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Park City Mountain Resort bought by Vail - All of the messy history - Page 53

Poll Results: Who will be operating Park City Ski Resort?

Poll expired: Sep 12, 2014  
  • 7% (3)
    POWDR for at least the next 10 years
  • 0% (0)
    POWDR for the next 5 years/MTN after that
  • 0% (0)
    POWDR for the next 3 years/MTN after that
  • 7% (3)
    POWDR for the next 2 years/MTN after that
  • 32% (13)
    POWDR for 2014/15 - /MTN after that
  • 20% (8)
    MTN starting in the 2014 season
  • 7% (3)
    Joint POWDR/MTN starting in 2014
  • 7% (3)
    Joint POWDR/MTN starting in 2015
  • 0% (0)
    Joint POWDR/MTN starting in 2016
  • 10% (4)
    Park City will not operate in 2014
  • 0% (0)
    Park City will not operate in 2015
  • 0% (0)
    Park City will not operate in 2016
  • 7% (3)
    Flawed Poll!
40 Total Votes  
post #1561 of 1770
Who knows? Maybe heavier emphasis on some joint love in? As I said all these pages on and I'm not any more certain my original punt was wrong. Probably no real need for a re poll.
post #1562 of 1770
Quote:
Originally Posted by fatbob View Post

Who knows? Maybe heavier emphasis on some joint love in? As I said all these pages on and I'm not any more certain my original punt was wrong. Probably no real need for a re poll.

Let's do another one.  There isn't going to be any snow for most of us to ski on for a while, so why not kill some more time seeing how many people get it right?

post #1563 of 1770

The controversy was on television on CNBC this morning.

 

See the following:   http://www.cnbc.com/id/101951406  

post #1564 of 1770

http://www.parkrecord.com/park_city-news/ci_26417111/pcmr-and-talisker-bond-estimates-vary-by-moreYou guys called it. I'm not sure which one of you guys, it's a looooong thread, but the bond spread is:

 

PCMR and Talisker bond estimates vary by more than $100 million

Courtroom packed for hearing on whether PCMR can stay on disputed land
The Park Record
POSTED:   08/27/2014 01:37:13 PM MDT1 COMMENT

 

 
 
post #1565 of 1770

This week delay in a ruling should let us reach 55 pages before we really know anything.

 

fom

post #1566 of 1770
Quote:
Originally Posted by fatoldman View Post

This week delay in a ruling should let us reach 55 pages before we really know anything.

fom
55? I'm going for 61!

Maybe that's what we should poll: how many pages will we reach before the ruling comes out or is announced in court gets posted on this thread?
post #1567 of 1770
Quote:
Originally Posted by litterbug View Post


55? I'm going for 61!

Maybe that's what we should poll: how many pages will we reach before the ruling comes out or is announced in court gets posted on this thread?

The pages listing the billable hours could reach 61 for the quarter.  Anyhow, being off by $100 million?  And I thought something good was in the works...

 

PCMR must be a goldmine, and not a silver mine.

 

For the record, I was figuring on mid to high eight figures, not nine figures.  Yeah, they can get treble damages on some things.  But to get at over $120 million PCMR must be earning some serious coin.


Edited by quant2325 - 8/27/14 at 1:41pm
post #1568 of 1770
Somewhere in one of Vail's legal arguments about the bond amount in the last round of filings they said that only the 3rd year's rent/damages/fees (or maybe it was last season's) are subject to treble damages. I was surprised by this, and some of you may disagree, but if Vail's lawyers admit it it's a fact for the court's purposes. So estimate your bond amount accordingly.

Vail's going to have to document every bit of that 100M in a potential judgment. I suspect they threw in everything they could imagine, including speculations about income and growth that might be hard to prove, just as Powdr ignored everything they could in coming up with their 1M-7M.
post #1569 of 1770
Quote:
Originally Posted by litterbug View Post

Somewhere in one of Vail's legal arguments about the bond amount in the last round of filings they said that only the 3rd year's rent/damages/fees (or maybe it was last season's) are subject to treble damages. I was surprised by this, and some of you may disagree, but if Vail's lawyers admit it it's a fact for the court's purposes. So estimate your bond amount accordingly.

