Originally Posted by UllrIsLord
What if they made a rule that x% of ski company profits had to be re-invested in on-mountain infrastructure improvements? That would keep them from collapsing!
That's cool. I wonder what are the obvious reasons for scrapping Yan detachable lifts? Something about bad grips? Was there an incident?
There are tax accounting rules regarding "depreciation" that addresses the reduction of the value of an asset over time. In theory, resort operators should be reserving for replacement of the asset (e.g., a ski lift) over the depreciation schedule (which is never accurate regarding the asset life and just an estimate). Unfortunately, not all ski areas make enough money to reserve for future capital expenditures. It is the lack of profits that causes smaller ski areas to close or reorganize or sell. Some profitable operators simply replace an asset only when they absolutely have to and don't bother reserving (they have access to capital if needed), sucking out as much profit as possible. Is Powdr Corp. such an operator? I'll let you decide.
In the old days it was rumored some smaller operators could always depend upon a lightning strike or electrical problem to burn down an old lodge so insurance proceeds along with a new loan could be used to help build a new one. Unfortunately, fraud could mean jail time and right now some smaller operators can't get loans. Some smaller operators are very profitable, but others are getting out.
Now that the Cumming family operates and is an owner of Snowbird, is there still the drive to build Powdr Corp? I have no doubts the family will be good stewards of Snowbird, but the love may or may be lost for the rest of the ski areas now that the Crown Jewel or PCMR is gone. We'll see over the next few years what happens at Killington and elsewhere.
Edited by quant2325 - 10/8/15 at 9:58am