During his presentation to Mammoth Lakes’ Town Council Wednesday evening, Mammoth Mountain CEO Rusty Gregory opined that during the recent regional snow drought, “We fared better than our peers … which makes me the tallest man at a midget contest.”
A relative description, perhaps, but as town lightning rods go, the self-described 6 foot, 5 inches and 230 pound Gregory is hard to miss. Gregory used his presentation time before Council to give a detailed explanation of the 75 layoffs and other employee pay cuts that were enacted a week previously,
“I want to be very clear … the steps were very severe … but they were nobody’s decision but mine,” Gregory stated categorically. He further flatly refuted some speculation he’s encountered via local chatter and on blog sites that the layoffs were somehow ordered by Starwood Capital Group CEO Barry Sternlicht or by banks scrambling to avoid defaults.
“If we hadn’t the banks would have,” Gregory acknowledged, adding that “it’s important for lenders to see we’re ahead of what they’d do.” His preferred modus operandi: “React quickly rather than hope it goes away.”
Of the 75 positions eliminated, Gregory said that 17 were from either senior or top-level management. Some jobs, he posited, will likely need to be reinstated when things turn around. Back in the 1990’s 150 employees were laid off during what became known then as “Black Monday,” but Gregory pointed out that 80% of those employees were back on the job within 11 months.
Gregory said the cause the current crop of cuts was borne out of the regional drought. In terms of market demand, he illustrated that there is “a desire to go skiing until winter is over or demand is met.” If Mammoth doesn’t have snow, skiers will go to Colorado or Utah, and typically come back to Mammoth later. “That didn’t happen,” he explained. “We had early season snow, which can be precursor to a drought, but by the time ski season opened, no one had snow.”
He said that even if conditions improve for the rest of the ski season, MMSA’s revenues would still be off 30%. Half of MMSA’s roughly $150 million in projected annual revenue is paid out in wages, and things are costing more, such as fuel. MMSA had to spend more this year on water and electricity making snow, which he said was effective, but costly.
He said after a litany of salary reductions and hour-trimming measures, MMSA considered closing Chairs 12 through 14, but concluded that would lead to “false economy,” and send the wrong message to skiers.
One rumor floating around is that MMSA is being repossessed by the bank, which he dispelled, explaining that the company is in breach of operational covenants of its loan. According to Gregory, payment obligations, however, are being met.
In the near future, he expects Canyon Lodge to close after the spring holidays, as usual, and said June Mountain will continue to operate as long as it has snow. Gregory said MMSA will be ready to commit resources to summer when the weather is right.
Meanwhile, look for more job sharing among current employees, who will pick up front line duties, such as lift operations.
In other Council news, Interim Town Co-Manager Marianna Marysheva Martinez briefed Council on preliminary Town Budget deficits for fiscal years 2011-2012 and 2012-2013. Also pointing to low snowfall as a main contributor to the shortfall in revenue, Marysheva Martinez said so far the Town is looking at a $700,000 deficit, which could have been as much as $1.5 million had it not been for more conservative budgeting. She said less money will be earmarked for tourism, housing and transit as a result.
She also projected a $2.2 million gap in the following year’s budget, up a bit from $2 million. Neither projection, she added, includes any fallout from the ongoing airport litigation settlement.