Vail's going to have to document every bit of that 100M in a potential judgment. I suspect they threw in everything they could imagine, including speculations about income and growth that might be hard to prove, just as Powdr ignored everything they could in coming up with their 1M-7M.

We already know the different valuation methods (cost, income, & market) that will be used.  Sounds like an appraisal on a commercial piece of property.  Someone was kind enough to place documents on scribd: http://www.scribd.com/doc/236934829/Talisker-filing-on-bond-for-Park-City-Mountain-Resort  .  Under the income approach, Vail/Talisker was privy to what PCMR earns, and that was redacted in the document.

 

 

 

 

Consistent with these principles, and as set forth in greater detail in the accompanying
declaration, Talisker’s expert has calculated the reasonable value of GPCC/GPI’s use and
occupancy, reconciling standard cost-, income-, and market-based valuation approaches.
SeeSalt Lake City S. R.R. Co.
, 1999 UT 90, ¶ 14.
 
Under the cost approach, discussed in Section II.B., reasonable rent is based onland value plus the current cost of reproducing
or replacing improvements.Although GPCC/GPI were on the land unlawfully, this approach also credits them with a reasonable
net profit for operating the business.
 
Under the income approach, discussed in Section II.C, a reasonable rent is determined by allocating the income streams
attributable to Talisker, and subtracting out any expenses incurred by GPCC/GPI. Again, although GPCC/GPI were on
the land unlawfully, this approach also credits them with are asonable net profit for operating the business.
 
Under the market approach, discussed in Section II.D, comparable commercial real estate transactions with known
rental prices are identified, and adjusted to account for differences between the comparable property and
the Talisker property
 
From a footnote:

 GPCC earned over $-- million in EBITDAR last year, and if it continues to use and occupy

Talisker’s property, is expected to earn an even greater amount next year. As discussed above,

the annual use and occupancy damages are ----------------- the amount of profits that GPCC will earn, ranging from $---- million to $---- million. 

Without trebling, the costs of appeal are dwarfed by the profits to be gained by GPCC by further delay

 

Edited by quant2325 - 8/27/14 at 4:27pm
post #1570 of 1770
Quote:
Originally Posted by litterbug View Post

Somewhere in one of Vail's legal arguments about the bond amount in the last round of filings they said that only the 3rd year's rent/damages/fees (or maybe it was last season's) are subject to treble damages. I was surprised by this, and some of you may disagree, but if Vail's lawyers admit it it's a fact for the court's purposes. So estimate your bond amount accordingly.

Vail's going to have to document every bit of that 100M in a potential judgment. I suspect they threw in everything they could imagine, including speculations about income and growth that might be hard to prove, just as Powdr ignored everything they could in coming up with their 1M-7M.

It had something to do with a formality of the eviction process. The trebling only happens after the formality happened. Although the threat of eviction is what triggered POWDR's legal action, it was my understanding that the formal eviction process was not started until the third season of the dispute (although I originally thought it was the second season).

 

I don't think it's going to matter a whole lot. If the bond is set at what POWDR is asking, continued delay is a no brainer. However, it's likely that the judge is going to pick a number between the two sides and whatever that number is 10% (the price of bond insurance) of is going to be large enough to make Cumming think twice. But that's all that the bond is going to do. Here's either going to keep delaying, go nuclear or settle. He says he won't go nuclear. But he's also said he'd go nuclear before he let Vail steal the resort. If he really wants to delay he can afford to no matter what the price is. Almost everyone can see he's going to have to settle sooner or later. If he has to pay the bond before he can see it too, so be it. 10% of $100M is $10M. Does anyone doubt they've made $10M net over the past 3 seasons? They've probably got it to spend to keep this thing delayed. Would $5M make any difference than 10? Are they smart enough to see that spending $10M for bond insurance is just throwing good money after bad? Hard to say.

post #1571 of 1770
Quote:
Originally Posted by TheRusty View Post



Quote:
Originally Posted by litterbug View Post

Somewhere in one of Vail's legal arguments about the bond amount in the last round of filings they said that only the 3rd year's rent/damages/fees (or maybe it was last season's) are subject to treble damages. I was surprised by this, and some of you may disagree, but if Vail's lawyers admit it it's a fact for the court's purposes. So estimate your bond amount accordingly.


