acquisitions, how much borrowing power does Aspen-KSL have? With 15 resorts crying for attention like baby birds, how likely is it for Mammoth to get the worm?
The effects on real estate so far are hard to sort out. Real estate inventories this winter were already tight. Recently there were only 31 homes and 83 condos listed in Mammoth. Well priced properties coming on market are being snapped up quickly. Sierra Escrow reported opening 100 escrows last month. If inventories continue to be constrained as the ski season winds down—a period of historically expanding listings—then values should rise.
