State of the mountain
Mammoth Mountain Ski Area Chief Executive Officer Rusty Gregory has emerged from his summer hibernation and come down to the lowlands to present the second annual State of the Mountain address on Tuesday at Gomez’s Restaurant with Jack Lunch moderating. The public Q and A is a rare opportunity to hear what is happening inside the local cash cow, as well as MMSA’s visions for the future.
To hit the highlights: last year’s sales were down 50 percent over its busiest years, but the resort and its four mountains combined still expect to net about $40 million this year; refinancing loans will save $6 million a year; its lodges are in need of repair; the land trade deal has been made easier by Obama legislation so the Mountain can pay more money instead of trading a piece of equal value; and June Lake needs a snow making operation to make money … but first it has to find water.
“Rusty, what’s the financial state of the mountain?” Lunch asked. Is there money to do anything after four years of drought?
Rusty can be a little longwinded and the paper is only so big, so to paraphrase, the economy and historic drought forced cuts and layoffs. “Nobody in their right mind reserves for that kind of downside,” he said.
The resort, now Mammoth, June, Big Bear and Snow Summit, “Combined, we are well over $200 million a year in revenue, and our profit, if you want to look at it that way, operating cash flow should be about $60 million and about $18 million of that goes to debt, and the remaining dollars go back to reinvestment into the company and to sock away for bad years.”
He said, “In round numbers that’s $40 million we have available to sock away for a rainy day,” and half of that will be for reinvestment.
Turning to the skies, Lunch asked if the mountain was going to pitch in at the airport. Gregory said the airport terminal project isn’t an expansion, but the building of a real airport. The real deal would cost $20 million that, hopefully, the federal government would pay for, along with local matching funds. He added the Mountain should pay along with everybody else that benefits. That sounds like a ‘No.’
The mountain paid $10 million to get the airport flying and had been paying the annual $3.5 million subsidy, alone, until the Tourism Business Improvement District (TBID) that now pays a million or two. “I think TBID is a good idea, even if you don’t,” Gregory said to Lunch.
Gregory’s airport answer was similar to the one he gave to the parking problem at the Village; everybody’s got to pitch in.
Tom Cage wanted some clarification on a quote made 30,000 words and several margaritas ago; is MMSA going to contribute to the Town, hiring consultants to plan out the Town’s next priorities? Gregory finally got around to answering Cage’s question, and yes, MMSA will give about $500,000.
If this is a monster year, how much would get reinvested back in the mountain and how much goes to the investors? Lunch asked. Gregory said the investors don’t get a dime until the place sells.
When asked if resort partner and CEO of Starwood Capital Group, Barry Sternlicht had plans for building on resort owned property, Gregory said Sternlicht wants to hear about the vision. “Nobody’s going to invest without a well-articulated and clear vision of what the community wants,” Gregory said.