Vail's going to have to document every bit of that 100M in a potential judgment. I suspect they threw in everything they could imagine, including speculations about income and growth that might be hard to prove, just as Powdr ignored everything they could in coming up with their 1M-7M.
It had something to do with a formality of the eviction process. The trebling only happens after the formality happened. Although the threat of eviction is what triggered POWDR's legal action, it was my understanding that the formal eviction process was not started until the third season of the dispute (although I originally thought it was the second season).
Of course, I shoulda caught that.
post #1572 of 1770

A radio news blurb about this made it sound as if the bond is only for the current year/season and damages/compensation for the past years/seasons will have to be addressed separately. Anyone know if that is correct?

 

fom

post #1573 of 1770

The bond is for the appeal of the court rulings to date. The intent is to make sure that potential damages from the original ruling are guaranteed in case those rulings are upheld so that the appeals process is not used as a vehicle to delay the payment of damages. Another purpose of the bond is to ensure that the appeals process is not used as a vehicle to generate future profits during the delay caused by the appeal so there is no profit in making an appeal that has no chance of winning and no way to abscond with the profit by declaring bankrruptcy after losing the appeal. The blurb you heard was probably an over simplification. The bond will be based on an estimate of the damages. The actual determination of the damages has not been done yet. However, the process of determining the damages will undoubtedly use the work done for the bond determination as a starting point.

post #1574 of 1770
Quote:
Originally Posted by TheRusty View Post
 

The bond is for the appeal of the court rulings to date. The intent is to make sure that potential damages from the original ruling are guaranteed in case those rulings are upheld so that the appeals process is not used as a vehicle to delay the payment of damages. Another purpose of the bond is to ensure that the appeals process is not used as a vehicle to generate future profits during the delay caused by the appeal so there is no profit in making an appeal that has no chance of winning and no way to abscond with the profit by declaring bankrruptcy after losing the appeal. The blurb you heard was probably an over simplification. The bond will be based on an estimate of the damages. The actual determination of the damages has not been done yet. However, the process of determining the damages will undoubtedly use the work done for the bond determination as a starting point.

Talisker will obviously want the highest valuation it can get, since in theory they could also be selling the property if PCMR were off of it.  So between the three valuation approaches (that all small town commercial appraisers also use), which is the highest?  I will guess the market or income approach, assuming cost would come in a distant third.  If Vail got to over $120 million for the bond, the income generated must be high.

post #1575 of 1770

Well, however much cash has been generated over the last 3 years we know who's pockets it went into. The bond will give us a clue how much they will have to give back. An interesting plot twist would be if the bond was set so high the appeal could not be made and POWDR chose bankruptcy over paying the damages.

post #1576 of 1770
This from yesterday's Park Record. Who knows whether we'll hear anything more tomorrow, when meditation is scheduled to conclude.
Quote:
PCMR v. Talisker: courtroom watchers hopeful after hearing The courtroom on Wednesday was packed at the start of a hearing during which some expected a 3rd District Court judge would attach a dollar figure to a bond that Park City Mountain Resort will be required to post to remain on most of the land underlying the resort's terrain.

It was among the largest audiences to watch a hearing in a high-profile lawsuit pitting PCMR against the firm that owns most of the land at the resort, Talisker Land Holdings, LLC, and Colorado-based Vail Resorts. The amount of the bond has been a critical question in the case in recent weeks.

