[News & Views] 1
AN INDEPENDENT BEAST
By Katie Brinton, Senior Editor, SAM
In late August, news circulated that Powdr was selling Killington Resort / Pico Mountain in Vermont to a group of local investors. By late September, “The Beast of the East,” which had been owned by a conglomerate since the mid-’80s (first S-K-I, then American Skiing Company, and most recently Powdr), was official- ly “fiercely independent,” as the media release to passholders put it. The investors. There was a certain ele- ment of kismet to the deal. Phill Gross, one of the lead investors in the new own- ership group and the co-founder of Adage Capital Management, knew Powdr found- er John Cumming from their shared work on the U.S. Ski and Snowboard Founda- tion board of trustees. When Powdr pur- chased Killington / Pico in 2007 and toyed with the idea of shutting down the resort’s Skyeship Gondola, Gross, whose home is served by the gondola, was instrumen- tal in working with Cumming to keep the lift spinning. Seventeen years later, when Cumming was considering selling the resort to an independent group, Gross was the person he called. “He reached out to me and said, ‘I think it’s the right time, and you’re the right person to put something togeth- er.’ And I said, ‘Well, I’ll try,’” says Gross. Gross’s first phone call was to Michael Ferri, vice president of the Killington Mountain School (KMS) board of trust- ees and the co-owner of Valvoline Oil. “Although I was a little uncertain about whether we could do this, [Ferri] was like, ‘We have to do this, whatever it takes.’” That’s how it all started, says Gross. The appetite for involvement was significant, he says. “When the publicity came out in August, we did have more people interested than we could accom- modate. … Everybody wanted to be part
Two of Killington / Pico’s new owners, Phill Gross (L) and Michael Ferri (R), with president and GM Mike Solimano.
of something really exciting and histor- ic.” Despite the fact that the investment returns in the ski industry “aren’t necessar- ily the greatest,” says Gross, folks loved the idea of having a stake in their home hill. Gross and Ferri found the sweet spot with a group of 16 investors: 14 different Killington families, as well as Powdr and the developer of the forthcoming Killing- ton village, Great Gulf, which both have minority stakes. “ALTHOUGH I WAS A LITTLE UNCERTAIN ABOUT WHETHER WE COULD DO THIS, [FERRI] WAS LIKE, ‘WE HAVE TO DO THIS, WHATEVER IT TAKES.’” Closing the deal. Unlike, say, Alterra’s acquisition of Colorado’s Arapahoe Basin, which has been held up since February by a routine but cumbersome Department of Justice review, the Killington / Pico deal closed quickly. Notably, the sale was completed with zero net debt. (While the group did bor- row some funds for added flexibility, says Gross, “The key is we raised the entire purchase price with 100 percent equity, so that debt is more than offset with equity from the investors.”) “The fact that we got to the point where [they] bought it with no debt is real-
ly, really remarkable,” says Killington / Pico president and general manager Mike Solimano. “We’re starting from a point where we’re borrowing some money to do capital investment as opposed to bor- rowing money to pay for the resort, which is usually where it goes south.” Capital plans. The new owners have earmarked $30 million for capital improvements over the next two years. Most of the money will support snow- making and lift upgrades: 1,000 new low-energy HKD tower and fan guns (500 ahead of this season, and 500 ahead of 2025-26); a redesign of the learning area at Pico, which will include a new cov- ered surface lift; new Leitner-Poma cab- ins for the Skyeship Gondola; and the ski area’s first Doppelmayr lift, a detachable six-seater to replace the existing Super- star Express Quad. New mountain bike trails are also on the docket. It’s to Killington / Pico’s benefit that the new investors aren’t looking for an immediate return, Solimano says. “They’re not really doing this to make money par- ticularly. That’s why I think it works.” The new owners have committed to reinvesting all profits back into the oper- ation over the next 10 years, but that’s not to say Killington / Pico is transforming into a nonprofit or co-op. “When I say that, it’s not that they don’t want to make money,” Solimano explains. “We have a bunch of aging infra-
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