The audience appeared to be made mostly of people without ties to either side. Audience members seemed riveted as attorneys for PCMR and Talisker Land Holdings, LLC-Vail Resorts argued about financial matters important as the judge considers a bond number. Judge Ryan Harris opted against setting a number on Wednesday and scheduled another hearing for Sept. 3.

Two members of the Summit County Council -- Chris Robinson and Roger Armstrong --were at the hearing. Tom Daley, a City Hall attorney, was also in the audience. There were several well-known Park City businesspeople watching as well. They included Mike Sweeney, whose family owns the Town Lift Plaza, and restaurateur and commercial real estate owner Hans Fuegi. Bob Richer, who served in elected office in Park City and Summit County, was in attendance. Myles Rademan, who was City Hall's longtime public affairs director, also watched the hearing. Robinson, who is the chair of the County Council, said in an interview afterward he was pleased with the judge's decision to delay setting an amount for the bond.

"I think it's good. I think it shows the judge is going to be really thoughtful," Robinson said, adding he was encouraged that mediation between the two sides was continuing at the time of the hearing.

Fuegi said he anticipates the dollar figure the judge will attach to the bond will be "acceptable to both parties."

"My hope is he'll come up with something in the middle," Fuegi said, referring to the $100 million-plus gap between the numbers presented by the two sides.

Sweeney, meanwhile, mentioned the extension of mediation until Friday, the second extension granted for the talks. "I think it's a positive they're talking. That's what they're doing," Sweeney said, noting the judge would not have granted an extension on mediation if the talks were not progressing. "He was convinced to give them another week. They asked for it.

Armstrong said the amount of time the judge spent privately talking with the attorneys in his chambers could signal there has been progress in mediation. He said he was interested in the judge's focus on the calculation that will be used as a dollar figure is set on the bond. It seemed Harris is considering setting a bond that would cover damages for a narrow period of time, Armstrong said, adding it also appeared the judge was reluctant to add treble damages and prejudgment interest to the figure. Armstrong mentioned the wide range in proposed bond amounts by the two sides. "I have no idea whether that would be acceptable to Park City . . . ," he said about Talisker Land Holdings, LLC's figure. "The range is just so large."
post #1577 of 1770
In other news, Rob Katz challenged John Cumming to an ALS Icebucket.

VAIL RESORTS ACCEPTS THE ALS ICE BUCKET CHALLENGE & DONATES $25,000 IN HONOR OF NORTHSTAR EMPLOYEE MATT REEDER

Northstar employee Matt Reeder does the honors of dumping an ice bucket over the head of CEO Rob Katz. Vail Resorts accepted the ALS Ice Bucket Challenge (from Aspen Ski Company) and raised $25,000 in honor of Matt and his 2011 ALS diagnosis.
At this week's 6th Annual Leadership Summit, Vail Resorts accepted Aspen Ski Company's Ice Bucket Challenge. Our entire Executive Committee and nearly 250 leaders from across the Company took the plunge for ALS into the Keystone Lodge & Spa swimming pool / self made ice bucket. We committed $100 per participating employee to total $25,000 for ALS and in honor of our Northstar employee Matt Reeder who was diagnosed with the disease in 2011.

And of course, as the challenge requires, we laid down the ice bucket gauntlet to Intrawest (Bill Jensen), PCMR (John Cumming), Jackson Hole Mountain Resort (Jerry Blann) and Mammoth Ski Area (Rusty Gregory).

Watch the challenge unfold here. #epicpoolparty #ALSresearch #epicpromise
post #1578 of 1770

Looking good for Vail/Talisker if PCMR is making EBT of $30-55m

 

http://www.sltrib.com/sltrib/politics/58340046-90/pcmr-million-talisker-park.html.csp

 

Yeah a bond of $1m looks real reasonable in those circumstances 

post #1579 of 1770

^^^^ Wow, PCMR makes (made) a lot more money than I thought.  I think this is the first time we've gotten any idea about their profitability:

 

Quote:
 According to attorneys for Talisker, $14.8 million would be equivalent to 27 percent of PCMR’s annual earnings. But PCMR attorneys said $14.8 million was more like 50 percent to 60 percent of earnings before taxes. Such lease rates would drive PCMR out of businesses, they argued.
 

 

And, on the other side the judge isn't buying Vail's rationale for the high number either:

 

Quote:

Talisker countered that the land in question is worth $11.4 million based on what Vail is now paying for it. According to Talisker attorney Howard Shapiro, Vail’s annual payment of $25 million to Talisker includes $13.6 million for Canyons Resort and $11.4 million for the 2,852 acres of ski terrain at PCMR.

But the judge didn’t buy that reasoning.

"That fails the eyeball test," he said. "They paid $25 million for the whole shootin’ match. ... The $11.4 million looks like a litigation-manufactured number."

 

I believe that should be $11.4 million/year above, not $11.4 million.

post #1580 of 1770
Quote:
Originally Posted by tball View Post
 

^^^^ Wow, PCMR makes (made) a lot more money than I thought.  I think this is the first time we've gotten any idea about their profitability:

 

 

And, on the other side the judge isn't buying Vail's rationale for the high number either:

 

 

I believe that should be $11.4 million/year above, not $11.4 million.

I just read the article.  Yeah, I thought PCMR must have been a goldmine.  This is why Katz offered so much for the lease...he was not overpaying for it.  This revelation also means Cumming blew it when not agreeing to a $7.7 million lease offer from Talisker.  Based upon the income approach, I can see how Talisker got to over $120 million as a number for the bond.  I don't know the legal aspects of these things, but from a financial perspective it is easy to justify using the highest number of the three valuation approaches.

 

According to attorneys for Talisker, $14.8 million would be equivalent to 27 percent of PCMR’s annual earnings. But PCMR attorneys said $14.8 million was more like 50 percent to 60 percent of earnings before taxes. Such lease rates would drive PCMR out of businesses, they argued.

 

Let's assume, for the sake of argument, that PCMR has interest expense up the wazoo, so pre-tax is only $29.6 million (the $14.8 million being the 50% of percent of  earnings before taxes)..  Earlier I estimated it was earning $35 million based upon 800,000 skier says w/o the summer revenue.  If the Talisker number is correct, PCMR is earning over $50 million.  Even if any of these numbers are before interest and tax,  it proves that Vail did not overpay and that PCMR certainly has the cash flow to make improvements.  It proves that you don't have to sell real estate to make money if there are enough skier days.   It proves PCMR also could have easily offered better pass pricing for locals.  I assume, of course, that the Salt Lake Trib did not confuse "revenue" with "income," and is accurate with the numbers mentioned.


Edited by quant2325 - 8/29/14 at 10:10am
post #1581 of 1770

They just extended mediation to Sunday at 10:00am. WTF. In other news, Deer Valley took out thirty six pages of advertising in ski magazine...  Park Ciy must still be here, somewhere.

post #1582 of 1770
Quote:
Originally Posted by Mr. Crab View Post
 

They just extended mediation to Sunday at 10:00am. WTF. In other news, Deer Valley took out thirty six pages of advertising in ski magazine...  Park Ciy must still be here, somewhere.

Well, it can't be bad news if the attorneys agreed to extend the mediation.  At the very least it shows both sides think there can be an agreement.

 

http://www.parkrecord.com/park_city-news/ci_26434586/pcmr-v-talisker-mediation-extended-until-sunday-morning

post #1583 of 1770
So the judge agrees with me that Talisker's and Vail's private agreement doesn't establish the market rate. I guess great minds do think alike!

Those of you who understand these things, I think I know what profit is, but what's the difference between income and revenue?
post #1584 of 1770
Quote:
Originally Posted by litterbug View Post

So the judge agrees with me that Talisker's and Vail's private agreement doesn't establish the market rate. I guess great minds do think alike!

Those of you who understand these things, I think I know what profit is, but what's the difference between income and revenue?

Accounting is supposed to be transparent, and is defined by organizations with acronyms like SEC, GAAP and FASB. The acronyms have the definitions.

 

Revenue is earned from the main activities of a company.  It is considered top line. So if you own a store and use a cash register to take in every cent of customer money, income is everything that ends up in that cash register except for the seed money.  The main activities of a ski area would include stuff like ticket sales (for skiing, lessons, alpine slides, mini-golf, zip lining, etc.), food, lodging (if the area owned lodging), rentals, and real estate sales provided the operator owned and sold real estate (e.g., home sites , time shares, etc.) as part of the main business.  Money earned on stocks and bonds the company owns, for example, is not "revenue" but would be accounted for as a dividend or interest.  Profit received for selling land is also not "revenue" unless the company considers that a main activity.  That profit received might end up being classified as a capital gain. 

 

Income is  generally what is net of revenue and expenses.  So in the example above, you take the revenue and subtract out expenses (labor, the power bill, the water used for snowmaking, cost of all that food,etc.) to get  income. What gets tricky is when a CFO has some latitude in determining what items are an "expense" and what are not. This can make a difference in determining what a company reports as "earnings."  For example, a capitalized lease would have a different effect on earnings because it is not an expense.  Income is further broken down into earnings before interest and tax and depreciation and amortization (EBITDA),  earnings before tax (EBT), earnings before interest and tax (EBIT), etc. 

 

This stuff is important for tax accounting, which can be substantially different than financial accounting.  It is also important for stuff like executive bonus and debt covenants.  Getting a higher credit rating means a lower cost of capital, so playing accounting games to manage the current and future debt covenants is a big thing.  So is playing accounting games (e.g., timing of revenue) to make sure management gets big, fat bonus checks. 

 

In the big business world, the CFO is like a God because he/she can play accounting games (usually legally) that can manage earnings to make a company appear to be growing faster or more consistently, or to pay less in tax, etc.   This is why there is a statement of cash flows and a balance sheet to go along with the income statement, and why good analysts start with the footnotes. Footnotes help analysts determine what accounting methods are used and, more importantly, what red flags should be raised because something just changed.  This helps analysts determine the "quality" of the earnings.   

 

If the Talisker lawyers are smart, they already hired a really anal forensic accounting person to look over the PCMR books.  Did Ian Cumming recently lend Powdr or PCMR a boatload of money it doesn't need to jack up the interest expense, so it will show less net profit in the years since the lawsuit started?  Was there a change in the classification of any lease, or with executive comp or dividends paid to the owners?  You get the idea.  I am not saying anything nefarious happened with PCMR's accounting, just that this kind of stuff does happen every day somewhere.


Edited by quant2325 - 8/30/14 at 3:21am
post #1585 of 1770
Thanks for defining all those terms, quant. So earning is the same as income?
post #1586 of 1770
Quote:
Originally Posted by litterbug View Post

Thanks for defining all those terms, quant. So earning is the same as income?

No. But it can be.

post #1587 of 1770
Quote:
Originally Posted by quant2325 View Post

Quote:
Originally Posted by litterbug View Post

Thanks for defining all those terms, quant. So earning is the same as income?
No. 
Ah. In the middle of your second paragraph it looked like you might be using them interchangeably.
post #1588 of 1770
Quote:
Originally Posted by litterbug View Post


Ah. In the middle of your second paragraph it looked like you might be using them interchangeably.

Most people consider net income and earnings as the same thing.  I said, "No" only because you didn't specify what kind of earnings.  This means I am too tired and am going back to sleep.

post #1589 of 1770
Nighty night!
post #1590 of 1770
Quote:
Originally Posted by litterbug View Post


Those of you who understand these things, I think I know what profit is, but what's the difference between income and revenue?

If you buy a pair of skis for $500 and resell them for $600. Your revenue is $600 and your profit is $100. (Assuming you have no other costs)
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